Non-financial disclosure requirements

The increase of importance of non-financial (risk) management and corresponding information needs from stakeholders is a growing global trend. The increased focus on non-financial information was recognized and formalized by the European Parliament when it introduced Directive 2014/095/EU regarding the disclosure of non-financial and diversity information by certain large companies and groups (the “EU Directive”).
The EU Directive has been implemented in Dutch law as the Non-Financial Information Disclosure Decree (Besluit bekendmaking niet-financiële informatie, the “NFI Decree”) and the Diversity Policy Disclosure Decree (Besluit bekendmaking diversiteitsbeleid, the “Diversity Decree”, together with the NFI Decree the “Decrees”). The Decrees came into effect for the annual reports of certain Dutch companies, covering periods starting on or after January 1, 2017. The Decrees require certain companies to prepare non-financial statements in addition to the required Dutch corporate governance statement.

NFI Decree
The NFI Decree applies to Dutch large public interest companies (“LPICs”), such as listed companies, non-listed banks, certain insurance companies and institutions designated by the government as public interest companies, with more than 500 employees.
Pursuant to the NFI Decree, LPICs are required to prepare a non-financial statement as part of their management board report (the “NFI Statement”). Below we summarize what the NFI Statement should at least include, insofar required for a good understanding of the developments, results, position and the effects of the activities of the LPIC;
(i) a brief description of its business model;
(ii) a description of and the results of its policy in relation to environmental, social and employee matters, respect for human rights and anti-corruption and bribery matters;
(iii) the principal risks related to the policy and how the risks are managed; and
(iv) the disclosure of non-financial key performance indicators, relevant to its particular business.
If the LPIC does not have a policy as meant under (ii), a clear and reasoned explanation must be provided in the management board report.

Diversity Decree
The Diversity Decree applies solely to Dutch large listed companies. Pursuant to the Diversity Decree, qualifying companies are required to prepare a statement as part of their management report, regarding the diversity policy of the composition of the board of managing and supervisory directors (the “Diversity Statement”). The Diversity Statement should include the goals, the manner of implementation and the results of the diversity policy. If the company does not have a diversity policy, a clear and reasoned explanation must be provided in the management board report.

Improvement of reporting requirements under the Decrees
In the Netherlands, the Decrees explicitly states that the required information is to be disclosed in the management board report. The Dutch Authority for the Financial Markets (“AFM”) is responsible for supervising the operation of the financial markets and in this role supervises (non)financial reporting. Two reporting years have passed since the Decrees were implemented in March 2017. The AFM has conducted research regarding the implementation status for the first reporting year (financial year 2017). The AFM concluded that, amongst others, the Decrees are not complied with in all respects, that companies can make the reporting of their non-financial information more relevant, more balanced and more comparable and that companies need to improve and broaden their reporting on diversity.

In a few months from now, companies will have to prepare their annual report and management board report for the financial year 2019. If you require support in order to improve the implementation process of the Decrees, and the implementation process of other guidelines or decrees, e.g. the Contents of the Management Board Report Decree (Besluit inhoud bestuursverslag), the Dutch Corporate Governance Code or the guidelines on reporting on climate-related information, Van Campen Liem is happy to assist.

For more information please contact:

Eva Klein Obbink 

or Anna Zhu