Non-Financial reporting will help making the Corporate World more Responsive:
Michel Barnier, the European commissioner for internal market & services spoke at a conference on sustainability and enlightened the steps and measures taken by the commission to promote non-financial reporting in the corporate world for a long term success.
The speech started from the current financial and economic situation of Europe still trying to recover from financial crises in 50 years which spread aggressively and affected everyday life of a lot of citizens and reputed companies. He concluded one key reason of the current situation of Europe and that is “short term focus which has dominated the corporate sector for a long time”. Overcoming these financial crises is of course a goal of today. Various strategies have been adopted to tackle this following the recommendations of G-20 which also requires IASB & FASB to finalize their work on outstanding areas to achieve high quality standards.
Michel Barnier comments on this and says if soundness of financial sector is to be sustainable then we will have to come out from short-termism and focus on long term strategies which are hard to beat by any financial crises. In order to achieve long term success we must focus on better customer satisfaction, obligations towards employees, public authorities and local communities. There is only one key to avoid short-termism which is creating transparency in all the corporate areas.
Barnier further said that Europe has taken serious measures to achieve this:
- European commission amended the European accounting legislation in April 2013 to get additional information about environmental and social matters from big companies.
- Barnier announced that Commission will expand the reporting requirements for banks which they must comply with to transparently disclose their profits and taxes paid in every country.
Barnier, in response to the criticism on Europe being so speedy in taking these initiatives, responded and said that the initiatives taken by us in terms of imposing new obligations on banks and amendment in accounting legislation to require big companies to provide information about social and environmental matters are the right way to progress towards transparency. However, we will closely monitor and ensure not to overburden companies, especially small and medium sized companies, with unreasonable requirements.