On 29 September 2014, the Council of the European Union adopted a directive for disclosure of non-financial and diversity information by certain large companies. We discussed an earlier version of the proposed directive in the April 2014 edition of this publication. The directive will apply to certain large EU companies – in the case of the "non-financial statement" requirements mentioned below, to "public interest entities" with over 500 employees.
"Public interest entities" are companies, such as listed undertakings, banks, insurance companies or undertakings which are of significant public relevance because of the nature of their business, their size or number of their employees. These companies will be required to draw up, on a yearly basis, a statement relating to environmental, social and employee-related matters, respect for human rights, anticorruption and bribery matters. The statement will have to include a description of the policies, outcomes and the risks related to those matters. Where a company does not pursue policies in relation to these matters, it will have to explain why this is the case.
This non-financial statement will have to be included in the management report that companies are required to produce under the Accounting Directive (2013/34/EU). In addition, certain companies will be required to include in their corporate governance statement a description of their diversity policy as applied in relation to their administrative, management and supervisory bodies and covering aspects such as age, gender, educational and professional background.
The directive, which will come into force 20 days following its publication in the Official Journal, will introduce these new requirements for companies' annual reports by way of amendments to the Accounting Directive. Member states will have two years to incorporate the new provisions into domestic law.
A copy of a consolidated text of the directive as published in Brussels on 25 July 2014 is available at: http://www.esma.europa.eu/content/Consultation-Paper-Draft-technical-advice-possible-delegated-acts-concerning-Market-Abuse-Re .
A copy of the Council's press release announcing the adoption of the directive is available here: http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/intm/144945.pdf .
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
