Monday, 22 April 2013

Non-financial accounting of European companies

What do we know about the companies that trade and produce in Europe? Information on companies' financial performance is (in principle) public, but it is not what investors and- what concerns us more directly- communities and other stakeholders might need to know when dealing with a firm. 
Companies can of course release more information on a voluntary basis, but not many of them take this chance to shine. 

For this reason, last week the Commission put forward a proposal to amend two directives in the field of company law, with the following key objectives:

"(1) To increase the transparency of certain companies, and to increase the
relevance, consistency, and comparability of the non-financial information
currently disclosed, by strengthening and clarifying the existing requirements.
(2) To increase diversity in the boards of companies through enhanced
transparency in order to facilitate an effective oversight of the management and
robust governance of the company.
(3) To increase the company's accountability and performance, and the efficiency
of the Single Market" (explanatory note, p. 3)

If the proposal passes, companies with more than 500 employees will be required to disclose information on a number of "non-financial" aspects of their activity: environmental matters, social and employee-related aspects, respect for human rights, anti-corruption and bribery issues, and diversity on the boards of directors. Within these areas, the statement will include (i) a description of its policies, (ii) results and
(iii) risk-related aspects.

Even though the proposal is quite clear that the target is "business-relevant" information, more information will available to (associations of) consumers as well, hopefully hoping those of us who want to make considerate consumption choices.

1 comment:

  1. for a critical comment with some references to get more in depth