LEGAL CONTEXT OF INTEGRATED REPORTING Tineke Lambooy 30 May 2012, Conference Integrated Reporting, Rotterdam Senior researcher Nyenrode Business University/ Associate Professor Utrecht University
Introduction Regulatory context Preview subjects of other speakers Various backgrounds 2
Public regulatory framework Dutch corporate law (Boek 2 BW) European Accounting Directives 4, 4A, 4B, 7; Modernisation Directive Annual Accounts/ Consolidated Accounts Annual Report Balance Sheet Profit & Loss Account Explanatory part 3
CSR in annual report Annual report shall include: "To the extent necessary for an understanding of such development, performance or position, the analysis shall include both financial and, where appropriate, non-financial key performance indicators relevant to the particular business, including information relating to environmental and employee matters." (Since Modernisation Directive 2003/51/EC; see also Com. Rec. 30 May 2001 on including envir. aspects in annual accounts) 4
Denmark/Sweden Denmark: 1,100 largest companies to include CSR policy in annual report or explain why no policy is in place ( comply or explain ) Exemption: Communication on Progress (UNGC/UNPRI) Sweden: State-owned companies to report on CSR (GRI) 5
Private regulatory frameworks Dutch Accounting Guidelines (Standards) of the Dutch Accounting Standards Board (Raad voor de Jaarverslaggeving) -> Guideline 400 re Annual Report GRI Guidelines on CSR reporting 6
Content and status Dutch Accounting Guidelines Proceed from: statutory provisions (Book 2 DCC) Incorporate: rulings Enterprise Chamber and Supreme Court (NL) Consider: applicable International Financial Reporting Standards (IFRS) as endorsed by EU Courts consider DAG in judging annual accounts/reports 7
Guideline 400 DASB (report) general information company + enterprise; legal group structure, organisation, core activities, important elements company policy analysis of the financial information in annual accounts; important risks; including non-financial key-indicators, including environmental and employee matters CSR aspects business activities company + int l supply chain; main problems + challenges; environmental + social + economic aspects company policies on above-mentioned issues; implementation thereof; results; expectations reflection of with stakeholder dialogue 8
GRI Guidelines on CSR reporting Various generations (G3.1 G4) Indicators on sustainability issues Multistakeholder process Functional links with UN GC, OECD, Earth Charter Assurance methodology Many mutinationals follow GRI 9
Integrated reporting Integrated reporting is not the same as CSR reporting Non-financial information Linking it to financial information Integrating various information streams into one report IIRC 10
E.g. business water dependency 11
Option 1: moving the business? 12
Option 2: capturing rain water + planting trees? 13
Resume Legislative foundations: almost non-existent Private regulatory regimes provide guidelines; no systematic framework yet on how to measure and what to report Choices to be made: 1. full integration all instructions in accounting laws 2. main instructions in law (principle based) and refer for detailed instructions to private regulatory regimes (as they stand from time to time) + comply or explain? What is your perspective? 14
Paper on this study: Tineke Lambooy and Rosemarie Hordijk, De tijd is rijp voor integrated reporting Tijdschrift voor Jaarrekeningenrecht, 2012, nr. 2-3 (May) t.lambooy@nyenrode.nl /t.e.lambooy@uu.nl /r.m.hordijk@uu.nl 15
16