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*b v @ .} l @v c Z H v v 2 jx V [Z ,f \ ^ V V V z z fd B} 2 V V V a a a a V V V V V V V V V $ 0 : EUROPEAN PARLIAMENT2009 - 2014
Plenary sitting
A7-0006/2014
{08/01/2014}08.01.2014
***I
REPORT
on the proposal for a directive of the European Parliament and of the Council amending Council Directives 78/660/EEC and 83/349/EEC as regards disclosure of non-financial and diversity information by certain large companies and groups
(COM(2013)0207 C70103/2013 2013/0110(COD))
{JURI}Committee on Legal Affairs
Rapporteur: Raffaele Baldassarre
TITLE \* MERGEFORMAT PR_COD_1amCom
Symbols for procedures * Consultation procedure
*** Consent procedure
***I Ordinary legislative procedure (first reading)
***II Ordinary legislative procedure (second reading)
***III Ordinary legislative procedure (third reading)
(The type of procedure depends on the legal basis proposed by the draft act.)
Amendments to a draft actAmendments by Parliament set out in two columns
Deletions are indicated in bold italics in the left-hand column. Replacements are indicated in bold italics in both columns. New text is indicated in bold italics in the right-hand column.
The first and second lines of the header of each amendment identify the relevant part of the draft act under consideration. If an amendment pertains to an existing act that the draft act is seeking to amend, the amendment heading includes a third line identifying the existing act and a fourth lin e i d e n t i f y i n g t h e p r o v i s i o n i n t h a t a c t t h a t P a r l i a m e n t w i s h e s t o a m e n d .
A m e n d m e n t s b y P a r l i a m e n t i n t h e f o r m o f a c o n s o l i d a t e d t e x t
N e w t e x t i s h i g h l i g h t e d i n b o l d i t a l i c s . D e l e t i o n s a r e i n d i c a t e d u s i n g e i t h e r t h e %s y m b o l o r s t r i k e o u t . R e p l a c e m e n t s a r e indicated by highlighting the new text in bold italics and by deleting or striking out the text that has been replaced.
By way of exception, purely technical changes made by the drafting departments in preparing the final text are not highlighted.
CONTENTS
Page
TOC \t "PageHeading;1" DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION PAGEREF _Toc377112479 \h 5
EXPLANATORY STATEMENT PAGEREF _Toc377112480 \h 41
OPINION of the Committee on Foreign Affairs PAGEREF _Toc377112481 \h 45
OPINION of the Committee on Development PAGEREF _Toc377112482 \h 57
OPINION of the Committee on Economic and Monetary Affairs PAGEREF _Toc377112483 \h 84
OPINION of the Committee on Employment and Social Affairs PAGEREF _Toc377112484 \h 123
OPINION of the Committee on Industry, Research and Energy PAGEREF _Toc377112485 \h 139
OPINION of the Committee on the Internal Market and Consumer Protection PAGEREF _Toc377112486 \h 151
OPINION of the Committee on Women's Rights and Gender Equality PAGEREF _Toc377112487 \h 174
PROCEDURE PAGEREF _Toc377112488 \h 191
DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION
on the proposal for a directive of the European Parliament and of the Council amending Council Directives 78/660/EEC and 83/349/EEC as regards disclosure of non-financial and diversity information by certain large companies and groups
(COM(2013)0207 C70103/2013 2013/0110(COD))
(Ordinary legislative procedure: first reading)
The European Parliament,
having regard to the Commission proposal to Parliament and the Council (COM(2013)0207),
having regard to Article294(2) and Article50(1) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C70103/2013),
having regard to Article294(3) of the Treaty on the Functioning of the European Union,
having regard to the reasoned opinion submitted, within the framework of Protocol No2 on the application of the principles of subsidiarity and proportionality, by the Estonian Parliament, asserting that the draft legislative act does not comply with the principle of subsidiarity,
having regard to the opinion of the European Economic and Social Committee of 11 July 2013,
having regard to Rule55 of its Rules of Procedure,
having regard to the report of the Committee on Legal Affairs and the opinions of the Committee on Foreign Affairs, the Committee on Development, the Committee on Economic and Monetary Affairs, the Committee on Employment and Social Affairs, the Committee on Industry, Research and Energy, the Committee on the Internal Market and Consumer Protection and the Committee on Women's Rights and Gender Equality (A7-0006/2014),
1. Adopts its position at first reading hereinafter set out;
2. Calls on the Commission to refer the matter to Parliament again if it intends to amend its proposal substantially or replace it with another text;
3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.
Amendment 1
Proposal for a directive
Title
Text proposed by the CommissionAmendmentProposal for aProposal for aDIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCILDIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCILamending Council Directives 78/660/EEC and 83/349/EEC as regards disclosure of non-financial and diversity information by certain large companies and groupsamending Directive 2013/34/EU as regards disclosure of non-financial, specific financial and diversity information by certain large undertakings and groups(Text with EEA relevance)(Text with EEA relevance)
Amendment 2
Proposal for a directive
Recital 1
Text proposed by the CommissionAmendment(1) In its Communication to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions entitled 'Single Market Act Twelve levers to boost growth and strengthen confidence "Working together to create new growth"'9, adopted on 13 April 2011, the Commission identifies the need to improve the transparency of the social and environmental information provided by companies in all sectors, in order to ensure a level playing field.(1) In its Communication to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions entitled 'Single Market Act Twelve levers to boost growth and strengthen confidence "Working together to create new growth"'9, adopted on 13 April 2011, the Commission identifies the need to raise to a similarly high level the transparency of the social and environmental information provided by undertakings in all sectors across all Member States, in order to ensure a level playing field.____________________________________9 COM(2011) 206 final, 13 April 2011.9 COM(2011)0206.
Amendment 3
Proposal for a directive
Recital 2
Text proposed by the CommissionAmendment(2) The necessity to improve company disclosure of social and environmental information, by presenting a legislative proposal in this field, was reiterated in the Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions entitled A renewed EU strategy 2011-14 for Corporate Social Responsibility10 adopted on 25 October 2011.(2) The need to improve undertakings' disclosure of social and environmental information, by presenting a legislative proposal in this field, was reiterated in the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions entitled A renewed EU strategy 2011-14 for Corporate Social Responsibility10, adopted on 25 October 2011.____________________________________10 COM(2011) 681 final of 25 October 2011.10 COM(2011)0681.
Amendment 4
Proposal for a directive
Recital 3
Text proposed by the CommissionAmendment(3) The European Parliament has, in its resolutions of 6 February 2013 on, respectively, Corporate Social Responsibility: accountable, transparent and responsible business behaviour and sustainable growth11 and Corporate Social Responsibility: promoting society's interests and a tour to sustainable and inclusive recovery12 , acknowledged the importance of businesses divulging information on sustainability such as social and environmental factors, with a view to identifying sustainability risks and increasing investor and consumer trust, and called the Commission to bring forward a proposal on non-financial disclosure by companies.(3) The European Parliament, in its resolutions of 6 February 2013 on, respectively, Corporate social responsibility: accountable, transparent and responsible business behaviour and sustainable growth11 and Corporate social responsibility: promoting society's interests and a route to sustainable and inclusive recovery12, acknowledged the importance of businesses divulging information on sustainability such as social and environmental factors, with a view to identifying sustainability risks and increasing investor and consumer trust. Indeed, sustainability reporting is vital for managing change towards a sustainable global economy by combining long-term profitability with social justice and environmental protection. In this context, sustainability reporting helps measuring, monitoring and managing undertakings' performance and their impact on society. Thus, the European Parliament called on the Commission to bring forward a legislative proposal on the disclosure of non-financial information by undertakings allowing for high flexibility of action, in order to take account of the multi-dimensional nature of corporate social responsibility (CSR) and the diversity of the CSR policies implemented by businesses matched by a sufficient level of comparability to meet the needs of investors and other stakeholders as well as the need to provide consumers with easy access to information on businesses' impact on society.____________________________________11 Report on corporate social responsibility: accountable, transparent and responsible business behaviour and sustainable growth (2012/2098(INI)); Committee on Legal Affairs. HYPERLINK "http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+REPORT+A7-2013-0017+0+DOC+PDF+V0//EN&language=EN" http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+REPORT+A7-2013-0017+0+DOC+PDF+V0//EN&language=EN11 Report on corporate social responsibility: accountable, transparent and responsible business behaviour and sustainable growth (2012/2098(INI)); Committee on Legal Affairs. http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+REPORT+A7-2013-0017+0+DOC+PDF+V0//EN&language=EN12 Report on Corporate Social Responsibility: promoting society's interests and a route to sustainable and inclusive recovery (2012/2097(INI)); Committee on Employment and Social Affairs. HYPERLINK "http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+REPORT+A7-2013-0023+0+DOC+PDF+V0//EN&language=EN" http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+REPORT+A7-2013-0023+0+DOC+PDF+V0//EN&language=EN12 Report on Corporate Social Responsibility: promoting society's interests and a route to sustainable and inclusive recovery (2012/2097(INI)); Committee on Employment and Social Affairs. http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+REPORT+A7-2013-0023+0+DOC+PDF+V0//EN&language=EN
Amendment 5
Proposal for a directive
Recital 3 a (new)
Text proposed by the CommissionAmendment(3a) Evidence shows that disclosure of non-financial information improves undertakings management systems and internal policies, thereby reducing the negative social, environmental and human rights impacts caused by their activities. Evidence also shows that undertakings which conduct a proper analysis and disclose non-financial information increase their competitiveness and benefit from cost savings, easier access to capital and improved performance on financial markets, as well as improving their stability in the market and reducing possibilities of harm.
