Guidelines on Disclosure of EU Non-Financial Information Released

Guidelines on Disclosure of EU Non-Financial Information Released

On June 26, 2017, the European Commission has released provisional non-binding guidelines on the disclosure of information by companies under the European Union (EU) Non-Financial Reporting Directive (NFR) (2014/95/EU). The final version is to be released soon.

These guidelines seek to clarify the obligations placed on companies by the NFR to disclose relevant information on environmental matters, social and employee issues, workplace diversity, human rights, and anti-corruption and anti-bribery (ABAC) as a means to increase transparency and accountability in the market.

Not sure how to make a disclosure under the EU NFR? Download the infographic to ensure your company achieves compliance.

Direct and Indirect Impacts on Companies

This guidance is essential reading for the 6,000 companies that fall within direct scope of the NFR Directive. The Directive applies to public interest entities with over 500 employees, meaning most small and medium sized enterprises (SMEs) will be exempt from making disclosures.

For those in scope, maintaining compliance will mean having corporate social responsibility (CSR) data on hand to include in disclosures each year. This reinforces the need for a broader data collection program for CSR information from supply chains, like the solution offered by Assent Compliance. Alternatively, while your entity may not be in direct scope, the companies you sell to could be. If you do business with companies in Europe, it is likely you will be asked for information about efforts to mitigate environmental and human rights risks in your supply chain at some point so that your customer can complete their disclosure.

Using the Guidelines

Abiding by the guidelines is not mandatory (they do not include a legal requirement); however, failure to mimic the due diligence imperatives laid out in the guidelines could expose companies to supply chain vulnerability in the form of unmanaged human rights and environmental risks. Failing to meet the guidelines may also reduce funding from financial institutions and other large investors.

Nonetheless, recognizing the need for flexibility, the Directive gives companies the ability to use whichever framework is most relevant to their disclosure (examples include those produced by the Global Reporting Initiative (GRI) and the United Nations Global Compact). To learn more about the GRI — the most commonly used framework for NFR disclosures — download the infographic.  

Focus on Conflict Minerals

As per the guidelines, companies in scope of the NFR are obligated to disclose information on their policies and practices related to conflict mineral risk mitigation and due diligence. These disclosures must be in alignment with the Organisation for Economic Co-operation and Development’s (OECD) Due Diligence Guidance for Responsible Supply Chains from Conflict-Affected and High Risk Areas. This means companies must conduct thorough supply chain surveying, data collection, data analysis and reporting to be able to comply with the NFR. To learn more about how Assent’s Conflict Mineral Module can help your company meet its obligations under the EU NFR, visit our website.

Assent Compliance’s regulatory experts are closely following developments in the EU’s regulatory landscape. For guidance on how your company can prepare for compliance with the EU NFR Directive, contact our experts at