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FRC comments on EC consultation on non-financial reporting guidelines

  • FRC comment letter Image

05 Apr 2016

The Financial Reporting Council (FRC) has published its comment letter on the European Commission (EC) public consultation which sought to collect views from stakeholders on non-binding guidance on the methodology for reporting of non-financial information by certain large companies across all sectors.

The EU Non-Financial Reporting Directive was approved by the council of the European Union in September 2014. It requires large public-interest companies with more than 500 employees to disclose relevant and material environmental and social information in their annual report. Public interest companies are those with securities admitted to a regulated market in the EU together with credit institutions and insurance undertakings.

Those within scope will also be required to provide information on their diversity policy, covering age, gender, geographical diversity, and educational and professional background. Disclosures shall set out the objectives of the policy, how it has been implemented, and results.

The EC consultation was published in January 2016.

The FRC believes that “non-mandatory guidance can be helpful to companies when implementing legal requirements” and “can lead to improvements in the quality of corporate reporting”.  However it has “some concerns about the direction of travel of the Commission’s proposals”.  Additionally it believes that any guidance should be “concise, principles based” and should “allow companies flexibility to tell their story”.  The FRC does not support prescriptive guidelines which can lead to boiler plate reporting.  Additionally the FRC comments that the guidance should not go beyond the scope of the Directive and should provide Member States with flexibility to use their own guidance.

The full comment letter is available on the FRC website.

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