For months, Institut Cerdà has been working with companies from all sectors to help them meet the new parameters of the so-called non-financial information law. On 29th December 2018, the BOE published Law 11/2018. This amended the Commercial Code, the consolidated text of the Capital Companies Law and the Accounts Auditing Law 22/2015 (20/07/2015), regarding non-financial information and diversity.
The new regulation set as a priority objective the identification of risks to improve sustainability and increase the confidence of investors, consumers and society in general. It also establishes the obligation of companies to add the disclosure of non-financial information, such as social and environmental factors, in their corporate information. This means that aspects that until now were in the background in the information published by companies are now given the same level of consideration and relevance as financial information. As the Law points out, the disclosure of non-financial information, and information related to corporate social responsibility, is important because it helps the performance of companies and their impact on society to be measured, monitored and managed.
A company’s non-financial information report must, as a minimum, reflect the impact of its activity on environmental and social issues, on respect for human rights, and also on the fight against corruption and bribery. It must also include information on staff related initiatives including, where appropriate, the measures that have been adopted to favour the principles of equal treatment and opportunities between women and men, non-discrimination and inclusion of persons with disabilities and universal accessibility.
Many companies are not used to collecting and preparing this information. For this reason, Institut Cerdà has launched a specific support service for the preparation of the report by specialists in the environment, social responsibility and sustainability. Also, the law establishes that the State of Non-Financial Information must be verified by an independent provider of verification services so that said information is free of relevant errors.
The new legislation is mandatory for the following types of entity: limited companies, and companies that formulate consolidated annual accounts (Groups of Companies), which have, on average over 500 staff; Public Interest Entities; entities that during two consecutive years meet two of the following three criteria: total assets >20 million euros, total turnover >40 million euros, average number of employees >250.
Three years after the approval and entry into force of the new Law, the obligation will be extended to more companies. These will include all those with more than 250 workers who are considered public interest entities in accordance with the audit legislation of accounts- Also those that during two consecutive years, meet, have either a total turnover of over 20 million euros or total net business of over 40 million euros.