As the Council of the European Union announces the adoption of the directive for the disclosure of non-financial information, high spirits are dampened by concerns around implementation.
The result of months of painstaking negotiation and debate, the directive will require around 6,000 listed large businesses across the EU to include environmental and social impact information in their financial reporting.
With the European parliamentary elections in May looming, negotiations intensified at the beginning of the year, leading to a draft directive being agreed between the Greek presidency of the EU Council and the European Parliament (EP) in February.
The draft was also endorsed by the Committee of Permanent Representatives (COREPER), responsible for monitoring issues on the Council’s agenda.
In March the Committee on Legal Affairs (or JURI) of the EP unanimously backed the non-financial reporting rules, which in April were voted in favour by 599 votes to 55, with 22 abstentions the EP plenary session.
However, the directive has not specified how businesses are to report the information, and with no IFRS-equivalent standard setter for non-financial information reporting, consistency across member states is likely to remain an issue.
Climate Disclosure Standards Board (CDSB) managing director Mardi McBrien said she acknowledges the EU’s intent, but aired concerns that "as drafted, the directive will not sufficiently address the information gap due to the lack of consistent and comparable information that will be reported."
As such, she urged the European Commission to further develop its guidance "with consistency in mind", as well as recommending member states do the same when implementing it.
CDSB technical manager and co-author of the CDSB Reporting Framework Jarlath Molloy said CDSB has been working alongside industry stakeholders, including firms and membership organisations, to help them establish ways to report "consistent, comparative and timely information".
CDSB plans to open a second consultation on the expansion of its framework in October, in the lead up to its spring 2015 publication date.