Amendment 6
Proposal for a directive
Recital 4
Text proposed by the CommissionAmendment(4) The coordination of national provisions concerning the disclosure of non-financial information in respect of large undertakings with limited liability is of importance for the interests of companies, shareholders and other stakeholders alike. Coordination is necessary in those fields because most of these undertakings operate in more than one Member State.(4) The coordination of national provisions concerning the disclosure of non-financial information in respect of large listed undertakings with limited liability is of importance for the interests of undertakings, shareholders and other stakeholders alike. Coordination is necessary in those fields because most of these undertakings operate in more than one Member State.
Amendment 7
Proposal for a directive
Recital 5
Text proposed by the CommissionAmendment(5) It is also necessary to establish a certain minimum legal requirement as regards the extent of the information that should be made available to the public by undertakings across the Union. Annual reports should give a fair and comprehensive view of an undertaking's policies, results, and risks.(5) It is also desirable to establish a certain minimum legal requirement as regards the extent of the information that should be made available to the public and authorities by undertakings across the Union. Management reports should give a fair and comprehensive view of an undertakings policies, results and risks, with the greater transparency in respect of nonfinancial aspects helping undertakings to manage risk more effectively and enhance their competitiveness.
Amendment 8
Proposal for a directive
Recital 6
Text proposed by the CommissionAmendment(6) In order to enhance consistency and comparability of non-financial information disclosed throughout the Union, companies should be required to include in their annual report a non-financial statement containing information relating to at least environmental matters, social and employee-related matters, respect for human rights, anti-corruption and bribery matters. Such statement should include a description of the policies, results, and the risks related to those matters.(6) In order to enhance consistency and comparability of non-financial information disclosed throughout the Union, undertakings should be required to include in their management report a non-financial statement containing information on the impact of the activities of the undertaking concerned relating to at least environmental matters, social and employee-related matters, respect for human rights, anti-corruption and bribery. Such statement should include a description of the policies, results, significant incidents which occurred during the reporting period and the risks related to those matters. The non-financial statement should also include information on the due diligence policies implemented by the undertaking, in particular regarding the undertakings' supply and subcontracting chains, in order to identify, prevent and mitigate existing and potential adverse impacts.
Amendment 9
Proposal for a directive
Recital 6 a (new)
Text proposed by the CommissionAmendment(6a) With regard to environmental matters, the statement should contain details of the current and foreseeable impacts of an undertaking's operations on the environment, health and safety, the use of renewable and non-renewable energy, greenhouse gas emissions, water use and air pollution. As regards social and employee-related matters, the information provided in the statement should concern, in particular, the relationships maintained by the undertaking with its supply and subcontracting chains, the actions taken to ensure gender equality, implementation of fundamental conventions of the International Labour Organisation (ILO), 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, as well as the actions taken to ensure the protection and the development of those communities. Social matters should also include responsible behaviour on tax planning to ensure that a fair share of tax is paid correctly and tax avoidance is averted. With regard to human rights, anti-corruption and bribery, the non-financial statement should include, as a minimum, information on the prevention of human rights abuses and instruments in place in order to fight corruption and bribery.
Amendment 10
Proposal for a directive
Recital 6 b (new)
Text proposed by the CommissionAmendment(6b) Undertakings should provide adequate information in relation to matters that stand out as being most likely to bring about the materialisation of risks of severe impacts, along with those that have already materialised. The severity of such impacts should be judged by their scale and gravity. The risks of adverse impact may stem from the undertaking's own activities or may be linked to its operations, products, services or business relationships, including with supply and subcontracting chains and other business partners.
Amendment 11
Proposal for a directive
Recital 6 c (new)
Text proposed by the CommissionAmendment(6c) The disclosure of information on impending developments or matters in the course of negotiation may lead to the disclosure of sensitive business information and, as a consequence, interfere with the business model and, ultimately, distort competition. For this reason, the members of the administrative, management, and supervisory bodies of undertakings should be given the possibility to decide whether to disclose such information if disclosure would be seriously prejudicial to the commercial position of the undertaking concerned and where, in the reasonable and duly justified opinion of the members of its administrative, management, and supervisory bodies, non-disclosure of that information would not be likely to mislead the public.
Amendment 12
Proposal for a directive
Recital 7
Text proposed by the CommissionAmendment(7) In providing this information, companies may rely on national frameworks, EU-based frameworks such as the Eco-Management and Audit Scheme (EMAS), and international frameworks such as the United Nations (UN) Global Compact, the Guiding Principles on Business and Human Rights implementing the UN Protect, Respect and Remedy Framework, the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, the International Organisation for Standardisation (ISO) 26000, the International Labour Organization (ILO) Tripartite Declaration of principles concerning multinational enterprises and social policy, and the Global Reporting Initiative.(7) In providing this information, undertakings should rely on the Guiding Principles on Business and Human Rights implementing the UN "Protect, Respect and Remedy" Framework, the United Nations (UN) Global Compact, the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises and the ILO Tripartite Declaration of principles concerning multinational enterprises and social policy. Undertakings may also rely on national frameworks, Union-based frameworks such as the Eco-Management and Audit Scheme (EMAS), and international frameworks such as the International Organisation for Standardisation (ISO) 26000, the Global Reporting Initiative, the Carbon Disclosure Project (CDP) and the Climate Disclosure Standards Board (CDSB). In their statement, undertakings should specify which framework(s) they have relied upon. In order to enhance consistency and comparability of non-financial information provided by undertakings, the Commission should develop, with the involvement of all relevant stakeholders, guidelines on methodology and the use of international standards.
Amendment 13
Proposal for a directive
Recital 7 a (new)
Text proposed by the CommissionAmendment(7a) Member States should ensure that adequate and effective means exist to guarantee disclosure of non-financial information by undertakings in compliance with the provisions of this Directive. To that end, Member States should ensure that effective national procedures are in place to enforce compliance with the obligations of this Directive and that those procedures are available for all persons and legal entities having a legitimate interest, in accordance with national law, in ensuring that the provisions of this Directive are respected.
Amendment 14
Proposal for a directive
Recital 8
Text proposed by the CommissionAmendment(8) Paragraph 47 of the final declaration of the United Nations Rio +20 conference, The Future We Want13, recognises the importance of corporate sustainability reporting and encourages companies, where appropriate, to consider integrating sustainability information into their reporting cycle. It also encourages industry, interested governments and relevant stakeholders with the support of the United Nations system, as appropriate, to develop models for best practice and facilitate action for the integration of financial and non-financial information, taking into account experiences from already existing frameworks.(8) Paragraph 47 of the final declaration of the United Nations Rio +20 conference, The Future We Want13, recognises the importance of corporate sustainability reporting and encourages undertakings, where appropriate, to consider integrating sustainability information into their reporting cycle. It also encourages industry, interested governments and relevant stakeholders with the support of the United Nations system, as appropriate, to develop models for best practice and facilitate action for the integration of financial and non-financial information, taking into account experiences from already existing frameworks. Consequently, Union undertakings should, under this Directive, be required to publish their non-financial statement as part of their financial statement.____________________________________13 United Nations, The Future We Want, Outcome Document of the United Nations Conference on Sustainable Development RIO+20, A/CONF.216/L.113 United Nations, The Future We Want, Outcome Document of the United Nations Conference on Sustainable Development RIO+20, A/CONF.216/L.1
Amendment 15
Proposal for a directive
Recital 9
Text proposed by the CommissionAmendment(9) Investors' access to non-financial information is a step towards reaching the milestone of having in place by 2020 market and policy incentives rewarding business investments in efficiency under the Roadmap to a Resource Efficient Europe14.(9) Investors' access to non-financial information is a step towards reaching the milestone of having in place by 2020 market and policy incentives rewarding business investments in efficiency under the Roadmap to a Resource Efficient Europe14. Non-financial reporting can also help the Union to reach additional milestones under that Roadmap, in particular that of halving food waste by 2020.____________________________________14 COM(2011) 571 final of 20 September 201114 COM(2011)0571.Justification
About 90 million tonnes of food are wasted annually in Europe. Considering such waste occurs across the entire food supply chain and there are fundamental information gaps as a very limited number of EU companies currently publish food waste data, reporting is essential to help achieve the EU 2020 target of halving disposal of edible food set up in the Roadmap for a Resource Efficient Europe. In order to ensure transparency, companies should report on food waste as an example of the kind of environmental and social impacts generated by the activities of the company.
Amendment 16
Proposal for a directive
Recital 9 a (new)
Text proposed by the CommissionAmendment(9a) Access by investors to non-financial information should also help to channel investment into undertakings with high social standards.
Amendment 17
Proposal for a directive
Recital 9 b (new)
Text proposed by the CommissionAmendment(9b) In addition to non-financial reporting encouraged at Union level, international efforts to improve transparency in financial reporting have been noted. Country-by-country reporting in the extractives sector has been legislated for by both the European Union and the United States, while within the context of the G8 and the G20, which includes four Member States and involves the European Commission, the OECD has been asked to draw up a standardised reporting template for multi-national undertakings to report to tax authorities where they make their profits and pay taxes around the world. Such developments improving transparency in financial reporting complement the proposals contained in this Directive, as appropriate measures for their respective purposes, be they national, pan-European or international in scale and possible risk.
