March 30, 2015
The aim of non-financial reporting is to establish transparency and accountability within companies. According to the new European Union Directive on disclosure of non-financial reporting, which was adopted by the European Parliament on 15 April 2014, large public companies,
with more than 500 employees, are obliged to publish non-financial reporting.
Companies are obligated to disclose information on policies, possible risks, and outcomes about various matters like environmental matters, social issues and employee related issues, respect for human rights, anti-corruption and bribery issues as well as diversity in their board of directors. Specifically it is expected by companies to disclose specific non-financial information about their management report. The new directive gives the flexibility to the companies to disclose additional relevant information, in the way they consider, as valuable information. It is expected that 6000 companies within EU fall under the Directive either listed or unlisted companies like banks and insurance companies.
Furthermore, the new directive gives the opportunity to the companies to choose which guidelines, international, national or European, may choose to follow and implement non-financial reporting. For example some well-known guidelines are ISO 26000, UN Global Compact, and German Sustainability code.
ISO 26000, provides guidelines on Social responsibility to assist, any type or size organization, to implement a social responsibility strategy. It was established under the authority of the International Standardization Organization and released on 1st of November 2010. ISO 26000 was developed by the contribution of 500 experts. Unlike other types of ISO, ISO 26000 is not a certification standard and cannot be certified. It covers a complete approach that consists of seven core subjects: human rights, labor practices, the environment, fair operating practices, consumer issues, community involvement and development, and organizational governance. The advantage of ISO 26000 is that it provides full methodology to implement good governance and transparency, as well as to establish a sustainable communication between the organization(s) and stakeholders.
To conclude it is recommended for companies to use ISO 26000 since it covers all the aspects that are required by the new directive on non-financial reporting. Additionally, ISO 26000, promotes the greater internal communication and collaboration between the various functions of the organization, and establishes more sustainable operation within the organization.
Author: Martin Neureiter, Director CSR Consulting LTD