On 15 April 2014 the European Parliament ratified the Directive on non-financial reporting. Its vote in the Council will follow shortly and after a legal-linguistic verification the final adoption is expected in September or October 2014. Twenty days later it will be published in the Official Journal of the EU and enter into force. Member States will then have 2 years to transpose it into their national legislation.
The new Directive marks a significant step. It will require large listed companies to report annually on principal risks to human rights, the environmental and social impacts linked to their operations, relationships, products and services – as well as aspects related to bribery and diversity – and their due diligence procedures for identifying, preventing and mitigating those risks. The reform recognises that such risks must be disclosed regardless of what a company considers being relevant, i.e. material, to the interests of its shareholders, which was the organising principle of the accounting law until now. This legislation is the first step in embedding into EU law the corporate responsibility to respect human rights and the environment as it is expressed in the UN Guiding Principles and OECD Guidelines for Multinational Enterprises.