The role of the EU in the promotion of extra financial reporting

If France has embarked on the path of non-financial reporting for more than a decade, initiatives in this area are gradually being developed in other countries of the European Union. This trend might result in a significant heterogeneity of approaches, and France has called for a European policy to be developed in order to avoid what could become a real problem for more and more companies with subsidiaries in several European countries. The communication of October 2011 recognized: "It is not excluded that the existence of different national requirements result in additional costs for businesses operating in several Member States."

Harmonizing the European non-financial reporting requirements is imperative and answers to a dual necessity: -meets the need of transparency expressed by public authorities, investors and organizations of civil society regarding the risks generated by firms activities on the social and human environment.

  • provides tools to business leaders in order to improve social and environmental governance relying on standard which may favor comparisons.

The draft of a European directive on extra financial reporting issued by the European Commission on the 16th of April 2013, which preparation had been strongly encouraged by France (see contribution to seminars of 2009-2010) is consistent with this requisite harmonization, hoping that some of its shortcomings will be addressed during the discussions that will take place in the coming months.

The challenge is to restore a relationship of trust between citizens and companies, a relationship which has been badly damaged through the recent crisis: “Disclosure of social and environmental information, including climate-related information, can facilitate engagement with stakeholders and the identification of material sustainability risks. It is also an important element of accountability and can contribute to building public trust in enterprises. To meet the needs of enterprises and other stakeholders, information should be material, and cost-effective to collect. (Communication of the 25th of October 2011).

Updated on: 07.05.13