Non-financial reporting: the new status quo?
From 1 January 2018 onwards, companies with more than 500 employees are required by EU rules to publish regular reports on the social and environmental impacts of their activities. This will help investors, consumers, policy makers and other stakeholders to evaluate non-financial performance of large private sector companies and in turn encourage these companies to develop a responsible business approach and hold them to account when social and environmental performance is under par.
The full EU directive that lays down the rules on disclosure of non-financial information can be downloaded here. These rules only apply to large public-interest companies with more than 500 employees, a categorisation that includes approximately 6,000 large companies (listed companies, banks and insurance companies) across the EU.
As these companies work across various sectors and offer a multitude of products and services, the directive gives companies significant flexibility in what information they disclose and how they do what. In publishing, companies may use international, European or national guidelines to help produce their reports. Moreover, the European Commission published their own guidelines to help companies disclose environmental and social information, for which the Commission has reviewed multiple existing frameworks. The European Commission underpins the following key principles when reporting on non-financial information:
Disclose material information
Fair, balanced and understandable
Comprehensive but concise
Strategic and forward-looking
Consistent and coherent
Companies have to publish reports on the material outcomes of the policies they implement in relation to environmental protection, social responsibility and treatment of employees, respect for human rights, anti-corruption and bribery and diversity on company boards (in terms or age, gender, educational and professional background). The analysis of the outcomes should include relevant non-financial KPIs. Companies are expected to disclose the KPIs that they consider most useful in monitoring and assessing progress and supporting comparability across companies and sectors. Where appropriate, companies may also consider presenting and explaining this information in relation to targets and benchmarks.
We celebrate the EU directive as an important milestone in widening the corporate lense to place as much emphasis on social and environmental value, as on financial value. Sinzer developed a publically available search engine to find relevant KPIs from existing databases, aligned with the Sustainable Development Goals. Have a look at the Impact Standards by browsing to https://standards.sinzer.org. Once you have find your KPIs, start using our online solution to manage the environmental and social impact of your activities.
Topics: impact metrics, SDGs, framework