The government has published its response to their consultation on the EU Non-Financial Reporting Directive (2014/95/EU) and issued draft regulations. The Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016 will require relevant companies to prepare a non-financial information statement as part of their strategic report covering a number of human rights issues. The new regulations have been laid before parliament and are likely to come into force very shortly as they apply to financial reporting for relevant companies and partnerships from 1 January 2017.
The Regulations apply to:
•traded companies (i.e. those with securities admitted to trading on regulated markets)
•authorised insurance companies; and
•those companies carrying out insurance market activities
Companies which benefit from a ‘small’ or ‘medium sized’ company exemption need not comply. Companies or groups with, on average, less than 500 employees during the relevant reporting period are also exempt.
The Regulations amends the Companies Act 2006 and whilst they sit alongside the provisions requiring the production of a strategic report, they have been kept separate from them.
If caught, an organisation will need to report to ‘the extent necessary for an understanding of the company’s development, performance and position’ the impact of its activity relating to, as a minimum –
1.environmental matters (including the impact of the company’s business on the environment)
2.the company’s employees
4.respect for human rights, and
5.anti-corruption and anti-bribery matters
The organisations policies in these areas will need to described as well as setting out how risks in these areas are managed.