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Environmental, Social, Governance (ESG)
20 March 2014

EU takes step toward greater corporate transparency

The deal amends the Accounting Directive and provides rules to improve transparency and accountability when it comes to the social, environmental and financial impact of large companies. The proposal will go before the entire European Parliament in April.

The scope of the  Directive has been narrowed to cover only large undertakings which are public-interest entities with an average number of employees of 500. Nevertheless, ALDE supported this proposal in the Legal Affairs committee vote considering this as a necessary first step in ensuring greater non-financial transparency in the years to come. 

Rebecca Taylor (United Kingdom, Liberal Democrats), liberal spokesperson on this proposal, says: "The final text is far from being the ambitious text we had aimed for and the Council's position throughout the negotiation was disappointing and weak, however the result is better than none at all. We need to ensure greater transparency and accountability for all large businesses across Europe and I am pleased that a result has been achieved during this mandate so that this is just the first step and that forthcoming reviews will allow for this to be strengthened by at least extending the scope".

Around 6,000 companies across Europe will have to fulfil these new reporting obligations presenting their impacts on the environment, social and employee matters, respect for human rights and anti-corruption and bribery and the policies they have in places in order to minimise the principal risks.

The final text also calls for the Commission to prepare non-binding guidelines on methodology for reporting non-financial information, including non-financial key performance indicators, and in preparing this the Commission will consult the relevant stakeholders. 

Finally, a strong review clause was negotiated requesting for the Commission to submit a report to the European Parliament and Council at the latest 4 years after the entry into force of the Directive, which will focus amongst others on the scope, particularly as regards large non-listed undertakings. 

Press release


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