Amendment 18
Proposal for a directive
Recital 10
Text proposed by the CommissionAmendment(10) The European Council of 24 and 25 March 2011 called for the overall regulatory burden, in particular for small and medium-sized enterprises (SMEs), to be reduced at both European and national levels and suggested measures to increase productivity while the Europe 2020 Strategy for smart, sustainable and inclusive growth aims to improve the business environment for SMEs and to promote their internationalisation. Thus, according to the think-small-first principle, the disclosure requirements under Directive 78/660/EEC and Directive 83/349/EEC should only apply to certain large undertakings and groups.(10) The European Council of 24 and 25 March 2011 called for the overall regulatory burden, in particular for small and medium-sized enterprises (SMEs), to be reduced at both European and national levels, welcomed the intention of the Commission to propose ways of exempting micro-enterprises from certain regulations, and suggested measures to increase productivity while the Europe 2020 Strategy for smart, sustainable and inclusive growth aims to improve the business environment for SMEs and to promote their internationalisation. Thus, according to the think-small-first principle, the disclosure requirements under Directive 2013/34/EU should apply only to certain large undertakings and groups.
Amendment 19
Proposal for a directive
Recital 10 a (new)
Text proposed by the CommissionAmendment(10a) Small and medium-sized enterprises should under no circumstances be required to deliver non-financial statements regarding their voluntary social activities, since this would give rise to excessive administrative costs, destroy jobs and undermine rather than promote corporate social engagement.
Amendment 20
Proposal for a directive
Recital 10 b (new)
Text proposed by the CommissionAmendment(10b) The requirement to disclose non-financial information includes striking a balance between environmental results and social results, in order to ensure that such disclosure is in keeping with CSR principles and is not confined solely to environmental data.
Amendment 21
Proposal for a directive
Recital 11
Text proposed by the CommissionAmendment(11) The scope of these non-financial disclosure requirements should be defined by reference to the average number of employees, total assets and turnover. SMEs should be exempted from additional requirements, and the obligation to disclose a non-financial statement in the annual report should only apply to those companies whose average number of employees exceeds 500, and exceed either a balance sheet total of EUR 20 million or a net turnover of EUR 40 million.(11) The scope of these non-financial disclosure requirements should be defined by reference to the average number of employees, balance-sheet total and net turnover. Microenterprises and SMEs should be exempted from additional requirements, and the obligation to disclose a non-financial statement in the management report should only apply to those large undertakings and groups whose average number of employees exceeds 500.
Amendment 22
Proposal for a directive
Recital 11 a (new)
Text proposed by the CommissionAmendment(11a) For the purposes of adopting the criteria for determining which bodies are to be covered by the obligation to disclose nonfinancial information, differences in the levels of economic development in the individual Member States should be taken into account, and regard should be had to the fact that, in order to achieve the same outcome from economic activity, undertakings in different countries will require a different average number of employees. Therefore, in the selection of criteria for determining which bodies are to be covered by these new reporting requirements, greater emphasis should be placed on the balancesheet amount or on net turnover.
Amendment 23
Proposal for a directive
Recital 12
Text proposed by the CommissionAmendment(12) Some of the companies and groups falling under the scope of Directive 78/660/EEC and Directive 83/349/EEC already prepare non-financial reports on a voluntary basis. Those companies should not be subject to the obligation to provide a non-financial statement in the annual report, provided that the report corresponds to the same financial year, covers at least the same content required by this Directive, and is annexed to the annual report.(12) Some of the undertakings and groups falling under the scope of Directive 2013/34/EU already prepare non-financial reports on a voluntary basis. Those undertakings should not be subject to the obligation to provide a non-financial statement in the management report, provided that the report corresponds to the same financial year, covers at least the same content as required by this Directive, and is annexed to the management report.
Amendment 24
Proposal for a directive
Recital 13
Text proposed by the CommissionAmendment(13) Many of the undertakings which fall under the scope of Directive 78/660/EEC are members of groups of undertakings. Consolidated annual reports should be drawn up so that the information concerning such groups of undertakings may be conveyed to members and third parties. National law governing consolidated annual reports should therefore be coordinated in order to achieve the objectives of comparability and consistency of the information which undertakings should publish within the Union.(13) Many of the undertakings which fall under the scope of Directive 2013/34/EU are members of groups of undertakings. Consolidated management reports should be drawn up so that the information concerning such groups of undertakings may be conveyed to members and third parties. National law governing consolidated management reports should therefore be coordinated in order to achieve the objectives of comparability and consistency of the information which undertakings should publish within the Union.
Amendment 25
Proposal for a directive
Recital 15
Text proposed by the CommissionAmendment(15) Diversity of competences and views of the members of administrative, management and supervisory bodies of companies facilitates a good understanding of the business organisation and affairs. It enables members of these bodies to exercise a constructive challenge of the management decisions and to be more open to innovative ideas, addressing the similarity of views of members, the group-think phenomenon. It contributes thus to effective oversight of the management and a successful governance of the company. It would therefore be important to enhance transparency regarding the diversity policy companies have in place. This would inform the market of corporate governance practices and thus put indirect pressure on companies to have more diversified boards.(15) Diversity of competences and views of the members of administrative, management and supervisory bodies of undertakings facilitates a good understanding of the business organisation and affairs. It enables members of these bodies to exercise a constructive challenge of the management decisions and to be more open to innovative ideas, addressing the similarity of views of members, the group-think phenomenon. It contributes thus to effective oversight of the management and a successful governance of the undertaking. It would therefore be important to enhance transparency regarding the diversity policy which undertakings have in place. This would inform the market of corporate governance practices and thus put indirect pressure on undertakings to have more diversified boards. In this context, employee representation in management bodies could be seen as a positive way of enhancing diversity.
Amendment 26
Proposal for a directive
Recital 16
Text proposed by the CommissionAmendment(16) The obligation to disclose their diversity policies for their administrative, management and supervisory bodies with regard to aspects such as age, gender, geographical diversity, educational and professional background should only apply to large listed companies. Therefore small and medium-sized companies that may be exempted from certain accounting obligations under article 27 of Directive 78/660/EEC should not be covered to by this obligation. Disclosure of the diversity policy should be part of the corporate governance statement, as laid down by Article 46a of Directive 78/660/EEC. Companies not having a such a diversity policy should not be obliged to put one in place, but they should clearly explain why this is the case.(16) The obligation to disclose their diversity policies for their administrative, management and supervisory bodies with regard to gender and other aspects such as age, ethnical origin, disability, educational and professional background should apply only to large listed undertakings. Disclosure of the diversity policy should be part of the corporate governance statement, as laid down by Article 20 of Directive 2013/34/EU. Undertakings not having such a diversity policy should not be obliged to put one in place, but they should clearly explain why this is the case.
Amendment 27
Proposal for a directive
Recital 17
Text proposed by the CommissionAmendment(17) Since the objective of this Directive, namely to increase the relevance, consistency and comparability of information disclosed by companies across the Union, cannot be sufficiently achieved by the Member States, and can therefore by reason of its effect be better achieved at Union level, the Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary to achieve the pursued objective.(17) Since the objective of this Directive, namely to increase the relevance, consistency, transparency and comparability of information disclosed by undertakings across the Union, cannot be sufficiently achieved by the Member States, and can therefore by reason of its effect be better achieved at Union level, the Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary to achieve the pursued objective.
Amendment 28
Proposal for a directive
Recital 19
Text proposed by the CommissionAmendment(19) Directives 78/660/EEC and 83/349/EEC should therefore be amended accordingly,(19) Directive 2013/34/EU should therefore be amended accordingly,
Amendment 29
Proposal for a directive
Article 1 title
Text proposed by the CommissionAmendmentAmendments to Directive 78/660/EECAmendments to Directive 2013/34/EU
Amendment 30
Proposal for a directive
Article 1 introductory part
Text proposed by the CommissionAmendmentDirective 78/660/EEC is amended as follows:Directive 2013/34/EU is amended as follows:
Amendment 31
Proposal for a directive
Article 1 point 1
Directive 78/660/EEC
Article 46
Text proposed by the CommissionAmendment(1) Article 46 is amended as follows:deleted(a) Paragraph 1 is replaced by the following:'1. (a) The annual report shall include a fair review of the development and performance of the company's business and of its position, together with a description of the principal risks and uncertainties that it faces. The review shall be a balanced and comprehensive analysis of the development and performance of the company's business and of its position, consistent with the size and complexity of the business.(b) For companies whose average number of employees during the financial year exceeds 500 and, on their balance sheet dates, exceed either a balance sheet total of EUR 20 million or a net turnover of EUR 40 million, the review shall also include a non-financial statement containing information relating to at least environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters, including: (i) a description of the policy pursued by the company in relation to these matters;(ii) the results of these policies;(iii) the risks related to these matters and how the company manages those risks.Where a company does not pursue policies in relation to one or more of these matters, it shall provide an explanation for not doing so.In providing such information the company may rely on national, EU-based or international frameworks and, if so, shall specify which frameworks it has relied upon.(c) To the extent necessary for an understanding of the company's development, performance or position, the analysis shall include both financial and non-financial key performance indicators relevant to the particular business.(d) In providing its analysis, the annual report shall, where appropriate, include references to and additional explanations of amounts reported in the annual accounts.'(b) Paragraph 4 is replaced by the following: '4. Where a company prepares a comprehensive report corresponding to the same financial year relying on national, EU-based or international frameworks and which covers the information provided for in paragraph 1(b), it shall be exempt from the obligation to prepare the non-financial statement set out in paragraph 1(b), provided that such report is part of the annual report.' (c) The following paragraph 5 is added: '5. A company which is a subsidiary company shall be exempt from the obligations set out in paragraph 1(b), if the company and its subsidiaries are consolidated in the financial statements and annual report of another company and that consolidated annual report is drawn up in accordance with Article 36(1) of Directive 83/349/EEC.'See amendment to Article 19 of Directive 2013/34/EU.
