Jan 10, 2017

If you are a EU company or supply to the EU, you could be expected to be more transparent about CSR soon.

From 1 January 2017, EU countries will start implementing the Non-Financial Reporting Directive. This means that companies will have to release more information about their supply chain policies than before.

Who Does It Affect?

Companies in the 28 EU countries with 500+ employees. These are classed as public-interest entities in the EU. This is in total about 6000 companies.

But don’t stop reading just yet if you're not one of these companies! It will affect many more, including small suppliers. This is because buyers at reporting companies will need information from suppliers to use in their reports.

What Is It?

The directive means that countries will require companies to report more information about CSR. The first company disclosures should come in 2018. They have to report:

  • A non-financial statement: including environmental, social and employee matters, respect for human rights, and anti-corruption and bribery
  • A diversity disclosure: including diversity commitments in corporate governance.

Why Does CSR Reporting Matter?

The directive should improve transparency among large companies. It will also help consumers and investors to make informed judgements about companies and brands. It’s part of a global effort to make supply chains more transparent. Other examples of laws include the California Supply Chain Transparency Act and the UK Modern Slavery Act.

Will It Work?

Companies will still have a lot of flexibility about reporting. But the CSR ratings agency EcoVadis has studied the reporting quality of 21,672 suppliers in the EU. Importantly, EU companies are already better at reporting this information than the BRICS countries (Brazil, Russia, India, China and South Africa).

Certainly, if it shows itself to be successful, the new EU directive could provide a model for CSR reporting in other countries and regions.

To read more, download the new whitepaper from POOL4TOOL partner, EcoVadis.

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