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Those companies affected will need to comply with the national rules from 2017 onwards; the European Commission is in the process of developing non-binding guidelines to assist them in complying with these requirements.
The Directive requires 6,000 large European companies to disclose information at least on environmental, social, and employee-related matters, as well as on the respect for human rights, anti-corruption, and bribery issues. These companies also have to disclose the diversity policy for their administrative, management and supervisory boards.
This Directive represents the most significant EU legislative initiative in respect of such environmental, social and governance disclosure in nearly a decade and is likely to have a significant impact on the non-financial information (NFI) reporting of many of the companies affected. This paper sets out what the NFI Directive means in practice, discusses the key issues around implementing the requirements, and provides some real-world examples of how the requirements can be met.
NFI reporting should not just be seen as an administrative burden on business to placate the demands of other stakeholders. FEE believes that implementing the internal processes required to fulfil the requirements of the NFI Directive can have long term benefits for the undertaking in question, particularly by focusing its attention on the key risks and opportunities that could impact on the undertaking. It also provides a means to communicate those aspects where the undertaking has taken an innovative approach in CSR matters, which could provide them with a competitive advantage over less innovative competitors.
Given that the matters under discussion are of importance to the undertaking, FEE believes such information should be displayed with prominence in the management report, not relegated to a separate report.