In March 2017, the German Bundestag passed the law to strengthen companies’ non-financial disclosure in their management reports and group management reports. The CSR reporting law, which is the implementation of the EU Directive 2014/95/EU (non-financial reporting), is called „Gesetz zur Stärkung der nichtfinanziellen Berichterstattung der Unternehmen in ihren Lage- und Konzernlageberichten“ (see the official legal text).
Target of the legislation is to improve corporate transparency in terms of social and ecological aspects, which is requested by stakeholders like investors, companies or consumers. Furthermore, the mandatory reporting is intended to provide incentives for companies to strengthen their sustainability commitment and to better assess their risks in this field.
Who is concerned?
Affected are all capital-market-oriented companies, as well as credit institutions and insurance companies, with a workforce of more than 500 employees, and whose balance sheet amounts to more than EUR 20 million, or whose revenues amount to more than EUR 40 million. According to a recent study, this concerns about 550 companies in Germany.
It is however likely that companies directly concerned will also intensify their inclusion of suppliers, e.g. also SMEs. In practice, this could lead to requests for sustainability-related information such as carbon footprint data.
When does the law come into effect?
According to the CSR reporting law, the concerned companies need to start reporting for fiscal years starting after the 31st of December 2016.
What has to be reported?
Companies need to provide information on environmental, employee-related and social issues, respect for human rights and the fight against corruption. You will need to give a description of the concepts followed, present the due diligence processes applied, the results of these concepts, the main risks and the most important non-financial performance indicators.
The non-financial declaration must be published not later than four months after your financial statement date.
How can you proceed?
The information requested by the CSR reporting law may be
- integrated into the annual report,
- published in parallel to the annual report
- published later than the annual report, within a defined time limit of 4 months. Where a separate CSR report is produced, the company must ensure that it is available on the company’s website for a period of ten years
In terms of framework, you can choose any reporting standard that fits your needs, for instance UNGC or GRI. An independent audit of the report is not mandatory.
What does DFGE recommend?
In order to generate the requested environmental KPIs, DFGE highly recommends assessing the company’s carbon footprint, which will provide you with KPIs such as CO2 emissions, energy consumption or waste generation.
Furthermore, DFGE recommends aligning your reporting to an already well-established standard such as the UN Global Compact or GRI, whose comprehensive documentation will facilitate your first steps in non-financial reporting.
We’d be happy to consult you which reporting and what KPIs your corporation should consider – get in touch with us via e-mail or call +49 8192 99733 20.
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