First proposals for the implementation of the European CSR Directive in German law have been published:
In April of this year, the Federal Ministry of Justice and Consumer Protection (German BMJV) published a concept for the implementation of the European CSR Directive into German law. A first draft of this is expected by the end of 2015. The CSR Directive stipulates new reporting commitments for large companies. In future when making their annual reports, they must be more geared to significant non-financial aspects of corporate activity.
Who is affected? The requirement for the disclosure of non-financial information primarily concerns large companies of public interest with more than 500 employees. These include listed as well as some non-listed companies, such as banks, insurance companies, financial service providers. The companies concerned are expected to report for the first time in their 2018 report on the fiscal year 2017. The extent to which small and medium-sized enterprises (SME) are affected by the CSR Directive remains to be seen. However, it is already clear that such companies should actively inform themselves about the reporting requirements for large companies if they are a link in their supply chains.
What must be reported? The companies must report on environmental issues, concerns of workers and social concerns, respect for human rights, the fight against corruption and bribery, and diversity in their governing bodies. On the subject of diversity for example, information must be provided on whether there is a diversity concept, the criteria on which this is based, and how it is implemented. The principle of “comply or explain” applies, i.e. if an aspect is not reported, the company has to provide justification for this.
How is the report made? Information on non-financial aspects can be integrated into an existing annual report or in a separate document, e.g. in a sustainability report. There are no requirements for the implementation in a sustainability report. The companies may, for example, use the framework of the UN Global Compact, the OECD guidelines, the ISO 26000 standard, the Global Reporting Initiative or the German Sustainability Codex.
How is compliance monitored? The European CSR Directive requires that the information must be certified by an annual auditor. This verifies that information on non-financial issues and diversity has been provided. The Member States may decide individually whether to stipulate a substantive review of the information provided. In Germany, this is not planned at present.