Unwrapping businesses

Environment law expert Colleen Theron provides a guide to the EU Non-Financial Reporting Directive

Financial and non-financial reporting provides shareholders and other stakeholders with a comprehensive view of performance and the position of companies. There is a global trend to move away from voluntary disclosure of non-financial information towards mandatory disclosure.

The EU Non-Financial Reporting Directive (2014/95/EU) is one example and a further step towards developing a legal framework that covers environmental and human rights reporting.

Back to basics

The European Parliament acknowledged in 2013 the need to increase companies’ accountability and transparency. MEPs backed two resolutions on corporate social responsibility, urging the European Commission to develop a legislative proposal on the disclosure of non-financial information by businesses. The first resolution referred to accountable, transparent and responsible business behaviour and sustainable growth; the other emphasised promoting society’s interests and the need for a route to sustainable and inclusive recovery.

The parliament and European Council adopted the directive in 2014. Its purpose is threefold:

to increase transparency of large companies (these are public interest companies with more than 500 employees – see below); improve boardroom diversity; and enhance accountability and performance.

The directive also establishes minimum legal requirements on the information that should be available to the public and authorities across the EU.

The directive entered into force ...

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