Large public companies with a presence in the European Union may be required to comply with an obligation to report additional non-financial information in addition to standard financial reporting. As the obligation applies to reporting on financial years starting from 1 January 2017, companies will be faced with this new obligation for the first time in 2018.
From 2018, the EU’s Directive 2014/95/EU mandates the disclosure of specified non-financial and diversity information by certain large undertakings and groups in the interests of a harmonized approach to transparency. Under the new Directive, companies are required to publish information on their position, policies and performance relating to environmental, social and employee matters, respect for human rights, anti-corruption, and bribery.
The non-financial reporting obligation applies to large public-interest companies, including publicly traded companies, that employ over 500 employees. This includes companies that are parent companies of a large group which employs, on a consolidated basis, over 500 employees. It is estimated that some 6000 companies across the EU are subject to the new requirement including listed companies; banks; insurance companies; and other companies designated by national authorities as public-interest entities.
As implementation of the Directive is left to the prerogative of the Member States, specific obligations and even the interpretation of whether the new obligations apply to a particular size and type of company will differ from one country to another.
Kelley Drye can assist with verifying the applicability of the non-financial reporting obligation and, where required, compliance with the new requirements.