The European Commission has taken further steps to enhance business transparency on social and environmental matters and adopted new guidelines on the disclosure of environmental and social information.

The guidelines, which are voluntary and do not extend the scope of current rules in any way, are intended to help companies to disclose relevant non-financial information in a consistent and more comparable manner. The aim is to boost corporate transparency and performance, as well as encourage companies to embrace a more sustainable approach.

The new guidelines will support companies in fulfilling their reporting obligations under current non-financial disclosure requirements. 

Announcing the new guidelines, the Commission said:

“Transparent companies perform better over time, enjoy lower financing costs, attract and retain talented employees and are ultimately more successful. Well-informed business and investment decisions have much better chances to succeed.”

The adoption of the guidelines will supplement the already existing EU rules on non-financial reporting (Directive 2014/95/EU which entered into force on 6 December 2014. The deadline for transposition into national legislation by Member States was 6 December 2016. The companies concerned will have to apply the Directive as of 2018, on information relating to the 2017 financial year.

The disclosure requirements for non-financial information apply to certain large companies with more than 500 employees.

Companies falling within its scope have to disclose relevant information on policies, risks and results as regards environmental matters, social and employee-related aspects, as well as respect for human rights, anti-corruption and bribery issues, and diversity on the boards of directors.

The proposed guidelines reflect current best practices and most recent developments including lessons from the UN Sustainable Development Goals, the Paris Climate Agreement, the industry-led Task Force on climate-related financial disclosures set up by the Financial Stability Board, and the on-going work of the High-Level Group on Sustainable Finance established by the European Commission in the context of the Capital Markets Union initiative.

Valdis Dombrovskis, Vice-President responsible for Euro and Social Dialogue, Financial Stability, Financial Services and Capital Market Union, commented:

“Europe needs to take the lead in making economies greener and more sustainable. This is why we are today proposing flexible guidelines to boost corporate transparency across all sectors. By providing relevant information on their environmental and social credentials, companies are doing themselves a favour and helping their investors, lenders and society at large."

Click here to download the guidelines, which are currently in draft format.