The Department of Jobs, Enterprise and Innovation (DJEI) has commenced a consultation process on EU proposals for companies to report certain non financial information. The rationale for this proposed directive is to increase the relevance, consistency and comparability of the non financial information that is currently displayed by companies and to increase diversity on boards through enhanced transparency.
The EU Commission plans to introduce two new obligations. The proposal itself will take the form of amendments to Article 46 of the 4th Accounting Directive and Article 36 of the 7th Accounting Directive to include new provisions on the disclosure of non financial information, and an amendment to Article 46a of the 4th Directive to include new provisions on diversity on boards.
The two provisions of the EU proposal are as follows:
- Certain large companies will be required to disclose a statement in their Annual Report including material relating to environmental, social and employee-related matters, respect for human rights, anti-corruption and bribery matters (on a "comply or explain" basis); and
- Specified information on the company's diversity policy for its administrative, management and supervisory bodies will be required to be disclosed in the company's corporate governance statement (on a "comply or explain" basis). Specifically, information on all aspects of the diversity policy will be required, including age, gender, geographical diversity and educational or professional background.
The requirement to disclose non financial information will apply to companies with greater than 500 employees and either a balance sheet of €20million or a net turnover of €40 million. The requirement to disclose details of diversity policy will apply to all listed companies regardless of their size.
The DJEI is seeking to establish that the specific provisions are proportionate and appropriate, and it is seeking comments on all aspects of the proposed directive to help inform its negotiations at EU level.
The closing date for submissions is Friday 4 October 2013.