Corporate social responsibility (CSR) becomes mandatory
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In 2014 the European Union adopted the corporate social responsibility reporting requirement, to be put into effect through Directive 2014/95/EU. This widened companies’ obligations to report on non-financial matters. From 1 January 2017 the CSR Directive will also be transposed into national law – and breaches will carry fines of up to ten million euros.
Corporate social responsibility – disclosure obligations for companies
From 1 January 2017 more companies will be required to publish a sustainability report. Companies that breach the legislation face fines of up to ten million euros. The rules apply to companies with a balance sheet total of more than €20 million or turnover of more than €40 million. The sustainability reporting requirement also applies to companies with more than 500 employees. The federal government obliges all companies that operate as “capital market-oriented” corporations to act sustainably. The reporting duty also covers insurance companies and credit institutions that meet the criteria above, regardless of their legal form. According to estimates, around 550 companies in Germany are affected by the reporting requirement. Earlier estimates assumed that around 6,000 companies would be affected by the new law – so the rules are considerably broader than previously thought. The burden on small and medium-sized businesses is to be kept very low.
Acting sustainably – which topics are covered?
The sustainability reporting requirement covers the following matters:
- Environmental matters, in particular water and energy consumption, greenhouse gas emissions and air pollution
- Employee matters, in particular health protection, workplace safety and equality
- Social matters, in particular dialogue at regional level
- Combating bribery and corruption
The fine of up to ten million euros is considerably higher than the €50,000 fine recommended by the European Union. Companies that act sustainably and want to prove it have to set aside around 40 working days to produce a sustainability report. The time and money needed for a corporate social responsibility report ultimately depend on the size of the company.
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