- Commission’s new guidelines to enhance business transparency on social and environmental matters
Commission’s new guidelines to enhance business transparency on social and environmental matters
In June 2017, the European Commission adopted a new set of guidelines on the disclosure of environmental and social information. These guidelines will help companies to disclose relevant non-financial information in a consistent and more comparable manner. The aim is to boost corporate transparency and performance, as well as encourage companies to embrace a more sustainable approach.
The new guidelines will support companies in fulfilling their reporting obligations under current non-financial disclosure requirements and will promote smart company reporting. Transparent companies perform better over time, enjoy lower financing costs, attract and retain talented employees and are ultimately more successful. Well-informed business and investment decisions have much better chances to succeed.
Appropriate non-financial disclosure is also an essential element to enable sustainable finance. This builds on the Commission's goal to develop an overarching and comprehensive EU strategy on sustainable finance as part of the Capital Markets Union.
The adoption of the guidelines will supplement the already existing EU rules on non-financial reporting (Directive 2014/95/EU). Companies falling within its scope have to disclose relevant information on policies, risks and results as regards environmental matters, social and employee-related aspects, as well as respect for human rights, anti-corruption and bribery issues, and diversity on the boards of directors.
The proposed guidelines reflect current best practices and most recent developments including lessons from the UN Sustainable Development Goals, the Paris Climate Agreement, the industry-led Task Force on climate-related financial disclosures set up by the Financial Stability Board, and the on-going work of the High-Level Group on Sustainable Finance established by the European Commission in the context of the Capital Markets Union initiative. The guidelines are voluntary and do not extend the scope of current rules in any way. Nor do they add undue administrative burden.
General information on non-financial reporting
Author: Marco Matrisciano (Abis - The Academy of Business in Society)