The non-financial reporting regulations are now in effect for those EU-PIEs with over 500 employees. Those reporters from January 2018 should ensure they are compliant with the regulations, which from our initial review generally do not look to have been fully addressed.
The new regulations, in our view, sought to both drive improvements in reporting but also to encourage companies to consider their wider impact. Whilst some requirements in non-financial reporting already existed, the updates to the Companies Act 2006 took this a step further.
Given the notable changes in the regulation, the PwC Corporate Reporting team conducted a review of some of the first companies captured by these new rules. Our findings show that the response has been mixed, and it is ultimately unclear if companies have chosen to ignore the change, were not aware of it or simply thought they were doing enough already.
Our review reveals some notable statistics and tips on next steps for future reporters, and those who may need to make improvements in year two.
The 3 focus areas coming out of our review
Whilst there is broad scope for improvement, we see the focus areas that really get to the heart of this reporting requirement as follows.
- Recognise the existence of the regulations
Demonstrate you are aware of the regulations and signpost where they are addressed in the annual report. Also highlight where you have omitted a disclosure. - Explain your policies and don’t forget to mention any due diligence
Do more than simply list policies – explain these where they are important. Consider what assurance and due diligence is gathered – if there really is none, should there be? - Disclose your most important impacts – positive and negative
Explain your choices and link them to your strategy, business model and risks where appropriate. Don’t just list areas where you’ve reduced your impact on a quantitative basis, regardless of their significance.
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