A proposal to introduce new sustainability reporting requirements across the European Union could provide a quantum leap in transparency and accountability among European companies, if accepted, the Global Reporting Initiative said.
The European Commission has adopted a proposal which would require large companies to disclose information on the major economic, environmental, and social impacts of their business as part of their annual reporting cycle.
"The proposal could be the vital catalyst that is needed to usher in a new era of transparency in the largest economic region in the world," Teresa Fogelberg GRI deputy chief executive said.
The proposal contains a ‘report or explain’ approach, requiring companies to provide information on their strategy, results and risks in six key areas - environmental, social and employee-related matters, human rights, anti-corruption and bribery.
Companies that are already producing a standalone sustainability report using recognized frameworks will be considered to have met the requirements.
At present, fewer than 10 per cent of the largest EU companies regularly produce sustainability reports. Since a ‘report or explain’ policy was implemented in Denmark in 2009, disclosure among large Danish companies has risen to 97 per cent, the GRI announced.
The directive has to be ratified by both the European Parliament and the Council of the European Union under a complicated dual system. It may not be ratified before elections of the European Parliament in June 2014, according to the GRI.