As part of its Company Law and Corporate Governance Action Plan, the European Commission has published (on 16 April 2013) a proposal to require large companies and groups to make new non-financial and diversity disclosures. The proposals include the following:
Non-financial information (including information on human rights and anti-corruption)
Companies listed on an EU-regulated market as well as large unlisted EU companies3 must include in their annual report a non-financial statement covering:
- Environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters; and
- A description of their policies in these areas (with information regarding the results of such policies); or
- If the company has no relevant policies, an explanation for this.
Companies listed on an EU-regulated market (other than small and medium sized companies) must include in their corporate governance statement:
- Information on their diversity policy, including age, gender, geographical diversity, and educational and professional background; and
- The objectives of their diversity policy, its implementation and the results obtained; or
- If the company has no diversity policy, an explanation for this.
Implementation of the EU proposals
It is unlikely that the proposals made by the European Commission will be implemented until 2016 at the earliest. The proposals allow member states to give unlisted companies a further year’s grace before they are required to comply with the proposed new disclosure regime.
Implementation of changes to narrative reporting proposed by the UK Government
In the meantime, it is anticipated that the changes to the narrative reporting system for quoted companies proposed by the UK Government last October will come into effect for financial years ending on or after 1 October this year. There is some overlap between the two sets of proposals: the UK Government has also proposed new disclosures relating to human rights and the gender balance within companies. However, the proposals made by the Commission are more far-reaching. Some of the EU proposals, for example, apply to large unlisted companies as well as to listed companies, and those relating to diversity disclosures extend beyond gender and require disclosure as an obligation rather than on the "comply or explain" basis of the UK Corporate Governance Code.
Proposal for a Directive of the European Parliament and of the Council amending Council Directives 78/660/EEC and 83/349/EEC as regards disclosure of non-financial and diversity information by certain large companies and groups available at: http://ec.europa.eu/internal_market/accounting/docs/non-financial-reporting/com_2013_207_en.pdf