Amendment 32
Proposal for a directive
Article 1 point 2
Directive 78/660/EEC
Article 46a
Text proposed by the CommissionAmendment(2) Article 46a is amended as follows:deleted(a) In paragraph 1, the following point (g) is added:'(g) a description of the company's diversity policy for its administrative, management and supervisory bodies with regard to aspects such as age, gender, geographical diversity, educational and professional background, the objectives of this diversity policy, how it has been implemented and the results in the reporting period. If the company has no such policy, the statement shall contain a clear and reasoned explanation as to why this is the case. '(b) The following paragraph 4 is added: '4. Point (g) of paragraph 1 does not apply to companies within the meaning of Article 27. 'See amendment to Article 20 of Directive 2013/34/EU.
Amendment 33
Proposal for a directive
Article 1 point 3
Directive 78/660/EEC
Article 53a
Text proposed by the CommissionAmendment(3) Article 53a is replaced by the following:deleted'Article 53aMember States shall not make available the exemptions set out in Article 1a, 11, Article 27, points (7a) and (7b) of Article 43(1), Article 46(3), Article 47 and Article 51 of this Directive in the case of companies whose securities are admitted to trading on a regulated market within the meaning of point (14) of Article 4(1) of Directive 2004/39/EC.'
Amendment 34
Proposal for a directive
Article 1 point 3 a (new) introductory wording
Directive 2013/34/EU
Article 19
Text proposed by the CommissionAmendment(3a) Article 19 is amended as follows:
Amendment 35
Proposal for a directive
Article 1 point 1 point a
Directive 2013/34/EU
Article 19 paragraph 1 subparagraph 1
Text proposed by the CommissionAmendment'1. The management report shall include a fair review of the development and performance of the undertaking's business and of its position, together with a description of the management of the principal risks and uncertainties that it faces.
Amendment 36
Proposal for a directive
Article 1 point 3 a (new) point a
Directive 2013/34/EU
Article 19 paragraph 1 subparagraph 3
Text proposed by the CommissionAmendment(a) The third subparagraph of paragraph 1 is deleted;
Amendment 37
Proposal for a directive
Article 1 point 3 a (new) point b
Directive 2013/34/EU
Article 19 paragraphs 1 a to 1 d (new)
Text proposed by the CommissionAmendment(b) The following paragraphs are inserted:'1a. For large undertakings whose average number of employees during the financial year exceeds 500, the review shall also include a non-financial statement containing information on the impact of the undertaking's activities relating to, as a minimum, environmental, social and employee matters, including social dialogue, and respect for human rights, the fight against corruption and bribery, including:(a) a description of the policy pursued by the undertaking in relation to those matters, including due diligence policies which have been implemented, in particular with regard to its supply and subcontracting chains;(b) the results of those policies;(c) significant incidents which occurred during the reporting period in relation to those matters;(d) the principal risks related to those matters linked to the undertaking's activities, operations, products, services or business relationships which are likely to cause adverse impacts in those areas and the way in which the undertaking manages those risks.To the extent necessary for an understanding of the undertaking's development, performance or position, the review shall also include:(a) a description of the undertaking's commercial strategy,(b) a description of the undertaking's business model.Where the undertaking does not pursue policies in relation to one or more of those matters, the review shall provide a clear and duly justified explanation for not doing so.Information relating to impending developments or matters in the course of negotiation need not be disclosed where, in the reasonable and duly justified opinion of the members of the administrative, management, and supervisory bodies:(a) the disclosure of such information would be seriously prejudicial to the commercial position of the undertaking; (b) the non-disclosure of this information would not be likely to mislead the public. Where, pursuant to this paragraph, the undertaking has not disclosed information, it shall provide a duly justified statement to this effect.In providing the information required by the first subparagraph, the undertaking shall rely as minimum on the Guiding Principles on Business and Human Rights implementing the United Nations "Protect, Respect and Remedy" Framework, the United Nations (UN) Global Compact, the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises and the ILO Tripartite Declaration of principles concerning multinational enterprises and social policy. The undertaking may additionally rely on other national, Union-wide or international frameworks, and, if so, it shall clearly specify which frameworks it has relied upon.1b. To the extent necessary for an understanding of the current and future development of the undertaking, its performance or position, or of the impact of its activity relating to the matters defined in paragraph 1, and for the transparency and comparability of the review, the analysis referred to in paragraph 1 shall include both financial and non-financial key performance indicators relevant to the particular business.1c. In providing the analysis referred to in paragraph 1, the management report shall, where appropriate, include references to, and additional explanations of, amounts reported in the annual financial statements.1d. The Commission shall develop, with the involvement of all relevant stakeholders, guidelines on the methodology and use of international standards and non-financial performance indicators as referred to in paragraphs 1a and 1b in order to assist undertakings in their reporting.The guidelines shall contain sectoral key performance indicators (KPIs) relating to the matters on which information has to be provided. The KPIs developed in relation to environmental matters shall cover, as a minimum, land use, water use, greenhouse gas emissions and use of materials.The Commission shall publish the guidelines 12 months after the entry into force of this Directive. It shall submit a report to the European Parliament and the Council on the development of the guidance, at the latest 24 months after the entry into force of this Directive.
Amendment 38
Proposal for a directive
Article 1 point 3 a (new) point c (new)
Directive 2013/34/EU
Article 19 paragraph 4
Text proposed by the CommissionAmendment(c) Paragraph 4 is replaced by the following:4. Where an undertaking prepares a comprehensive report corresponding to the same financial year which relies on national, Union-based or international frameworks and which covers the information provided for in paragraphs 1a, 1b or 1c in accordance with the specific rules laid down therein, it shall be exempt from the obligation to prepare the non-financial statement provided for in paragraph 1a, provided that such report forms part of the management report.'
Amendment 39
Proposal for a directive
Article 1 point 3 a (new) point d (new)
Directive 2013/34/EU
Article 19 paragraphs 4 a and 4 c (new)
Text proposed by the CommissionAmendment(d) The following paragraphs are added:'4a. Member States may exempt public-interest entities from the obligation set out in the second subparagraph of Article 34(1) in so far as it relates to paragraph 1a.4b. Member States may exempt small and medium-sized undertakings from the obligations set out in paragraph 1b and 1c in so far as they relate to non-financial information.4c. An undertaking which is a subsidiary undertaking shall be exempt from the obligations laid down in paragraph 1a if that undertaking and its subsidiary undertakings are included in the consolidated financial statements and consolidated management report of another undertaking and that consolidated management report is drawn up in accordance with Article 29.The persons conducting the audit shall check only whether the information referred to in paragraph 1(a) has been given.'
Amendment 40
Proposal for a directive
Article 1 point 3 b (new) introductory wording
Directive 2013/34/EU
Article 20
Text proposed by the CommissionAmendment(3b) Article 20 is amended as follows:
Amendment 41
Proposal for a directive
Article 1 point 3 b (new) point a
Directive 2013/34/EU
Article 20 paragraph 1 point f a (new)
Text proposed by the CommissionAmendment(a) In paragraph 1, the following point is added:'(fa) a description of the undertaking's diversity policy for its administrative, management and supervisory bodies with regard to gender and other aspects such as age, disability, ethnic origin, educational and professional background, the objectives of the diversity policy, the way in which it has been implemented and the results in the reporting period. If the undertaking has no such policy, the statement shall contain an explanation as to why this is the case.';
Amendment 42
Proposal for a directive
Article 1 point 3 b (new) point b
Directive 2013/34/EU
Article 20 paragraph 3
Text proposed by the CommissionAmendment(b) Paragraph 3 is replaced by the following:'3. The statutory auditor or audit firm shall express an opinion in accordance with the second subparagraph of Article 34(1) regarding information prepared under points (c) and (d) of paragraph 1 of this Article and shall check that the information referred to in points (a), (b), (e), (f) and (fa) of paragraph 1 of this Article has been provided.':
Amendment 43
Proposal for a directive
Article 1 point 3 b (new) point c
Directive 2013/34/EU
Article 20 paragraph 4 a (new)
Text proposed by the CommissionAmendment(c) The following paragraph is added:'4a. Notwithstanding Article 40, point (fa) of paragraph 1 of this Article shall not apply to small and medium-sized undertakings.';
Amendment 44
Proposal for a directive
Article 1 point 3 c (new) introductory wording
Directive 2013/34/EU
Article 29
Text proposed by the CommissionAmendment(3c) Article 29 is amended as follows:
Amendment 45
Proposal for a directive
Article 1 point 3 c (new) point a
Directive 2013/34/EU
Article 29 paragraph 1a (new)
Text proposed by the CommissionAmendment(a) The following paragraphs are inserted:1a. For the purposes of paragraph 1, the review of the parent undertaking of a large group whose average number of employees during the financial year exceeds 500 shall also include a non-financial statement containing information on the impact of the undertaking's activities relating to, as a minimum, environmental, social and employee matters, including social dialogue, and respect for human rights, the fight against corruption and bribery, including:(a) a description of the policy pursued by the group in relation to those matters, including due diligence policies which have been implemented, in particular with regard to its supply and subcontracting chains;(b) the results of those policies;(ba) significant incidents which occurred during the reporting period in relation to those matters;(c) the principal risks related to those matters linked to the group's activities, operations, products, services or business relationships which are likely to cause adverse impacts in those areas and how the group manages those risks.Where the group does not pursue policies in relation to one or more of those matters, the review shall provide a clear and duly justified explanation for not doing so.In providing the information required by the first subparagraph, the parent undertaking shall rely as minimum on the Guiding Principles on Business and Human Rights implementing the United Nations "Protect, Respect and Remedy" Framework, the United Nations (UN) Global Compact, the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises and the ILO Tripartite Declaration of principles concerning multinational enterprises and social policy. The parent undertaking may additionally rely on other national, Union-wide or international frameworks and, if so, it shall clearly specify which frameworks it has relied upon.1b. The Commission shall develop, with the involvement of all relevant stakeholders, guidelines on the methodology and use of international standards and non-financial performance indicators as referred to in Article 19(1a) and (1b) in order to assist undertakings in their reporting.The guidelines shall contain sectoral key performance indicators (KPIs) relating to the matters on which information has to be provided. The KPIs developed in relation to environmental matters shall cover, as a minimum, land use, water use, greenhouse gas emissions and use of materials.The Commission shall publish the guidelines 12 months after the entry into force of this Directive. It shall submit a report to the European Parliament and the Council on the development of the guidance, at the latest 24 months after the entry into force of this Directive.
