Large firms in Europe must report non-financial information, say investors

An alliance of investors has backed European commission proposals to force large firms based in the continent to report material non-financial information.

The group, which includes the European Sustainable Investment Forum (Eurosif), the Carbon Disclosure Project (CDP) and the Institutional Investors Group on Climate Change (IIGCC), represents over 700 institutional investors or financial organisations. It collectively manages over €65 trillion (£55 trillion) in assets.

The European commission tabled its non-financial reporting proposals in April, stating that the social and environmental transparency of certain large companies needed to be improved.

A recent survey conducted by Eurosif and the Association of Chartered Certified Accountants (ACCA) found that 90% of investors believe non-financial reports – such as ones covering corporate social responsibility and sustainability – are “essential”.

However, current non-financial disclosure was seen as lacking by survey respondents, with 93% claiming that current investor information made for difficult comparisons between companies.

The group of investors says that at the end of 2011, €10.5 trillion (£8.9 trillion) of assets were invested globally using strategies that took into account non-financial information.

Meanwhile, according to the CDP, which works to achieve greater non-financial transparency among large companies, investors managing €65.8 trillion (£56.1 trillion) are in favour of greenhouse gas emissions and climate change disclosure.

The objective of the European commission’s non-financial disclosure proposals is “to increase EU companies’ transparency and performance on environmental and social matters, and, therefore, to contribute effectively to long-term economic growth and employment.”

Further reading:

90% of investors say CSR and sustainability reports are ‘essential’

Ernst & Young report has sustainability at the top of corporate agendas

CSR and sustainability practices found to boost public perception of firms

Survey shows UK firms are getting complacent with supplier risks

The Guide to Corporate Social Responsibility 2013