Proposed European legislation on non-financial reporting is an opportunity for economy
Eurosif, Eumedion, CDP, CDSB, EFFAS, UNEP-FI, ICGN and IIGCC strongly support the European Commission proposal published on 16 April mandating large European companies to report material non-financial information and their diversity policy in their annual reports.
The organisations believe that while some aspects of the proposed legislation can be strengthened, the legislation must not be weakened by the co-legislators.
The above group of investor-led platforms or initiatives represents over 700 institutional investors or financial institutions, of which a large part is based in Europe, and managed assets over EUR65trn.
Investors’ interest in corporate non-financial information is growing. As of end of 2011, assets managed under investment strategies incorporating non-financial information represented in excess of EUR10.5trn globally, of which almost two thirds are managed by European investors3. In addition, investors managing in excess of EUR65.8trn assets under management support the disclosure of corporate greenhouse gas emissions and climate change data.
This growth is in part fuelled by the mounting evidence that there are links between how well a company manages environmental and social issues and its financial performance or access to lower cost of capital.
The proposed legislation will help investors by making more relevant information available from a larger number of European companies.
It therefore represents a significant step forward for European and international investors who seek timely, material, comparable and forward-looking information on non-financial risks and opportunities, in order to make better informed investment decisions. Failure to adopt the legislation will make such decisions more difficult and costly for investors, and will increase the risks of harming European companies’ international competitiveness.
By offering greater flexibility and avoiding the imposition of overly costly requirements on European companies, especially small and medium sized ones, the legislative proposal should not be seen as a burden on companies, but an opportunity to increase European companies’ long term competitiveness and therefore Europe’s long term sustainable growth prospects.
The signatories to this press release therefore jointly urge the European Parliament and the Council to adopt the legislation proposed by the European Commission without weakening the provisions of the text.