In June 2017 the Companies Law Chapter 113 was amended by Law 51(I)/2017 (the Transposing Law), which transposed into domestic law the EU Corporate Social Responsibility Directive (2014/95/EC) regarding the publication of non-financial information by certain groups of large companies.
The Transposing Law applies to large, public interest companies which employ more than 500 people in the course of a single financial year.
Pursuant to the Transposing Law, such companies must publish non-financial reports on how they address:
- environmental protection;
- social responsibility and the treatment of employees;
- human rights;
- anti-corruption and bribery; and
- diversity on company boards in terms of age, gender and educational and professional backgrounds.
Within the framework of the EU Corporate Social Responsibility Directive, the Transposing Law ensures that applicable companies are afforded the flexibility to disclose relevant information in a manner that they consider most useful. In preparing the relevant reports for publication, such companies may follow national, international or EU guidelines. By way of example, companies can refer to a number of standards, including:
- the UN Global Compact guidelines on sustainability and development;
- the Organisation for Economic Cooperation and Development guidelines for multinational enterprises;
- the International Organisation for Standardisation's ISO 26000 on social responsibility; and
- the EU Commission guidelines of June 26 2017, which are relevant to the disclosure of environmental and social information and aim to enhance business transparency on non-financial matters.
The reports must include a brief description of:
- the applicable companies' business models;
- the policies which the companies have adopted to address social and environmental risks;
- the results which such policies have produced; and
- the steps which the applicable companies intend to take to resolve any conflicts that occurred during the implementation of their policies.
The Transposing Law makes applicable companies accountable for a lack of relevant policies, as they must provide reasons for not adopting a specific policy.
The EU Corporate Social Responsibility Directive entered into force on December 6 2014 with a timeline for national implementation by December 6 2016. The directive aims to make large companies more resilient, enabling them to perform better through improved financial and non-financial transparency. The underlying objective is to foster healthy economic growth, employment and improved trust among relevant stakeholders, including investors and consumers.
The non-financial reports form part of the annual reporting requirements of applicable companies and must be published in accordance with Articles 118 to 122 of the Transposing Law or on the company's website within six months of the close of an applicable company's balance sheet.
For further information on this topic please contact Stella Koukounis at S Koukounis & Partners LLC - Solsidus Law by telephone (+357 99 415 708) or email ([email protected]). The S Koukounis & Partners LLC - Solsidus Law website can be accessed at www.solsiduslaw.com.