Amendment 46
Proposal for a directive
Article 1 point 3 c (new) point b
Directive 2013/34/EU
Article 29 paragraphs 3a and 3b (new)
Text proposed by the CommissionAmendment(b) The following paragraphs are added:3a. For the purposes of paragraph 1, where a parent undertaking prepares a comprehensive report corresponding to the same financial year and referring to the entire group, relying on national, Union-based or international frameworks and covering the information provided for in paragraph 1a in accordance with the specific rules laid down therein, the parent undertaking shall be exempt from the obligation to prepare the non-financial statement provided for in paragraphs 1a, 1b and 1c provided that such comprehensive report forms part of the consolidated management report.3b. For the purposes of paragraph 1 of this Article, a parent undertaking which is also a subsidiary undertaking shall be exempt from the obligations laid down in paragraph 1a if the exempted undertaking and its subsidiaries are included in the consolidated financial statements and consolidated management report of another undertaking and that consolidated management report is drawn up in accordance with this Article.';
Amendment 47
Proposal for a directive
Article 1 point 3 d (new)
Directive 2013/34/EU
Article 48 paragraph 3 a (new)
Text proposed by the CommissionAmendment(3a) In Article 48, the following paragraph is inserted:'The report shall consider the introduction of an obligation requiring large undertakings and all public-interest entities to publicly disclose, on an annual basis, a country-by-country report for each Member State and third country in which they operate, containing information on, as a minimum, profits made, taxes paid on profits and public subsidies received.'.
Amendment 48
Proposal for a directive
Article 2
Directive 83/349/EEC
Article 36
Text proposed by the CommissionAmendmentArticle 2deletedAmendments to Directive 83/349/EECDirective 83/349/EEC is amended as follows: (1) Article 36 is amended as follows:(a) Paragraph 1 is replaced by the following: '1. The consolidated annual report shall include a fair review of the development and performance of the business and of the position of the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.The review shall analyse in a balanced manner the development and performance of the business and the position of the undertakings included in the consolidation taken as a whole, consistent with the size and complexity of the business.For parent undertakings of undertakings to be consolidated that together exceed an average number of 500 employees during the financial year, and, on their balance sheet dates, exceed either a balance sheet total of EUR 20 million or a net turnover of EUR 40 million, the review shall also include a non-financial statement containing information relating to at least environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters, including the following: (i) a description of the policy pursued by the company in relation to these matters; (ii) the results of these policies; (iii) the risks related to these matters and how the company manages those risks.Where the undertakings included in the consolidation taken as a whole do not pursue policies in relation to one or more of these matters, the company shall provide an explanation for not doing so.In providing such information the consolidated annual report may rely on national, EU-based or international frameworks and if so, shall specify which frameworks it has relied upon.To the extent necessary for an understanding of such development, performance or position, the analysis shall include both financial and non-financial key performance indicators relevant to the particular business.In providing its analysis, the consolidated annual report shall, where appropriate, provide references to and additional explanations of amounts reported in the consolidated accounts. '(b) The following paragraphs 4 and 5 are added:'4. Where a parent undertaking prepares a comprehensive report corresponding to the same financial year, referring to the whole group of consolidated undertakings, relying on national, EU-based or international frameworks and covering the information provided for in the third subparagraph of paragraph 1, the parent undertaking shall be exempt from the obligation to prepare the non-financial statement set out in the third subparagraph of paragraph 1, provided that such comprehensive report is part of the consolidated annual report. 5. A parent undertaking which is also a subsidiary undertaking shall be exempt from the obligations set out in the third subparagraph of paragraph 1, if the exempted undertaking and its subsidiaries are consolidated in the financial statements and annual report of another undertaking, and that consolidated annual report is drawn up in accordance with the third subparagraph of paragraph 1. 'See amendments to Article 29 of Directive 2013/34/EU.
Amendment 49
Proposal for a directive
Article 2 a (new) point l
Directive 2013/34/EU
Article 53 a (new)
Text proposed by the CommissionAmendment(1) The following Article 53a is inserted:'Article 53aRevisionNo later than three years after the entry into force of this Directive, the Commission shall review its provisions and submit a report to the European Parliament and Council, accompanied, if appropriate, by legislative proposals concerning: the non-financial information disclosed and its scope, including the coverage of the supply and subcontracting chains; the transparency and comparability of the non-financial information provided by the undertakings and whether the aims of the legislation are being fulfilled; whether adequate guidance and methods are provided and whether non-financial reporting would benefit from binding Union guidelines, including Union-wide key performance indicators (KPIs) in the matters on which information has to be provided; the judicial and/or administrative procedures for the enforcement of obligations under this Directive, including procedures available to interested third parties, within the Member States; the progress with non-financial reporting throughout the world.'
Amendment 50
Proposal for a directive
Article 4 title
Text proposed by the CommissionAmendmentEntry into forceEntry into force and consolidation
Amendment 51
Proposal for a directive
Article 4 paragraph 1
Text proposed by the CommissionAmendmentThis Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. It shall be consolidated with the Directive which it amends within three months of its entry into force.Justification
The consolidated versions of the amended directives should be made available and published promptly.
EXPLANATORY STATEMENT
1. Introduction.
1.1 What is the added value of the disclosure of non-financial and diversity information?
The growing recognition of the socially responsible role that can be played by business may be interpreted in various ways. On the one hand, the emergence of global markets is encouraging the development of social and environmental standards by undertakings; on the other, an increasingly attentive and informed civil society is calling for more responsible behaviour from undertakings. This twin driving force behind the development of CSR is a reflection of the community of interests between business and society as a whole.
Corporate social responsibility is thus a key factor in competitiveness. This does not mean that all CSR measures will automatically make a business more competitive. It means that measures that create shared value for a business, its stakeholders and society at large can make that business stronger.
In this regard, greater transparency on non-financial aspects can help undertakings better to manage risks and become more competitive. At the same time, a more informed civil society is better able to assess and, accordingly, support, the business operations, products and services offered by an undertaking. Equally, potential investors can better determine the sustainability, and thus long-term profitability, of their investments.
Likewise, increased transparency and disclosure of diversity information can make it easier to forecast risks and increase the competitiveness of a business. As indicated by a solid body of research, more heterogeneous company boards have a positive impact on the business activities of an undertaking and on the far-sightedness of its policies.
1.2 The current situation and the need for clearer rules.
The disclosure of non-financial information by undertakings has, up to now, been regulated by the so-called Accounting Directives, which were recently recast into a single directive. Nationally, some Member States have adopted more stringent legislation, while several non-member states have introduced legislative provisions which, albeit to varying extents, lay down non-financial reporting requirements.
The proposal under consideration is, therefore, in line with international regulatory developments and with the ever-increasing need for greater transparency as regards non-financial information. Indeed, as highlighted in the assessment carried out by the Commission, only around 2 500 out of a total of 42 000 EU large companies formally disclose non-financial information on a yearly basis.
Obviously, the current situation does not meet the needs of internal and external business stakeholders. That is why a clearer, uniform set of rules is needed at EU level, to introduce requirements restricted to a number of key issues aiming to improve the quantity, quality and comparability of information.
1.3 The Commission proposal.
The proposal makes some changes to the Accounting Directive, requiring large undertakings and groups to provide a specific analysis relating to non-financial information. Such a statement, annexed to the management report, must contain key information relating to at least environmental, social and employee matters, respect for human rights and the fight against corruption. In addition, large listed companies will have to provide information on their diversity policy, including aspects concerning the age, gender, geographical diversity and educational and professional background of their staff.
The regulatory principle chosen is that of comply or explain. Accordingly, where a company does not pursue policies in relation to one or more of these matters, it will have to provide an explanation for not doing so.
2. The rapporteurs view
2.1 Preliminary remarks
Broadly speaking, your rapporteur agrees with the Commissions regulatory approach. This approach responds to the request of Parliament, which came out in favour of the adoption of a legislative proposal on non-financial reporting that would allow high flexibility of action, in order to take account of CSR's multi-dimensional nature and the diversity of the CSR policies implemented by businesses and that, at the same time, would provide a sufficient level of comparability to meet the needs of investors and other stakeholders as well as the need to provide consumers with easy access to information on businesses impact on society.
In view of these considerations, which identify two key principles for your rapporteurs amendments, such as flexibility and comparability, your rapporteur considers it necessary to clarify the value of the comply or explain principle, in order to avoid any misunderstanding as to the binding nature of the provisions. This principle does not leave undertakings free to choose whether to disclose the information required by the legislation or to refrain from doing so. On the contrary, the proposal introduces a dual requirement for undertakings: on the one hand, they have to report on certain aspects (comply), while, on the other, they have to provide an explanation should they fail to implement policies regarding one or more aspects ('explain').
