European business lobby group objects to EU nonfinancial reporting proposal

Powerful business grouping has “fundamental concerns” with key EU legislation

The main European umbrella business lobby group is objecting to the European Commission’s proposal on nonfinancial reporting.

The Commission, the executive arm of the European Union, is planning to amend its existing accounting directive to oblige major companies to disclose information on policies, risks and results on environmental matters, human rights, anti-corruption and bribery and boardroom diversity.
The plan forms part of a raft of proposals from Internal Markets Commissioner Michel Barnier, including a Green Paper on long-term finance, to address Europe’s financial crisis.
As Barnier himself said at the Global Reporting Initiative conference: “We need more responsible companies.” He argued his proposal “serves the interests of investors, shareholders, employees and society at large”.
But it’s being opposed by BusinessEurope, which represents 41 European business federations in 35 countries, which says it has “fundamental concerns” with the proposal.
“We invented CSR, it’s our baby,” said BusinessEurope CSR Advisor Roman Strecker at an event at the European Parliament yesterday. “We feel this proposal will damage CSR. Reporting [on nonfinancial issues] will make CSR mandatory.”
He went on: “Only successful companies can have CSR, CSR doesn’t lead to good companies.”The Commission argues that greater transparency is needed to help haul Europe out of its financial crisis, but Strecker rejected this idea.
BusinessEurope will issue its full response to the proposal later this month, he added.

The comments were seen as inflammatory at an event, co-organised by Aviva Investors, Eurosif and accountancy body ACCA, which brought together ESG groups such as the GRI, the International Integrated Reporting Council and the European Coalition for Corporate Justice.
The remarks drew a stinging response from meeting chair Richard Howitt, the MEP who is a leading advocate of CSR. Howitt said: “I suggest you rethink your diplomacy about how you address this issue. I appeal to you to be a constructive partner. History will look back on you.”
Robin Edme, Senior Advisor on Responsible Finance to the French government, said BusinessEurope is part of society and can’t escape from complying with society’s expectations.
The Commission’s proposal will now have to be ratified at the parliament, where it will be shepherded by ‘rapporteur’ Raffaele Baldassarre, an Italian MEP in the European People’s Party grouping. It’s hoped it could be ratified by the end of the year, though this could prove problematic given a very tight timetable post-summer recess – which will not be helped by a lobbying campaign from business.