Mandatory CSR for EU firms

Around 6,000 European businesses will soon be required to report environment and diversity data in their annual reports under new legislation formally adopted by the EU parliament

The new Directive will apply to “public interest entities”, which are defined as “mainly listed companies and financial institutions” employing more than 500 people, and will require them to disclose information on policies related to social and environment issues. Companies will also have supply data on the risks posed to their operations as well as their environmental performance.

Enterprises are not, however, expected to write a detailed report, with the legislation requiring only “concise, useful information” to give stakeholders an “understanding” of impacts. The rules also allow for disclosures to be made at the group level, rather than by individual companies.

Although the Directive does not specify how to report data – firms are allowed to use existing guidelines such as ISO 26000 – the commission has been tasked with developing its own guidance.

The final Directive represents a significant compromise on the proposals set out by the European commission last April, which would have required all large companies in the EU to report such non-financial data. However, member states, including the UK, were opposed to such a far-reaching approach.

Michel Barnier, EU commissioner for internal market and services, said that the final legislation still offered benefits to businesses, investors and society at large.

"Companies that publish information on their financial and non-financial performances take a longer-term perspective in their decision-making. They often have lower financing costs, attract talented employees and, ultimately, are more successful,” he said.