At the end of the year, the new directive on the disclosure of non-financial information was approved in the European communication framework with the aim of reinforcing the regulations on the communication of environmental, social and corporate governance information.
A regulation which provides for a drastic change in the content of the reports that companies have to present, both in the content of the report and in the new standards, whose approval is scheduled for next June and which cover all ESG axes: topics environmental, social and governance.
The main novelties of the new Directive for companies are:
- increase the scope of your application on the companies that, directly or indirectly, will see the effect of the directive.
- guarantees the impartiality through the execution of audits by independent entities.
- foresees the double materiality impact and financial since they must include information in accordance with the EU Taxonomy regulation and the Sustainable Finance Regulation and, in addition, add a prospective that includes objectives and progress.
- Name the report “Information on sustainability” instead of “Statement of non-financial information”, as until now it was identified.
- The company must also indicate How did you identify the information? communicated in the report.
- single window: the European Commission will provide a digital platform for access to public financial and sustainability information on companies throughout the EU. This will be presented in electronic format for companies to share the information.
For the first time, companies will have to submit a detailed report on ESG issues: environmental aspects (policies, management systems and results on climate change, pollution, water and marine resources, biodiversity and ecosystems, resource consumption and circular economy), social aspects (policies, management systems and results on the company’s people; workers in the value chain (outsourcing); affected communities; customers and end users) and governance aspects (corporate policies and culture, prevention and detection of corruption or bribery, political influence, lobbying practices, payment practices).
To which companies does the new Directive apply?
The companies that will have to adjust their reports in order to comply with the upcoming regulations are:
- All large companies, whether or not they are listed on the stock markets.
- Non-EU companies, but with a turnover of more than 150 M euros in the EU.
- SMEs listed on the stock market.
- Unlisted SMEs and micro-enterprises that will be affected when large companies report their practices and impacts across the value chain.
- Subsidiaries with the category of SMEs, which must publish the management report of the parent company, referring to the fact that it is exempt from presenting information on sustainability, (an exemption that also applies to companies from third countries).
The rules will begin to apply between 2024 and 2028, according to the type and size of the company. These are the dates to keep in mind:
- On January 1, 2024 for large public interest companies (more than 500 employees) already subject to the directive on non-financial information. They must deliver their reports in 2025.
- On January 1, 2025 for large companies not subject to the directive on non-financial information (more than 250 employees and/or a turnover of 40 million euros and/or 20 million in total assets). They must deliver their reports in 2026.
- On January 1, 2026 for listed SMEs and other companies, which must submit their reports in 2027.
- SMEs may delay it until 2028.
