Over 20 leading NGOs working on corporate transparency have published a statement calling on EU policy-makers to define companies’ disclosure obligations on sustainability issues on the occasion of tomorrow’s high-level conference on the future of corporate reporting hosted by the European Commission in Brussels.
WHAT: The statement asks the Commission to take action and develop the corporate sustainability reporting framework through the ongoing review of the EU Non-Financial Reporting Directive, for which NGOs are providing specific recommendations. These requests are supported by research studies that evidence the need to specify a mandatory baseline of disclosure requirements and metrics as well as increasingly frequent calls made by the European Parliament, civil society and the investor community for a standardised reporting framework.
WHY: Currently, there is wide divergence in corporate reporting practices, which leads to a significant gap in the quality and usefulness of the information disclosed by companies. This hinders investor decisions and engagement on sustainability issues (crucial in the Commission’s Action Plan on Sustainable Finance and related legislative files), as well as the role of civil society and public authorities with regard to corporate accountability.
WHO: The list of 27 signatories includes Frank Bold, Amnesty International, WWF, Oxfam, Transparency International, ClientEarth, Global Witness, ShareAction, SOMO, ActionAid, Clean Clothes Campaign, Fair Trade Advocacy Office, among others.
See below a summary of the recommendations put forward by NGOs to clarify and develop the EU legal framework for corporate sustainability reporting.
* The EU Non-Financial Reporting Directive came into effect this year and requires large listed companies to disclose information on environmental, social, human rights and anti-corruption issues. In particular, the reports should include information on the company’s business model, policies and their outcomes, as well as any risks of severe impacts linked to the company and its supply chains and how these risks are managed. The Directive does not, however, specify which precise information and risks must be disclosed, which undermines the legislation’s objective to increase the relevance, consistency and comparability of information.
* The Sustainable Finance Action Plan was published by the European Commission in March with the aim to reorient capital flows towards sustainable investments and manage risks stemming from climate change, environmental degradation and social issues. The Action Plan has led to the establishment of a Technical Expert Group on Sustainable Finance, several analytical and consultative work by European institutions, related agencies and advisory bodies, as well as three specific legislative proposals on investors’ duties, the development of an EU taxonomy and low-carbon benchmarks.
*UNGPs refers to the United Nations Guiding Principles on Business and Human Rights, a framework endorsed by the United Nations Human Rights Council in 2011, that provide the first global standard for preventing and addressing the risk of adverse impacts on human rights linked to business activity, and continue to provide the internationally accepted framework for enhancing standards and practice regarding business and human rights.
*The statement has been coordinated by Frank Bold, a purpose-driven law organisation coordinating the Alliance for Corporate Transparency Project. For any queries, please contact susanna.arus@frankbold.org.
*The full list of signatories: ActionAid, Amnesty International, Business and Human Rights Resource Centre, Clean Clothes Campaign, ClientEarth, CORE Coalition, E3G, European Coalition for Corporate Justice, Ecologistas en Acción, Ethical Consumer, Fair Trade Advocacy Office, Forest Peoples Programme, Frank Bold, Future-Fit Foundation, Germanwatch, Global Witness, India Committee of the Netherlands, London Mining Network, NeSoVe, Oxfam, Rights and Accountability in Development, ShareAction, SOMO, The Equality Trust, Themis Research, Transparency International, WWF.
You can see the response letter from Mr Valdis Dombrovskis, Vice President of the European Commission here.
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