Monday

21st Jun 2021

EU seeks more corporate transparency

  • Companies would have to publish their boardroom policies (Photo: ShellVacationsHospitality)

EU companies will be required to publish information ranging from anti-corruption and bribery measures to their boardroom policies and employment practices, under new legislation unveiled by the European Commission on Tuesday (16 April).

The Commission draft, which would cover an estimated 18,000 European companies with more than 500 employees, would also force firms to assess the environmental and social results of their activities,

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In a statement launching the legislation, internal market commissioner Michel Barnier said that more corporate accountability would lead to more profits.

"Companies that already publish information on their financial and non-financial performances take a longer term perspective in their decision-making. They have lower financing costs, attract and retain talented employees, and ultimately are more successful," he noted.

Speaking later with reporters in Strasbourg, Barnier said the new requirements were aimed at increasing "cohesion for businesses and between businesses."

He added that greater company transparency was "needed for all sectors, not just banks."

The proposal is the latest attempt to increase transparency standards for EU companies.

Earlier this month, MEPs and ministers reached agreement on country-by-country reporting by companies in the extractive and logging sector. Meanwhile, from 2014 banks will also be required to disclose information ranging from profits and turnover to employee numbers and tax payments.

Jana Mittermaier, director of the campaign group Transparency International said that the new rules would "help to raise awareness about corruption risks in the private sector and steps that companies can take to address them."

For her part, Rachel Jackson of the accountancy trade-body ACCA expressed hope that "the latest EU proposals will significantly improve the level of transparency and comparability."

However, Jerome Chaplier of the European Coalition for Corporate Justice commented that "we fear companies will only identify and disclose the risks that affect their economic performance, and won’t take responsibility for the impacts they have on the people and the planet."

The new reporting requirements would cost between €1,200 and €4,900 per company each year, according to the commission's impact assessment.

The commission says that around 2,500 out of an estimated 42,000 EU companies voluntarily provide non-financial information on their activities. Barnier singled out companies in the Netherlands, France and Denmark for the best behaviour, describing them as "way ahead of the others."

Meanwhile, the EU executive's demand for companies to report on their diversity policies follows draft legislation tabled in November 2012 aimed at increasing the number of women executives to 40 percent.

The proposal will now be scrutinised by MEPs on the legal affairs committee, with parliament sources suggesting that the centre-right EPP group would probably take control of the dossier.

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