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ESBG response: Consultation on non-binding guidelines for non-financial information

Boost to company disclosure of social, environmental information important, as long as flexibility for undertakings is allowed, notably regarding reporting frameworks. 



>> See the .pdf version







Published on website: 26 April 2016



​​​ESBG Response to the Commission Consultation on Non-Binding Guidelines ​for Reporting of Non-Financial Information by Companies

 

ESBG (European Savings and Retail Banking Group)

Rue Marie-Thérèse, 11 - B-1000 Brussels

ESBG Transparency Register ID 8765978796-80

​07 April 2016

>> See the .pdf version


The Directive 2014/95/EU on disclosure of non-financial and diversity information by certain large undertakings and groups entered into force on 6 December 2014, with the objective of improving the transparency of certain large EU companies as regards non-financial information. The European Commission have since launched this public consultation, with the objective of collecting information and views from stakeholders on guidance on reporting of non-financial information by companies across all sectors.

ESBG believes that the improvement of company disclosure of social and environmental information is a very important matter, as long as flexibility for undertakings is allowed, notably regarding reporting frameworks. 


ESBG Response to the Consultation


Questionnaire:


Q1 What aspects of disclosure of non-financial information do you think that should be addressed by the GUIDELINES? 

​Please, order in terms of importance (1 least important, 9 most important) 

8 Materiality/Relevance 
5 Usefulness 
7 Comparability 
9 Avoiding undue administrative burden 
2 Comprehensiveness 
4 Fairness and balance 
3 Understandability 
6 Reliability 
1 Other, please specify: N/A 

Q2 Who should be considered in your opinion the main audience of the non-financial statement? 

Please, check the box of the alternative that you consider more appropriate.

o      The shareholders 
o      The investment community in a broad sense 
o      Users of information with an economic interest, such as suppliers, customers, employees, etc. 
X All users of information (including consumers, local communities, NGOs, etc.) 

o      Other, please specify: N/A 


Q2.1 Would you, please, provide a brief explanation? *(text – 400 characters)

All stakeholders, clients, shareholders and the investment community – if interested - should have an equal opportunity to be informed about NFI. 


Q3 In your opinion, what features make a piece of information material/relevant for the purposes of the non-financial statement? 

Please, order in terms of importance (1 least important, 7 most important) 

3 Useful for the management/directors of the company 
6 Relevant for shareholders or investors' decision-making 
4 Necessary to understand the impacts of the company's activity 
5 Necessary to understand the company's development, performance and position 
7 Necessary to understand how the company manages non-financial risks 
2 Other, please specify: Relevant for stakeholders in general 

Q3.1 Would you, please, provide a brief explanation? *(text – 400 characters)

If you want to change the behavior of people and organizations you must make all stakeholders aware of the consequences of an enterprise’s activities and risk management.

II. Content of the non-binding guidelines 


Q4 Do you think that the GUIDELINES will be more useful for companies and users if they set out general principles and key ideas or if they put forward solutions in a detailed manner, including on specific sectoral issues? * 

Please, indicate on a scale from 1 to 5 (1 geared towards general principles, 5 high level of detail/prescription)
3   

Q4.1 Would you, please, provide a brief explanation? *(text – 400 characters)

In line with the rules of GRI G4, where companies have to start with a “materiality analysis”, information should be specific and individual for each company. While a set of general information and key indicators which have to be answered by all companies (e.g. total energy consumption and total CO2 emissions) would be helpful providing clear and concise information, adapted to each sector, may help to achieve more comparability in the information reported.

Q5 Please, provide a brief description of how you think that the following matters should be treated in the GUIDELINES, including as appropriate how they should be defined and described: 


a. Business model: 

Not very detailed – general description only a few lines to get an idea about the business model. 

b. Policies: 

Not very detailed – general description about the guiding principles is enough.

c. Due diligence process: 

​Meaning is not clear.  

d. Business relationships: 

Providing information on business relationships where appropriate and where it does not harm the competitiveness of the company can be considered. 

e. Key performance indicators –KPIs: 

GRI Reporting framework is a good reference for indicators and therefore no additional KPIs are required.

f. Outcome of policies: 

The outcome of policies must be in line with the overall aims and strategies of the company in relation to its impacts on society and the environment.

g. Principal risks: 

There is a need to distinguish between risks to which the company is exposed and might affect its business (such as climate change and social developments - these can also be turned into opportunities) and the risks that can be created by the company.

h. Impact of the activity: 

The guidelines could refer to indicators that allow companies to showcase their positive impact together with their annual financial statements.

i. Adverse impacts: 

The guidelines could provide inspiration on how mitigating adverse impacts serves the overall strategy of the company.

j. Information omitted in exceptional cases where disclosure would be seriously prejudicial: 

In general no company should be forced to disclose information which is seriously prejudicial - the guiding principle should be “report or explain”. 


Q6 How do you think that the GUIDELINES should approach the disclosure of key performance indicators (KPIs)? * 

Please, indicate your two preferred approaches (1 Best option, 2 Second preferred option). 

