As companies face increasing public scrutiny and regulation influencing the way they conduct their business, we have become a trusted adviser to our clients ensuring regulations and new requirements have timely implementation, using a pragmatic approach appropriate for that organisation.
Whether it is introducing the EU Non-Financial Reporting Directive requirements into your reporting, developing your business model, creating relevant non-financial KPI’s or reporting against UN Sustainability Development Goals (SDG’s), we have extensive experience in supporting clients to develop their narrative reporting.
In addition our corporate responsibility practice support ranges from health checks and competitor benchmarking, assessing communication and reporting from an external stakeholder perspective through to working with our clients to develop an expansive, multi-layered corporate responsibility strategy against specific, measurable objectives.
What’s new in reporting
Unlisted and Private Companies – The Companies (Miscellaneous Reporting) Regulations 2018 (Draft regulations) amends the reporting requirements contained in Part 15 Companies Act 2006 (CA 2006), in the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008. This sets out new reporting requirements including:
- How directors comply with Section 172 Statement;
- Statement about engagement with employees;
- Statement about engagement with suppliers, customers and others in a business relationship with the company;
- Statement of corporate governance arrangements;
- Publication of CEO’s pay ratio;
- Share price impact reporting;
Board Diversity Reporting – At a recent FRC launch event (September 2018) research undertaken by Exeter University looked at how companies have been reporting on diversity, against current legislative and Corporate Governance Code requirements. If you didn’t attend the event or haven’t seen the report yet, it looked at the current extent and manner of reporting by FTSE 350 companies on diversity at board and senior management levels.
It acknowledges that the quality of reporting has improved over the last few years but the quality of reporting in some areas is still poor. As an example they looked at how companies report against the four elements of Provision B.2.4 (Corporate Governance Code 2016):
- a description of the nomination committee’s process in relation to board appointments;
- the board’s policy on diversity, including gender;
- any measurable objectives that it has set for implementing the policy;
- the progress made on achieving the objectives.
Their research showed that only 15% of the FTSE 100 and 6% of FTSE 250 companies discussed all four elements. With an increasing focus on diversity reporting, including responsibility for the nominations committee to oversee the development of a diverse pipeline for succession to senior management in the new Code (2018), the focus on reporting around diversity initiatives is set to continue. Given the numbers and seniority of the delegates at the launch event it is a hot topic!!
EU Non-Financial Reporting Directive – In December 2016, the government published new regulations implementing the EU Non-Financial Reporting Directive applying to certain large companies and qualifying partnerships with more than 500 employees to disclose relevant and material environmental and social information. They apply for financial years beginning on or after 1 January 2017.
The new regulations require companies to disclose, to the extent necessary for an understanding of the company’s development, performance, position and impact of its activity, information relating to environmental, employee, social, respect for human rights, anti-corruption and anti-bribery matters.
The scope of the new regulations provide some additional requirements. All quoted companies are already required to provide some information on environmental, employee, social, community and human rights matters in their Strategic Report. Similar to the pre-existing requirements, disclosures relating to most of these requirements are only required when the information would be material.
The additional information required is:
- a requirement for companies to provide information that enables an understanding of the impact of its activity;
- disclosure of anti-bribery and anti-corruption matters;
- a description of any due diligence processes implemented by the company in pursuing the policies relating to non-financial matters; and the outcome of those policies;
- a description of the principal risks arising in connection with the company’s operations including, where relevant and proportionate, a description of business relationships, products and services which are likely to cause adverse impacts in those areas of risk; and how the company manages those principal risks.
Where a company does not pursue policies in relation to environmental, employee, social, respect for human rights, anti-corruption and anti-bribery matters, the company must provide a clear and reasoned explanation for not doing so.
If you require support in developing and embedding your corporate responsibility approach or now to report on your initiatives in your strategic report and non-financial reporting please email corporategovernance@asesoria-group.com or call +44 (0) 20 3053 8630.