2.2 Key changes made
Having made a series of technical amendments, to bring the text of the proposal into line with the substance of the new Accounting Directive, your rapporteur considers it appropriate to clarify some of the aspects of the legislation, in order to avoid any legal uncertainty and ensure that the provisions are interpreted in as uniform a manner as possible.
As regards matters relating to reporting, a new recital sets out the main issues to be reported on. Environmental information, for instance, will have to include greenhouse gas emissions, air pollution and the use of renewable energy. With reference to social and staff-related matters, the information should concern, amongst other things, the implementation of fundamental International Labour Organization (ILO) conventions, working conditions and social dialogue. Information relating to human rights and the fight against corruption, however, will have to include at least data concerning the prevention of human rights infringements and explanations as to the tools used by the undertaking to combat corruption and bribery.
In keeping with the goal of clarifying the rules, some of the proposed amendments clarify the concept of risk. In this regard, your rapporteur would propose linking that concept to the activities, operations, products or business relationships of undertakings, which are more likely to have adverse effects on the matters included in the reporting.
Your rapporteur is concerned about the adverse impact that risk reporting might have on the business and future development of an undertaking. Since such information is particularly sensitive, its disclosure could undermine the undertakings business strategies and have a negative impact on competition dynamics. For this reason, your rapporteur proposes limiting the disclosure of information only to risks that are deemed to be principal, whilst giving the decision-making or supervisory bodies of an undertaking the option not to disclose information relating to risks or to negotiations under way, where such disclosure would seriously jeopardise the interests of the undertaking.
Your rapporteur is against any extension of reporting requirements to the supply and sub-contracting chain, or to the entire value chain. The proposal under consideration is, in fact, a first step towards greater constraints on undertakings as far as CSR is concerned, and as such, it should restrict itself to introducing primary obligations, which can be developed, if necessary, at a later stage once a prior analysis has been made of the impact of the new provisions.
Your rapporteur considers it possible and advisable, however, to extend the scope of the provisions to so-called due diligence processes, where these have been implemented by an undertaking in relation to disclosure-related matters. To that end, the draft report introduces an amendment, on the basis of which, as part of the description of the policy pursued in relation to the issues for which reporting is required, undertakings may refer to the due diligence processes they have implemented, where these exist.
Lastly, your rapporteur agrees with the Commissions decision to allow national, EU and international standards to be used flexibly in order to provide the information requested. That said, your rapporteur is of the view that in order to ensure greater comparability of information, as a general rule, the use of certain institutionally-recognised standards needs to be promoted.
3. Conclusions.
On 22 May 2013, in the context of the fight against tax evasion and tax fraud, the European Council, in its conclusions, called for rapid progress on the proposal amending the Directives on disclosure of non-financial and diversity information by large companies and groups, with a view to ensuring country-by-country reporting by large companies and groups.
Your rapporteur agrees with the need highlighted by heads of state and government to implement more stringent policies to combat tax evasion, especially because of the transfer of capital to third countries, or so-called tax havens. Greater transparency in such matters could also increase consumer confidence in the operations of large undertakings and multinationals. Equally, investors would have more information available in order to analyse the economic, political or reputation-related risks of undertakings, or to understand how solid a business is and whether it has a geographically diversified company portfolio so that it is better able to react to any economic shocks.
That said, your rapporteur is of the view that any legislative measures regarding such matters should take account of the diversity of sectors and legislations in which undertakings operate. In some legal systems, for example, certain information might fall under the definition of state secret or trade secret, resulting in legal uncertainty for European undertakings operating in those countries. Equally, the disclosure of certain information that is commercially and economically sensitive (strategic information on contracts, levels of profitability, results, management, etc.) could put undertakings at a competitive disadvantage, or could call into question agreements or contracts drawn up with the tax authorities of third countries.
In the light of these considerations, your rapporteur undertakes to deal with the issue of country-by-country reporting in this legislative proposal by taking a sensible and meticulous approach to the matter, so that its benefits can be multiplied and its risks neutralised. Your rapporteur therefore proposes an amendment to Article 48 of Accounting Directive 2013/34, requiring the Commission to consider, when reviewing the provisions relating to payments to governments, introducing an obligation for large undertakings and public-interest entities to publish an annual country-by-country report for each Member State and third country in which they operate, containing information on profits made, taxes paid on profits and public subsidies received.
{28/11/2013}28.11.2013
OPINION of the Committee on Foreign Affairs
for the Committee on Legal Affairs
on the proposal for a directive of the European Parliament and of the Council amending Council Directives 78/660/EEC and 83/349/EEC as regards disclosure of non-financial and diversity information by certain large companies and groups
(COM(2013)0207 C70103/2013 2013/0110(COD))
Rapporteur: Elmar Brok
SHORT JUSTIFICATION
The Fourth Council Directive 78/660/EEC of 25 July 1978 on the annual accounts of certain types of companies coordinates EU Member States' provisions regarding the annual accounts and annual reports of companies with limited liability. The current version of the Fourth Directive is the result of a series of amendments from 1983 to 2006.
The amendments presented in this opinion intend to supplement the information companies provide on the supply chain, and to ensure coherence between the definition given by the Fourth Directive to large companies and the related specific reporting requirements.
AMENDMENTS
The Committee on Foreign Affairs calls on the Committee on Legal Affairs, as the committee responsible, to incorporate the following amendments in its report:
Amendment 1
Proposal for a directive
Recital 6
Text proposed by the CommissionAmendment(6) In order to enhance consistency and comparability of non-financial information disclosed throughout the Union, companies should be required to include in their annual report a non-financial statement containing information relating to at least environmental matters, social and employee-related matters, respect for human rights, anti-corruption and bribery matters. Such statement should include a description of the policies, results, and the risks related to those matters.(6) In order to enhance consistency and comparability of non-financial information disclosed throughout the Union, companies should be required to include in their annual report a non-financial statement containing information relating to at least environmental matters, social and employee-related matters, respect for human rights, anti-corruption and bribery matters. Such statement should include a description of the policies, results, and the risks related to those matters. It should also include companies supply chains and their subcontractors in the case of major actors in these chains.
Amendment 2
Proposal for a directive
Recital 10
Text proposed by the CommissionAmendment(10) The European Council of 24 and 25 March 2011 called for the overall regulatory burden, in particular for small and medium-sized enterprises (SMEs), to be reduced at both European and national levels and suggested measures to increase productivity while the Europe 2020 Strategy for smart, sustainable and inclusive growth aims to improve the business environment for SMEs and to promote their internationalisation. Thus, according to the think-small-first principle, the disclosure requirements under Directive 78/660/EEC and Directive 83/349/EEC should only apply to certain large undertakings and groups.(10) The European Council of 24 and 25 March 2011 called for the overall regulatory burden, in particular for small and medium-sized enterprises (SMEs), to be reduced at both European and national levels, welcomed the intention of the Commission to propose ways of exempting micro-enterprises from certain regulations, and suggested measures to increase productivity while the Europe 2020 Strategy for smart, sustainable and inclusive growth aims to improve the business environment for SMEs and to promote their internationalisation. Thus, according to the think-small-first principle, the disclosure requirements under Directive 78/660/EEC and Directive 83/349/EEC should only apply to certain large undertakings and groups.
Amendment 3
Proposal for a directive
Recital 11
Text proposed by the CommissionAmendment(11) The scope of these non-financial disclosure requirements should be defined by reference to the average number of employees, total assets and turnover. SMEs should be exempted from additional requirements, and the obligation to disclose a non-financial statement in the annual report should only apply to those companies whose average number of employees exceeds 500, and exceed either a balance sheet total of EUR 20 million or a net turnover of EUR 40 million.(11) The scope of these non-financial disclosure requirements should be defined by reference to the average number of employees, total assets and turnover. Micro-enterprises and SMEs should be exempted from additional requirements, and the obligation to disclose a non-financial statement in the annual report should only apply to those companies whose average number of employees exceeds 500, and exceed either a balance sheet total of EUR 20 million or a net turnover of EUR 40 million.
Amendment 4
Proposal for a directive
Recital 11 a (new)
Text proposed by the CommissionAmendment(11a) When adopting the criteria for determining which bodies are to be covered by the obligation to disclose nonfinancial information, differences in the levels of economic development in the individual Member States should be taken into account, and, as follows, that in order to achieve the same outcome from economic activity, different countries will require a different average number of employees. Therefore, when selecting criteria for determining which bodies are to be covered by these new reporting requirements, greater emphasis should be placed on the balancesheet amount or on net turnover.
Amendment 5
Proposal for a directive
Recital 16
Text proposed by the CommissionAmendment(16) The obligation to disclose their diversity policies for their administrative, management and supervisory bodies with regard to aspects such as age, gender, geographical diversity, educational and professional background should only apply to large listed companies. Therefore small and medium-sized companies that may be exempted from certain accounting obligations under article 27 of Directive 78/660/EEC should not be covered to by this obligation. Disclosure of the diversity policy should be part of the corporate governance statement, as laid down by Article 46a of Directive 78/660/EEC. Companies not having a such a diversity policy should not be obliged to put one in place, but they should clearly explain why this is the case.(16) The obligation to disclose their diversity policies for their administrative, management and supervisory bodies with regard to aspects such as age, gender, geographical diversity, disability, educational and professional background should only apply to large listed companies. Therefore small and medium-sized companies that may be exempted from certain accounting obligations under article 27 of Directive 78/660/EEC should not be covered to by this obligation. Disclosure of the diversity policy should be part of the corporate governance statement, as laid down by Article 46a of Directive 78/660/EEC. Companies not having a such a diversity policy should not be obliged to put one in place, but they should clearly explain why this is the case.
