European governments meet to thrash out non-financial reporting proposal

European government representatives are meeting in Brussels to thrash out a proposal for new rules governing corporate disclosure of non-financial and diversity information.

Campaign group the European Coalition for Corporate Justice (ECCJ) warned this month that the UK, Germany, Poland and Austria were seeking to block the proposal and that the reform faced being killed off completely.

And Richard Howitt, the UK Labour MEP who is one of the ‘rapporteurs’ for the proposal at the European Parliament, as well as being the assembly’s spokesman on Corporate Social Responsibility, has lambasted what he termed “dinosaurs” seeking to block it.

But there is now a “final compromise text” and “a view to agreement” on the proposal, which will be discussed this week at the regular ‘Coreper’ (Committee of Permanent Representatives) meeting made up of member state representatives.

Agreement is key given that the current term of the European Commission, the executive arm of the EU, ends on October 31. The Parliament faces elections in May.

At stake is a proposal put forward by Internal Markets Commissioner Michel Barnier that would amend existing European-level accounting legislation, as part of a broader EU response to the financial crisis.In a blog posting, Howitt said the measure, which he had proposed over 10 years ago, was “no dry, technical debate simply about company law”. Rather it was the way through which many in companies as well as in wider society have chosen to advance the cause of sustainable and socially responsible business.

“It may seem incredible to non-specialists in the light of the financial crisis that anyone can continue to argue that corporations should not be responsible for their impacts on wider society,” he said.
And he referred to “those who refuse to see that a mandatory approach to company non-financial reporting would provide a level playing field between companies – something their much vaunted voluntary initiatives cannot provide”. He went on: “Some of these dinosaurs wield considerable influence on national governments – and this perhaps explains the reluctance of some EU Member States to support legislative reform.” He said Barnier’s first proposals were reasonable and struck a fair balance between promoting business transparency without impairing competitiveness. Major European companies such as IKEA, Unilever and Carrefour have all given their public support, as has the Global Reporting Initiative (GRI), he said.

The Commission argues that nonfinancial information “allows investors to take better account of sustainability considerations and long term performance”. Link to Coreper agenda