Certain large public interest entities, including companies listed on the Official List, who have more than 500 employees, are required to include a non-financial statement as part of their strategic report by the Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations in relation to the financial years beginning on or after 1 January 2017. The regulations amend Part 15 of the Companies Act 2006 and form part of the UK’s implementation of the Non-financial Reporting Directive 2014/95/EU.

The non-financial information statement must contain information, to the extent necessary for an understanding of the company’s development, performance and position and the impact of its activity, relating to, as a minimum:

  • Environmental matters (including the impact of the company’s business on the environment).

  • The company’s employees.

  • Social matters.

  • Respect for human rights.

  • Anti-corruption and anti-bribery matters.

If the company’s strategic report is a group strategic report, the non-financial information statement must be a consolidated statement relating to the undertakings included in the consolidation.

The information must include:

  • A brief description of the company’s business model.

  • A description of the policies pursued by the company in relation to the above matters and any due diligence processes implemented by the company in pursuance of those policies.

  • A description of the outcome of those policies.

  • A description of the principal risks relating to the matters mentioned above arising in connection with the company’s operations and, where relevant and proportionate:

    • a description of its business relationships, products and services which are likely to cause adverse impacts in those areas of risk; and

    • a description of how it manages the principal risks.

  • A description of the non-financial key performance indicators relevant to the company’s business (that is, factors by reference to which the development, performance or position of the company’s business, or the impact of the company’s activity, can be measured effectively).

Directors will be relieved to know that nothing in the new regulations requires the disclosure of information about impending developments or matters in the course of negotiation if the disclosure would, in their opinion, be seriously prejudicial to the company’s commercial interests, provided that the non-disclosure does not prevent a fair and balanced understanding of the company’s development, performance or position or the impact of the company’s activity.