​o The GUIDELINES should highlight key principles on how to disclose relevant KPIs and complementariness with narrative and/or financial information as applicable 
o The GUIDELINES should make reference to KPIs proposed by other frameworks where addressing concrete matters or issues 
2    The GUIDELINES should include a comprehensive list of KPIs, general and sectoral
1   The GUIDELINES should provide flexibility for companies to exercise judgment in deciding what KPIs should be included in their disclosures
o Other, please specify: N/A 


Q6.1 Would you, please, provide a brief explanation? *(text – 400 characters)

It is likely that the market will decide what a company has to report. Companies with an intensive reporting, not the regulator, will set the trend defining in detail what has to be reported. A comprehensive list of KPIs, general and sectoral would increase reporting comparability between companies.

​Q7 Do you think that the GUIDELINES should include guidance on specific sectoral issues such as responsible supply chain management of conflict minerals? * 

Please, indicate on a scale from 1 to 5 (1 geared towards general principles, 5 high level of detail/prescription)
3

Q7.1 Would you, please, provide a brief explanation? *(text – 400 characters)
While general principles allow for flexibility a more detailed guideline would allow for enhanced sectoral reporting.

III. Interaction with other frameworks and other aspects 


Q8 How do you think that the GUIDELINES should relate to existing national, international or other EU-based frameworks (such as UN Global Compact, the UN Guiding Principles on Business and Human Rights, OECD guidelines for multinational enterprises, the ILO Tripartite Declaration of principles concerning multinational enterprises and social policy, EMAS, etc.)?* 

Please, order in line with your views (1 least in line, 6 most in line) 


2 The GUIDELINES should include detailed solutions and be an exhaustive document in a way that could make unnecessary for companies the use of other guidelines 

3 The GUIDELINES should be complementary to other frameworks 

4 The GUIDELINES should make reference to other frameworks where addressing concrete matters or specific issues 

5 The GUIDELINES should get general inspiration from other frameworks 

6 The GUIDELINES should explain how content produced in the context of other frameworks could be used in the non-financial statement 

1 Other, please specify: N/A 

Q8.1 Would you, please, provide a brief explanation? *(text – 400 characters)

There is a tendency to require that everything has to be defined and fixed by rules and regulation. If a company decided to use one of the proposed national frameworks (EMAS, GRI …) it should not be forced to report additional information.

Q9 Do you think that when preparing the GUIDELINES only the companies included in the scope of the DIRECTIVE should be considered, or that the interests, characteristics and/or requirements of other companies that prepare management reports should be taken into account as well? * 

Please, check the box of the alternative that you consider most appropriate. 
o Specific to the requirements of the companies under scope of the DIRECTIVE 
o Consider all large companies 
X   Consider all companies
o Focus on the requirements of the companies under the scope of the DIRECTIVE, but also propose best practice for other companies that prepare management reports 

Q9.1 Accordingly, do you think that the content of the guidelines should be different according to the targeted companies? Would you please, provide a brief explanation? *(text – 400 characters)

Guidelines should allow for flexibility and provide guidance on sectoral reporting according to which companies will undertake a materiality analysis and will provide specific and individual information for each company. 

Q10 [only for respondents that are companies] 

Does your company disclose annually relevant non-financial information? 
o Yes
X   No 

If so, does your company use any existing reporting framework(s)? 
N/A

If so, would you, please, indicate which one(s)? (text – 100 characters)
Most of ESBG member companies report based on GRI. 

IV. Disclosures related to board diversity policy 


Q11 Should the GUIDELINES provide more clarity on what companies should disclose as regards their board diversity? * 

X   Yes  
o No
o No position


Q11.1 Would you, please, provide a brief explanation? *(text – 400 characters)

The more information and certainty that is provided while allowing for flexibility will enhance the level of reporting.

V. Final 

Please, upload, as needed, any relevant document or information that you consider useful for the purposes of this consultation.

​About ESBG (European Savings and Retail Banking Group)


ESBG brings together savings and retail banks of the European Union and European Economic Area that believe in a common identity for European policies. ESBG members support the development of a single market for Europe that adheres to the principle of subsidiarity, whereby the European Union only acts when individual Member States cannot sufficiently do so. They believe that pluralism and diversity in the European banking sector safeguard the market against shocks that arise from time to time, whether caused by internal or external forces. Members seek to defend the European social and economic model that combines economic growth with high living standards and good working conditions. To these ends, ESBG members come together to agree on and promote common positions on relevant matters of a regulatory or supervisory nature.

ESBG members represent one of the largest European retail banking networks, comprising of approximately one-third of the retail banking market in Europe, with total assets of €6,702 billion, non-bank deposits of €3,485 billion and non-bank loans of €3,719 billion (31 December 2014).
 
European Savings and Retail Banking Group – aisbl
Rue Marie-Thérèse, 11 ■ B-1000 Brussels ■ Tel: +32 2 211 11 11 ■ Fax: +32 2 211 11 99
Info@wsbi-esbg.org ■ www.esbg.eu

Published by ESBG. 30 March 2016

European Institutions; Non-financial reporting