The European Commission is expected to adopt a proposal for a Directive today, 16 April 2013, on disclosure of non-financial and diversity information.

Specifically, the Commission has indicated that the directive will enhance the transparency of certain large companies on social and environmental matters. Companies concerned will need to disclose information on policies, risks and results as regards environmental matters, social and employee-related aspects, respect for human rights, anti-corruption and bribery issues. In addition, information will have to be disclosed on diversity on the boards of directors.

The Commission says that current EU legislation, in particular, the Fourth Company Law Directive on annual accounts, addresses the disclosure of non-financial information in a way that companies may choose to make public certain information on environmental, social and other aspects of their activities. However, the requirements of the existing legislation have proved to be unclear and ineffective and applied in different ways in different Member States. Currently, fewer than 10% of the largest EU companies disclose such information regularly.

The Commission states that it is well known that companies which are transparent deliver consistently higher economic performances over time, have lower financing costs, attract and retain talented employees, and ultimately are more successful. Investors and consumers also increasingly demand this kind of information.

Finally the Commission points out that some Member States have introduced disclosure requirements that go beyond the Fourth Company Law Directive and this proposed directive seeks to improve the situation EU-wide.