The European Commission (EC) has adopted non-binding guidelines on the disclosure of non-financial information by companies which aims to help companies to disclose relevant and useful information on environmental and social matters in a consistent and comparable way.

These guidelines follow on the EU Directive on disclosure of non-financial and diversity information by certain large undertakings and groups which entered into force on 6 December 2014.  Companies will have to be compliant as of 2018 on information relating to financial year 2017.

“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,” the EC said in a statement. “The guidelines are voluntary and do not extend the scope of current rules in any way. Nor do they add undue administrative burden.”

EC vice president responsible for euro and social dialogue, financial stability, financial ervices and capital market union Valdis Dombrovskis said that Europe needed 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,” he continued. “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.”

The International Integrated Reporting Council (IIRC) CEO Richard Howitt, who was a key architects of the EU non-financial information Directive in his previous position as a member of the European parliament (MEP), welcomed the guidelines by saying: “My message to these businesses is that they cannot think of issues such as human rights and climate change as non financial. In the long term these issues will have a very real financial implication for business. I urge them to use this Directive as an opportunity to think about their strategy and business model as a whole, taking into consideration the broad resources and relationships they rely on.”

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However, Sirpa Pietikäienen MEP for the Christian Democrats called on greater action on the part of the EU: “There needs to be a system change: approximately 30 pieces of legislation need to be reviewed. The systems need to be harmonised and made compulsory for everybody. If comparability is lost, the whole effort will be lost as well. As regards to reporting, it is crucial to have transparency and comparability. Politicians need to take responsibility”