Submissions on a proposed EU Directive on the rules for the disclosure of non-financial and diversity information by large companies

1.     Introduction

The Joint Committee on Jobs, Enterprise and Innovation invites submissions on a proposed Directive of the European Parliament and of the Council, amending Council Directives 78/660/EEC and 83/349/EEC, as regards the disclosure of non-financial and diversity information by certain large companies and groups  (COM(2013)207)(final).

The European Commission has proposed an amendment to existing accounting legislation in order to improve the transparency of certain large companies on social and environmental matters. Under the proposed new rules, the companies concerned will be required to disclose information on policies, risks and results as regards environmental matters, social and employee-related aspects, respect for human rights, anti-corruption and bribery issues, and diversity on the boards of directors.

Under its Orders of Reference, the Joint Committee is tasked with the parliamentary scrutiny of draft legislative acts under its remit which are published by the European Commission. 

At its meeting of 18 June 2013, the Joint Committee agreed that the aforementioned draft proposal warrants further scrutiny and agreed to seek submissions from interested parties on the proposal.  

2.    The Proposal

The proposed directive would amend the Accounting Directives (Fourth and Seventh Accounting Directives on Annual and Consolidated Accounts (78/660/EEC and 83/349/EEC) respectively). The proposal sets a requirement for certain large companies to disclose in their annual reports relevant non-financial and diversity information, ensuring a level playing field across the EU, the rationale being that enhanced transparency may help companies to better manage non-financial risks and opportunities, and thus improve their non-financial performance.

The proposal has the following key objectives:

  • to increase the transparency of certain companies, and to increase the relevance, consistency, and comparability of the non-financial information currently disclosed, by strengthening and clarifying the existing requirements;
  • to increase diversity in the boardrooms of companies through enhanced transparency in order to facilitate an effective oversight of the management and robust governance of the company;
  • to increase the company's accountability and performance, and the efficiency of the Single Market.

 

The main points of the proposed directive are as follows:

i) Non-financial information: The proposal will require certain large companies to include a statement in their Annual Report including material information relating to at least environmental, social, and employee-related matters, respect of human rights, anti-corruption and bribery matters. Within these areas, the statement will include (i) a description of its policies, (ii) results and (iii) risk-related aspects.
The obligation will only apply to those companies where the average number of employees exceeds 500, and exceeds either a balance sheet total of €20 million or a net turnover of €40 million. This threshold, higher than the one currently applied within the Accounting Directives (250 employees), limits any undue administrative burden. It is estimated that, on this basis, the new requirement would cover around 18,000 companies in the EU.

ii) Diversity: The amendment will require large listed companies to provide information on their diversity policy, including aspects concerning age, gender, geographical diversity, and educational and professional background. The information will be included in the corporate governance statement and will have to contain the objectives of such a policy, its implementation and the results obtained. Companies not having a diversity policy will only be obliged to explain why this is the case.
The Proposal is available in full here.

3.    Views sought and Format of Submissions

The views of all interested parties would be welcome on any or all aspects of the proposal, including in relation to any particular difficulties or problems envisaged in the implementation or consequences of the proposal in the Irish context.  

Respondents are requested to make their submissions in writing and, where possible, by email. With regard to the latter, respondents are requested to ensure that electronic submissions are furnished in an unprotected format.
As a general guideline, submissions should consist of a separate document accompanied by a covering letter. Submissions should be presented as concisely as possible. The covering letter should contain your name and contact details (phone number and postal address and, if available, an email address). If the submission is on behalf of an organisation, you should indicate your position in the organisation. You should also indicate if you would be prepared to appear in public session at a Joint Committee meeting if so invited.
The main document should contain the following information:

1.    A brief introduction, for example, explaining your area of expertise or information regarding your organisation;
2.    Any factual information that you have to offer, from which the Joint Committee may be able to draw conclusions, or which could be put to other parties for their reactions;
3.    Any recommendations to the Joint Committee (these should be as specific as possible and should be summarised at the end of the document); and
4.    An executive summary of the main points made in the submission, if your document is more than 10 pages long.
As already indicated, submissions should, where possible, be made by electronic means to jei@oireachtas.ie.  Hard copies are not required in this case. Alternatively, submissions can be posted to the address below.

4.    Making a submission is a Public Process
The Joint Committee is not obliged to accept your document once it has been submitted, nor is it obliged to publish any or all of the submission if it has been accepted. However, the operations of a parliament are a public process, and you should be aware that any submissions made to a Joint Committee may be published either as part of a Joint Committee report, or separately, if the Joint Committee decides to do so.

A more detailed document outlining the guidelines for making a written submission can be viewed below, or can be obtained from the Clerk to the Joint Committee.

Making Submissions and Presentations to Oireachtas Committees

The Members of the Joint Committee are:
Deputies: Dara Calleary, Áine Collins, Michael Conaghan, Damien English (Chair), Tom Fleming, Seán Kyne, Anthony Lawlor, John Lyons, Peadar Tóibín.
Senators: Deirdre Clune, David Cullinane, John Kelly, Michael Mullins, Feargal Quinn, Mary White.

5.    Deadline

The deadline for receipt of submissions is 3pm, Friday, 06 September 2013.

6.     Queries

Any questions regarding the consultation should be emailed to jei@oireachas.ie.

Marie Fennell
Clerk
Joint Committee on Jobs, Enterprise and Innovation,
Kildare House,
Kildare Street,
Dublin 2.

01 6183929
Email jei@oireachtas.ie

 

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