MEPs back plans to boost transparency on firms’ environmental and social impact 

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Large companies would be obliged to disclose information on their environmental, social and employee-related impact under a draft law on non-financial reporting approved by Legal Affairs Committee on Tuesday. Disclosure should make them more accountable to investors, consumers and civil society, and help them to manage risks more effectively, say MEPs, who also call on the Commission to consider proposing requirements in 2018 for country-by-country reporting on profits, taxes and subsidies.

“Today's vote is the outcome of difficult negotiations and strikes a good balance between the need for increased transparency and the importance of not hampering competitiveness by adding unnecessary red tape for EU companies. For this reason, the requirements will not apply to SMEs but only to large undertakings and, in the case of diversity policies, will be limited to listed companies”, said rapporteur Raffaele Baldassarre (EPP, IT) after the vote.

More information on social and environmental matters

The proposed rules would require large EU companies (over 500 employees) to include in their management reports a non-financial statement on the impact of their activities relating to environmental, social and employee matters, including respect for human rights and efforts to combat corruption and bribery. This statement should provide comparable descriptions of the policies, risks and results related to these matters.

Large listed companies would also have to publish information on their diversity policy for boards, including information on the age, gender, disability, ethnic origin and educational and professional background of their members.

Reporting guidelines

To help ensure that non-financial information published by companies is comparable, MEPs call on the European Commission to publish guidelines, developed in cooperation with stakeholders, on how to use international standards and non-financial performance indicators.

MEPs also amended the proposed rules to ensure that companies are not obliged to publish information on upcoming developments and negotiations if disclosure would “be seriously prejudicial to their commercial position”.

For 2018: country-by-country reports on profits, taxes and subsidies?

A majority of committee MEPs agreed to propose that when reviewing the directive in 2018 the Commission should consider introducing an obligation for large companies to disclose country-by-county information on profits, taxes and subsidies received where they operate. However, some MEPs wanted to propose including such a requirement immediately.

Next steps

The committee gave the rapporteur a mandate to start negotiations with the Council.

Committee on Legal Affairs

Procedure: co-decision, 1st reading

In the Chair: Klaus-Heiner Lehne (EPP, DE)