The EU Directive on Non-Financial Reporting is a new chapter in promoting Corporate Responsibility. It requires organizations with more than 500 employees– alongside financial reports - to account for their non-financial activities. In the Directive, among other things, the emphasis is placed on:
This new Directive raises sustainability reporting to the norm. Sustainability is no longer a voluntary initiative; instead it is a legal obligation. That has not yet sunk in for everyone: according to the EU 4000 of the 6000 targeted companies perform below par. How can that be?
The nature of the EU is partly to blame for this slow transformation. European legislation must be enforced in all member states; that regularly meets with resistance and therefore delay. In addition, there is still a lot of uncertainty about how companies must implement sustainability reporting. The Directive offers a lot of freedom for choosing your own approach. For example, companies can use ISO 26000, but also the EFQM Excellence Model or the guidelines of Global Reporting Initiative as a framework. Plenty of choice, but that can also be crippling: how do you continue to see the wood for the trees?
The EU is well aware of this and is organizing a series of workshops for 2016. Also, the Global Reporting Initiative made a valuable contribution with the advisory report, Making Headway. But all good intentions aside: support is crucial. Sustainability reporting only makes sense if it is supported an embraced by the business world and if the potential power of sustainability is recognized.
Sustainability reporting demands transparency and (self) criticism. All business processes are examined and that is good for how the company performs as a whole. Both shareholders and stakeholders obtain clear insight into business performance. In that way, a culture of continuous improvement can be created, which is good for the company, shareholders and (potential) investors. Financial and non-financial reports are therefore inextricably linked with each other. Sustainability reporting is then the ideal way of shaping the future, of creating long term value. That insight deserves a broad following. It’s time to wake up!
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