Amendment 6
Proposal for a directive
Article 1 - point 1 - point a
Directive 78/660/EEC
Article 46 paragraph 1 subparagraph 3 indent iii
Text proposed by the CommissionAmendment(iii) the risks related to these matters and how the company manages those risks.(iii) the risks related to these matters, the risks related to the companys activities, which are likely to cause, or have caused, adverse social, environmental and human rights impacts, and how the company manages those risks.Justification
The Guiding Principles on Business and Human Rights state that businesses "seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services [] even if they have not contributed to those impacts". To have an international level playing field and make possible a comparison between companies, a company should always use an EU or international framework instead of a local one.
Amendment 7
Proposal for a directive
Article 1 point 1 point a
Directive 78/660/EEC
Article 46 paragraph 1 point b subparagraph 3
Text proposed by the CommissionAmendment In providing such information the company may rely on national, EU-based or international frameworks and, if so, shall specify which frameworks it has relied upon.In providing such information the company may rely on national, EU-based or international frameworks, such as: the Eco-Management and Audit Scheme (EMAS), and international frameworks such as the United Nations (UN) Global Compact, the Guiding Principles on Business and Human Rights implementing the UN Protect, Respect and Remedy Framework, the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, the International Organisation for Standardisation (ISO) 26000, the International Labour Organization (ILO) Tripartite Declaration of principles concerning multinational enterprises and social policy, and the Global Reporting Initiative.This provision shall apply without prejudice to the requirements of this Directive or to other European Union legislation or guidance containing more specific rules for companies' non-financial disclosure.When providing such nonfinancial information, the company shall indicate which legal framework it has used.
Amendment 8
Proposal for a directive
Article 1 point 1 point a
Directive 78/660/EEC
Article 46 paragraph 1 point c
Text proposed by the CommissionAmendment To the extent necessary for an understanding of the companys development, performance or position, the analysis shall include both financial and non-financial key performance indicators relevant to the particular business.To the extent necessary for an understanding of the companys development, performance or position, and human rights, social and environmental impacts, the analysis shall include both financial and non-financial key performance indicators relevant to the particular business.
Amendment 9
Proposal for a directive
Article 1 point 1 point a
Directive 78/660/EEC
Article 46 paragraph 1 point c a (new)
Text proposed by the CommissionAmendmentThe European Commission shall develop guidance on the methodology and use of international standards and non-financial performance indicators in order to assist companies in their reporting.
Amendment 10
Proposal for a directive
Article 1 point 1 point a
Directive 78/660/EEC
Article 46 paragraph 1 point c b (new)
Text proposed by the CommissionAmendmentThe Commission shall publish the guidance and report to the European Parliament and Council on the development of guidance, at the latest 18 months after the adoption of the Directive.
Amendment 11
Proposal for a directive
Article 1 point 1 point a
Directive 78/660/EEC
Article 46 paragraph 1 point c c (new)
Text proposed by the CommissionAmendmentThe Commission shall establish an internal Non Financial Disclosure Guidance Board to support the implementation of non-financial reporting requirements and to involve stakeholders for the development of guidance on the methodology and use of international standards and non-financial performance indicators in a balanced and open way.
Amendment 12
Proposal for a directive
Article 1 - point 1 - point c
Directive 78/660/EEC
Article 46 - paragraph 5 (new)
Text proposed by the CommissionAmendment'5. A company which is a subsidiary company shall be exempt from the obligations set out in paragraph 1(b), if the company and its subsidiaries are consolidated in the financial statements and annual report of another company and that consolidated annual report is drawn up in accordance with Article 36(1) of Directive 83/349/EEC.deletedJustification
A large company often consists of multiple companies; if a risk exists within the large company it should be clear in which subsidiary company this risk exists. An exclusion of the subsidiary companies from the obligations set out in paragraph 1(b) would diminish the necessary clarity.
Amendment 13
Proposal for a directive
Article 1 point 2 point a
Directive 78/660/EEC
Article 46a paragraph 1 point g
Text proposed by the CommissionAmendment a description of the companys diversity policy for its administrative, management and supervisory bodies with regard to aspects such as age, gender, geographical diversity, educational and professional background, the objectives of this diversity policy, how it has been implemented and the results in the reporting period. If the company has no such policy, the statement shall contain a clear and reasoned explanation as to why this is the case.a description of the companys diversity policy for its administrative, management and supervisory bodies with regard to aspects such as age, gender, geographical diversity, disability, educational and professional background, the objectives of this diversity policy, how it has been implemented and the results in the reporting period. If the company has no such policy, the statement shall contain a clear and reasoned explanation as to why this is the case.
Amendment 14
Proposal for a directive
Article 2 point 1 point a
Directive 83/349/EEC
Article 36 paragraph 1 subparagraph 3
Text proposed by the CommissionAmendmentFor parent undertakings of undertakings to be consolidated that together exceed an average number of 500 employees during the financial year, and, on their balance sheet dates, exceed either a balance sheet total of EUR 20 million or a net turnover of EUR 40 million, the review shall also include a non-financial statement containing information relating to at least environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters, including the following:For parent undertakings of undertakings to be consolidated that together exceed an average number of 500 employees during the financial year, and, on their balance sheet dates, exceed either a balance sheet total of EUR 20 million or a net turnover of EUR 40 million, the review shall also include a non-financial statement containing information relating to at least environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters, taking into account the companys complete supply chain, including the following:
Amendment 15
Proposal for a directive
Article 2 point 1 point a
Directive 83/349/EEC
Article 36 paragraph 1 subparagraph 3 indent iii
Text proposed by the CommissionAmendment the risks related to these matters and how the company manages those risks.the risks related to these matters linked to the companys activities, which are likely to cause, or have caused, adverse social, environmental and human rights impacts, and how the company manages those risks.
Amendment 16
Proposal for a directive
Article 2 point 1 point a
Directive 83/349/EEC
Article 36 paragraph 1
Text proposed by the CommissionAmendmentIn providing such information the company may rely on national, EU-based or international frameworks and, if so, shall specify which frameworks it has relied upon.In providing such information the company may rely on national, EU-based or international frameworks, such as: the Eco-Management and Audit Scheme (EMAS), and international frameworks such as the United Nations (UN) Global Compact, the Guiding Principles on Business and Human Rights implementing the UN Protect, Respect and Remedy Framework, the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, the International Organisation for Standardisation (ISO) 26000, the International Labour Organization (ILO) Tripartite Declaration of principles concerning multinational enterprises and social policy, and the Global Reporting Initiative.This provision shall apply without prejudice to the requirements of this Directive or to other European Union legislation or guidance containing more specific rules for companies' non-financial disclosure.When providing such nonfinancial information, the company shall indicate which legal framework it has used.
Amendment 17
Proposal for a directive
Article 4 paragraph 1
Text proposed by the CommissionAmendment This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.No later than [three years after adoption of this Directive], the Commission shall review the provisions in Article 46 and report to the European Parliament and Council accompanied by legislative proposals if appropriate, regarding:- non-financial information disclosed in practice, including the coverage of the supply chain, whether this is effective, whether adequate guidance and methods are provided;- progress with non-financial reporting across the world;- the implementation of the UN Protect, Respect and Remedy Framework and its Guiding Principles as well as of the OECD Guidelines for Multinational Enterprises;
PROCEDURE
TitleDisclosure of non-financial and diversity information by certain large companies and groupsReferencesCOM(2013)0207 C7-0103/2013 2013/0110(COD)Committee responsible
Date announced in plenaryJURI
21.5.2013Opinion by
Date announced in plenaryAFET
12.9.2013Rapporteur
Date appointedElmar Brok
27.11.2013Previous rapporteurThijs BermanDiscussed in committee26.9.201311.11.2013Date adopted26.11.2013Result of final vote+:
:
0:25
10
0Members present for the final votePino Arlacchi, Elmar Brok, Jerzy Buzek, Mark Demesmaeker, Andrzej Grzyb, Ric h a r d H o w i t t , A n n a I b r i s a g i c , L i i s a J a a k o n s a a r i , J e l k o K a c i n , N i c o l e K i i l - N i e l s e n , A n d r e y K o v a t c h e v , P a w e B R o b e r t K o w a l , E d u a r d K u k a n , V y t a u t a s L a n d s b e r g i s , K r z y s z t o f L i s e k , M a r u s y a L y u b c h e v a , F r a n c i s c o J o s M i l l n M o n , A n n e m i e N e y t s - U y t t e b r o e c k , P i e r A n t o n i o P a n z e r i , B e r n d P o s s e l t , H a n s - G e r t P t t e r i n g , C r i s t i a n D a n P r e d a , L i b o r R o u
e k , J o s I g n a c i o S a l a f r a n c a S n c h e z - N e y r a , W e r n e r S c h u l z , D a v o r I v o S t i e r , C h a r l e s T a n n o c k , E l e n i T h e o c h a r o u s , I n e s e V a i d e r e , N i k o l a V u l j a n i S u b s t i t u t e ( s ) p r e s e n t f o r t h e f i n a l voteKinga Gl, Marietje SchaakeSubstitute(s) under Rule 187(2) present for the final voteMaria Badia i Cutchet, Hiltrud Breyer, Antnio Fernando Correia de Campos
{11/11/2013}11.11.2013
OPINION of the Committee on Development
for the Committee on Legal Affairs
on the proposal for a directive of the European Parliament and of the Council amending Council Directives 78/660/EEC and 83/349/EEC as regards disclosure of non-financial and diversity information by certain large companies and groups
(COM(2013)0207 C70103/2013 2013/0110(COD))
Rapporteur: Judith Sargentini
AMENDMENTS
The Committee on Development calls on the Committee on Legal Affairs, as the committee responsible, to incorporate the following amendments in its report:
Amendment 1
Proposal for a directive
Title
Text proposed by the CommissionAmendmentDIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCILDIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCILamending Council Directives 78/660/EEC and 83/349/EEC as regards disclosure of non-financial and diversity information by certain large companies and groupsamending Council Directives 78/660/EEC and 83/349/EEC as regards disclosure of financial, non-financial and diversity information by certain large companies and groups
Amendment 2
Proposal for a directive
Recital 3 a (new)
Text proposed by the CommissionAmendment (3a) Increased transparency regarding the activities of large companies, and in particular regarding the name(s) of establishments, nature of activities and their geographical locations, turnover, number of employees on a full time equivalent basis, profits made, taxes on profit paid and subsidies received, is essential for ensuring the trust of EU citizens in companies. Mandatory reporting in this area can therefore be seen as an important element of the corporate responsibility of companies to stakeholders and society.
