Integrated Reporting: A Solution for European Business? - CSR Minute for November 18, 2013

Integrated reporting may be the way out of a dilemma now facing European business. EU companies are looking at a price tag of between 150,000 and 600,000 euros annually to comply with new, proposed regulations on CSR reporting put forward earlier this year by the European Commission. That cost guesstimate comes from BusinessEurope, the European employers’ umbrella organization. The EC had originally projected costs of only 5,000 euros annually for the upgraded reporting. The higher estimate has caused the Federation of German Industries, BDI, which represents more than 100,000 enterprises, to call for the complete withdrawal of the EC’s proposal. BDI’s argument is that this regulation comes with a too-high price tag that puts European businesses at a competitive disadvantage. The original proposal, laid out last spring, requires companies to step up their CSR reporting by including non-financial information, such as their diversity and environmental policies, and to describe their progress in those areas. It also requires reporting obligations to be extended throughout companies’ entire supply chains. And, this is the catch: larger companies would be required to report non-financial information in each country in which they operate, rather than issuing one report for all their European operations. Around 18,000 companies would be affected by these new rules, compared to the 2,500 organizations that now already disclose environmental and social information. How to have more transparency but at an affordable cost? One solution may be integrated reporting, in which companies apply CSR standards to each separate part of the business rather than producing a separate report and adding it as an appendix, as suggested by the EC’s proposal. It’s a cost-effective answer to the increasing calls for more corporate transparency. I’m John Howell for 3BL Media.