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Sustainability Newsletter 2017-02 Law of September 3rd 2017 related to non-financial information

Law of September, 3rd 2017

Belgium has translated the European Directive related to the publication of non-financial information and diversity information for some large entities in the law of September, 3rd 2017. This law amends article 96 of the company code concerning the management report content.

This law applies to public interest entities for which:

  • the average number of employees exceeds 500 during the financial year, and
  • Either the balance sheet total exceeds EUR 17 million or the net turnover exceeds EUR 34 million.

The non-financial information will be published for the first time for accounting year 2017.The non-financial information to be published includes a description of the diversity policy applied for board members, executive committee members, other members of management & CEO. The management report will also have to disclose the objectives of this diversity policy, the implementation measures, and the results reached. This should cover at the very least the efforts made in order to ensure that at least one third of board members are of a different sex than the rest.

 

Comply or explain

In application of the “comply or explain” principle, the company that doesn’t have a diversity policy in place needs to give its reasons.

In addition, with regard to the publication of non-financial information, Belgium has made use of, despite criticism, the option left in the directive which allows the companies concerned to not publish information that could harm seriously their commercial position provided the condition that such omission does not preclude a fair and balanced understanding of business developments.

The large public interest entities should also include in their management report environmental, social and human rights information.

 

Review by Auditors

For both non-financial and diversity information, the auditor will have to review whether the information has been provided. The task of the auditor is to check the consistency of the information provided in regard to the annual accounts for the past financial year.

 

How to implement it?

In order to help companies with those changes, the European Commission has published a communication containing "Guidelines on non-financial information”. This guidance contains a list of standards and methodological recommendations for the drafting of the report.

This report involves considerable work in collecting and verifying information. The compliance officer will, once again, be very involved in this work and exceptionally exposed in the event of publication failure.

 

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