Amendment 3
Proposal for a directive
Recital 3 b (new)
Text proposed by the CommissionAmendment (3b) Sustainability reporting is a vital step for managing change towards a sustainable global economy, one that combines long term profitability with social justice and environmental protection. Transparency and accountability are now becoming an intrinsic part of the discussions on the post-2015 development agenda and the Sustainable Development Goals. As sustainability reporting helps to measure, monitor and manage performance and impacts, it offers an opportunity to further harness the capacity of the private sector to positively impact sustainable development.
Amendment 4
Proposal for a directive
Recital 5
Text proposed by the CommissionAmendment(5) It is also necessary to establish a certain minimum legal requirement as regards the extent of the information that should be made available to the public by undertakings across the Union. Annual reports should give a fair and comprehensive view of an undertaking's policies, results, and risks.(5) It is also necessary to establish a certain minimum legal requirement as regards the extent of the information that should be made available to the public by undertakings across the Union. Annual reports should give a fair and comprehensive view of an undertaking's policies, results, and risks, as well as of the precise purpose of its social investments and those of its subsidiaries.
Amendment 5
Proposal for a directive
Recital 6
Text proposed by the CommissionAmendment(6) In order to enhance consistency and comparability of non-financial information disclosed throughout the Union, companies should be required to include in their annual report a non-financial statement containing information relating to at least environmental matters, social and employee-related matters, respect for human rights, anti-corruption and bribery matters. Such statement should include a description of the policies, results, and the risks related to those matters.(6) In order to enhance consistency and comparability of non-financial information disclosed throughout the Union, companies should be required to include in their annual report a non-financial statement containing information relating to at least environmental matters, social and employee-related matters, anti-discrimination measures, respect for human rights, anti-corruption and bribery matters. This statement should include a description of the policies and results and the precise purpose of social investments, as well as the risks related to those matters, including for the entire supply chain.
Amendment 6
Proposal for a directive
Recital 6 a (new)
Text proposed by the CommissionAmendment (6a) The disclosure of non-financial information should be based on risk-based due diligence carried out by companies to identify, prevent and mitigate actual and potential adverse impacts, as appropriate, to the size of the companies, the nature and context of operations and the severity of the risks of adverse impacts. The principles of due diligence have been outlined in the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights implementing the UN Protect, Respect and Remedy Framework by which the Commission committed to abide.
Amendment 7
Proposal for a directive
Recital 6 b (new)
Text proposed by the CommissionAmendment (6b) Companies should provide detailed information on matters linked to the most important risks involving severe impacts, as well as detailed information on any severe impact that has materialised. The importance ascribed to a risk should depend on the likelihood of it materialising in combination with the severity of the potential impacts. Severity of impacts should be judged by their scale and gravity, the number of individuals impacted at present or in the future and any irremediable character, in the sense of any limits to restore those who have been or that which has been impacted to a situation at least the same as, or equivalent to, the situation before an adverse impact.
Amendment 8
Proposal for a directive
Recital 6 c (new)
Text proposed by the CommissionAmendment (6c) More frequent references to existing sustainability and reporting frameworks, as well as the continuing emergence of new frameworks, stimulate the shift towards a sustainable global economy. Yet, with the global rise of sustainability reporting policies, including in developing countries, the alignment and harmonisation of frameworks become a growing challenge that should be addressed, given the risk of overlapping, conflicting, and even competing standards.
Amendment 9
Proposal for a directive
Recital 6 d (new)
Text proposed by the CommissionAmendment(6d) Social matters includes responsible behaviour on tax planning to ensure that a fair share of tax is paid in the right place and that aggressive tax avoidance is averted.
Amendment 10
Proposal for a directive
Recital 7
Text proposed by the CommissionAmendment(7) In providing this information, companies may rely on national frameworks, EU-based frameworks such as the Eco-Management and Audit Scheme (EMAS), and international frameworks such as the United Nations (UN) Global Compact, the Guiding Principles on Business and Human Rights implementing the UN Protect, Respect and Remedy Framework, the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, the International Organisation for Standardisation (ISO) 26000, the International Labour Organization (ILO) Tripartite Declaration of principles concerning multinational enterprises and social policy, and the Global Reporting Initiative.(7) In providing information on their compliance with rights and values protected by norms of international law, companies shall apply the Guiding Principles on Business and Human Rights implementing the UN Protect, Respect and Remedy Framework and the OECD Guidelines for Multinational Enterprises, companies may also rely on national frameworks, EU-based frameworks such as the Eco-Management and Audit Scheme (EMAS), and other international frameworks such as the United Nations (UN) Global Compact, the International Organisation for Standardisation (ISO) 26000 standard, the International Labour Organization (ILO) Tripartite Declaration of principles concerning multinational enterprises and social policy, and the Global Reporting Initiative or on a set of quantifiable, sector-specific social criteria endorsed by the European Union under, for example, a social labelling scheme.Justification
A harmonised global framework for sustainability reporting is in the interest of companies operating in the global economy. The OECD Guidelines cover all major areas of business ethics. On 16 June 2011, following work of Prof John Ruggie, the UN Human Rights Council unanimously endorsed the Guiding Principles implementing the UN "Protect, Respect and Remedy' Framework". Given their comprehensive sustainability scope and their complementarities these two frameworks should be taken as the base of alignment and harmonisation of reporting.
Amendment 11
Proposal for a directive
Recital 7 a (new)
Text proposed by the CommissionAmendment (7a) To the extent necessary for an understanding of the companies' human rights, social and environmental impacts, the annual reports shall include non-financial key performance indicators relevant to the particular business' sector. For environmental aspects, the non-financial indicators should include an assessment of green house gas emissions and the use of materials, water and land. This assessment should include an estimate of the use of these resources in the companys supply chain.Justification
The European Commission endorsed these indicators in its Communication entitled Roadmap to a Resource Efficient Europe of 20th September 2011.
Amendment 12
Proposal for a directive
Recital 7 b (new)
Text proposed by the CommissionAmendment (7b) In order to enhance consistency and comparability of non-financial information provided by companies, the Commission should develop guidance on the use of appropriate key performance indicators and resource measurement methodology and of the international frameworks, in particular as regards the corporate responsibility to respect rights and values protected by norms of international law.
Amendment 13
Proposal for a directive
Recital 7 c (new)
Text proposed by the CommissionAmendment (7c) Member States shall ensure that adequate and effective means exist to enforce full, accurate and credible disclosure of non-financial information by companies in compliance with the provisions of this Directive.
Amendment 14
Proposal for a directive
Recital 8 a (new)
Text proposed by the CommissionAmendment (8a) In line with the recommendations of the United Nations Environment Programme GEO-5 report, the integration of environmental, economic and social data should aim to provide a true assessment of environmental impact.
Amendment 15
Proposal for a directive
Recital 9 a (new)
Text proposed by the CommissionAmendment(9a) Investor access to non-financial information should also help to channel investment into undertakings with high social standards.
Amendment 16
Proposal for a directive
Recital 9 b (new)
Text proposed by the CommissionAmendment(9b) The disclosure of non-financial information should make it possible to implement a sustainable and inclusive investment strategy that includes a corporate social responsibility clause with concrete guidelines for investors, as well as an efficient assessment methodology for public authorities monitoring the social and environmental impact of the resulting investments;
Amendment 17
Proposal for a directive
Recital 10 a (new)
Text proposed by the CommissionAmendment(10a) The requirement to disclose non-financial information includes striking a balance between environmental results and social results, in order to ensure that such disclosure is in keeping with CSR principles and is not confined solely to environmental data.
Amendment 18
Proposal for a directive
Recital 11
Text proposed by the CommissionAmendment(11) The scope of these non-financial disclosure requirements should be defined by reference to the average number of employees, total assets and turnover. SMEs should be exempted from additional requirements, and the obligation to disclose a non-financial statement in the annual report should only apply to those companies whose average number of employees exceeds 500, and exceed either a balance sheet total of EUR 20 million or a net turnover of EUR 40 million.(11) The scope of these non-financial disclosure requirements should be defined by reference to the average number of employees, total assets and turnover. SMEs should be exempted from additional requirements, and the obligation to disclose a non-financial statement in the annual report should only apply to those companies whose average number of employees exceeds 250, and exceed either a balance sheet total of EUR 17,5 million or a net turnover of EUR 35 million.Justification
The definition of large company should be interpreted in accordance with the existing definition in the 4th Accounting Directive under which a c o m p a n y i s l a r g e i f i t h a s a n a v e r a g e n u m b e r o f e m p l o y e e s e x c e e d i n g 2 5 0 a n d e i t h e r a b a l a n c e s h e e t e x c e e d i n g 1 7 . 5 m i l l i o n o r n e t t u r n o v e r e x c e e d i n g 3 5 m i l l i o n .
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