The UK government is taking the opportunity presented by the European non-financial reporting directive to begin a “wide-ranging, strategic” review of the entire corporate reporting system.
European Union member states must implement the new Non-Financial Reporting Directive, adopted in late 2014, by December 6 this year, to apply to financial years starting on January 1 2017. So the UK has launched a consultation seeking the views of investors, companies and other stakeholders.
Baroness Lucy Neville-Rolfe, the Minister for Intellectual Property, said she wanted to make sure that there was a full understanding of the costs and benefits of the directive for companies, investors and other users of non-financial reporting.
But she added: “I also want to use this opportunity to take a wider look at narrative reporting, especially where we can make life easier on business.” She pointed to how technology could be better used to “present non-financial information that is right for a fast moving, digital economy”. It also wants to hear about UK and EU reporting requirements that are no longer, in its words, “fit for purpose” – to help cut red tape.Neville-Rolfe’s business career includes stints on the board at Hermes Equity Ownership Services and the Advisory Board at PwC. She was a main board director at retailer Tesco.
The consultation also touches on gender reporting, such as the definition of “senior manager” where female executives are concerned.
Under the directive, companies with more than 500 employees have to disclose information in their management reports about their policies, environmental risks, social and employee situation, respect for human rights, anti-corruption and bribery issues and board diversity. It’s hoped it will provide investors and other stakeholders with a more comprehensive view of a company’s performance.
“Good reporting is symptomatic of a company that has strong governance,” the government reckons, though just 2,500 of large EU companies currently prepare some form of separate non-financial report. The eight-week consultation ends on April 15. Link