The EU Directive on disclosure of non-financial and diversity information (2014/95/EU) entered into force in December 2014. This legislation requires around 6,000 large companies listed on EU markets, or operating in the banking and insurance sectors, to disclose relevant environmental and social information in the management report, with the first reports to be published in 2018 (on financial year 2017). Member States had to finalise the transposition into national legislation by December 6th 2016.
With the goal of increasing “the relevance, consistency and comparability of information disclosed by certain large undertakings and groups across the Union” this amendment to the EU Accounting Directive (2013/34/EU) Directive on the disclosure of non-financial and diversity information by certain large undertakings and groups (2014/95/EU), mandates EU Member States to bring into force (‘transpose’) the national laws, regulations and administrative provisions necessary to comply with its requirements
What does this mean?
By December 6th 2016, the Directive will be effective in all EU member states.
Public interest entities (PIEs) will be required to report according to its requirements for the 2017 Fiscal Year. The first company reports under the Directive, covering financial year 2017-2018 should be published in 2018.
Who do the new requirements apply to?
The requirements apply only to companies designated as public interest entities (PIEs). These are large undertakings with 500+ employees.
These include listed companies plus certain unlisted companies, such as banks, insurance companies and other companies so designated by member states because of their activities, size or number of employees. Public interest entities are generally those with securities admitted to a regulated market in the European Union (EU).
In Ireland the obligation to disclose non-financial information applies to those Groups and companies who, satisfy all 3 of the following criteria under the Companies Act 2014 (amended by Directive 2013/34/EU, to be transposed as part of Companies (Accounting) Bill 2015):
• Are “Public Interest Entities”
• Are large undertakings/parents of large groups
• Have an average of over 500 employees on their balance sheet date
In the UK the obligation to disclose non-financial information will be is regulated under The Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016 which transpose the Non-Financial Reporting Directive is now in force. This will be in time for reporting commencing on or after 1 January 2017.
Many countries already require quoted companies to report on their greenhouse gas emissions. Though they will be required to supply information on environmental matters, which may contain information on the use of renewable and non-renewable energy and greenhouse gas emissions, the EU directive does not require qualifying entities to report this information
Examples of areas to be disclosed are:
1. Environmental matters, which may include greenhouse gas emissions, current and foreseeable impacts of the entity’s operations on the environment and, as appropriate, on health and safety, the use of renewable and/or non-renewable energy, water use and air pollution.
2. Social matters, which may include actions taken to ensure gender equality, implementation of fundamental conventions of the International Labour Organization, working conditions, social dialogue, respect for the right of workers to be informed and consulted, respect for trade union rights, health and safety at work and the dialogue with local communities, and/or actions taken to ensure the protection and development of those communities.
3. Human rights matters which may stem from the undertaking’s own activities or may be linked to its operations, and, where relevant and proportionate, its products, services and business relationships, including its supply and subcontracting chains.
If you have any questions regarding the effect of these regulations on your business please do not hesitate to contact one of our experienced Consultants by Clicking Here
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