Non-financial reporting - are you captured?

Published 5th May 2016 by Lucy Haines

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In April 2014 the European Parliament adopted EU Directive 2014/95/EU on the disclosure of non-financial and diversity information by businesses and other large organisations. EU member states have been given a two year window to transpose the Directive into national law. As such it is expected that the first year of reporting will commence in the 2017-2018 financial year.

The new directive, commonly known as the non-financial reporting (NFR) requirements, will affect all large, public interest entities, defined by the EU as any entity which is:

1. Classified as a large undertaking

  • Have more than 500 employees;
  • Have a balance sheet total of at least €20 million; and
  • Have a net turnover of at least €40 million

and

2. Classified as a public interest entity

  • Organisations trading on a regulated market of any Member State;
  • Credit institutions;
  • Insurance undertakings; or
  • Organisations designated by Member States as public-interest entities, e.g. undertakings of significant public relevance because of the nature of their business, their size or the number of their employees.

The new legislation complements the ‘Narrative Reporting Regulations’ (NRR) of the UK’s Companies Act 2006, which require companies to report on business activities, risk and uncertainty and specific management policies. Therefore, all UK companies that meet the EU’s ‘large undertaking’ criteria should already be disclosing specific information on the company’s strategy, business model, risks and market positioning.

At present under the NRR, only companies that are listed and incorporated in the UK are currently required to report on their environmental, social and employee aspects. The NFR requirements will extend these requirements to all large undertakings and public interest entities with a presence in any EU country. The NFR will also introduce additional metrics such as age, gender, educational and professional background, as well as increased reporting on bribery and corruption.

As with the NRR disclosure of emissions data, organisations are required to use an internationally or nationally recognised reporting framework such as GRI, The UN Global Compact or ISO 26000. If metrics are not reported, an explanation for their omission must be provided.

The UK has already consulted on transposing the directive in to UK law, so the exact reporting requirements are likely to be announced towards the end of 2016.

At Carbon Clear, we understand that the announcement of another reporting requirement is problematic for already overburdened sustainability teams. We help our clients to reduce this burden in a variety of ways, from end to end compliance reporting to the implementation of fully managed data systems.

If you would like to learn more about non-financial reporting or how we can help to reduce your reporting burden, get in touch.

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