EU directive on non-financial reporting

In 2014, the Council of the European Union adopted changes to the Accounting Directive related to Non-Financial Reporting.

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The changes laid out in “Directive 2014/95/EU on disclosure of non-financial and diversity information by certain large undertakings and groups” explore in more detail non financial information such as environmental, social and employee matters and diversity.

The changes to non financial reporting detail that information highlighted in the ‘non-financial statement’, as part of the management report, will now cover issues such as human rights, anti corruption and bribery matters. While diversity reporting of ‘administrative, management and supervisory bodies’ will cover not only gender but also age, educational and professional backgrounds.

This information applies to large ‘public-interest entities’ which covers not just listed companies but also some unlisted companies such as banks, insurance companies, and other companies who, due to their size, number of employees or activities, have been deemed viable by Member States. This is linked to companies with over 500 employees, of which there are around 6000.

While some of these changes are already covered by the Strategic Report requirements, some activities may need to be reviewed for companies who are not currently undertaking sustainability reporting.

The UK Government has undertaken a consultation for the Accounting Directive prior these changes, but all member states will have to bring in ‘laws, regulations and administrative provisions’ that cover the changes from the Directive on Non Financial Reporting by December 6 2016.