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CSR reporting obligation

Sustainability and CSR reporting obligation: Government draft for the implementation of the CSR directive is available!:

 

On 21.09.2016, the Federal German government submitted the draft for implementation of the EU Directive 2014/95/EU (the “CSR” directive) into German law. This means that corporations and capital market-oriented companies, as well as banks and insurance companies who employ more than 500 employees as averaged over the year, exceed a balance sheet total of 20 million euros or revenues of 40 million euros will in future be obligated to disclose information on non-financial aspects of their business.

These aspects relate to environmental concerns, social and labour issues, the respect of human rights and the fight against corruption and bribery. Furthermore, listed companies must disclose information regarding diversity in their management and control bodies.

The reporting obligation will come into force for all financial years as from 31 December 2016, which means that those organizations affected must report non-financial aspects of their business activities of the financial year 2017 for the first time in 2018.

In order to comply with the reporting obligation, the affected companies are expected to request also relevant information from their suppliers along the supply chain. Thus, the directive will also be relevant to many smaller and medium-sized enterprises.

The principle of ‘comply or explain’ applies to the reporting process. This means if a company does not supply information on a specific area, a detailed explanation will then be required.

There are no specifications about the reporting format. The required information can be integrated into the business review (or another report format) or published as a separate report. Affected companies can orientate themselves to international, European and national reporting frameworks (e.g. OECD guidelines for multinational enterprises, Global Reporting Initiative, German Sustainability Code).

There must be a mandatory check on the existence of the required non-financial information by the balance sheet auditor; however, this does not extend to its actual content. This content can, of course, be reviewed at any given time by an independent auditor. In the event of breaches of the reporting obligation, fines can be imposed.

If you are affected by the CSR reporting obligation, we recommend that you determine possible gaps with regard to meeting content requirements by the end of 2016. In this way, you can include any required measures in the reporting for 2017 in good time.

Within the scope of a GAP analysis, Arqum provides you with an initial location assessment and together with you develops a CSR roadmap for your business. Arqum is also a training partner of the German Sustainability Code (DNK) and can support reporting in accordance with the German Sustainability Code.

Arqum would also be very happy to assist you even if you are not directly affected by the CSR reporting obligation but still want to prepare your business for CSR topics. For all interested companies Arqum is providing a webinar on the “CSR reporting obligation” on 13.12.2016. You can register via this link.

 

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