Driving European accountability:
the creation of the EU Directive on sustainability reporting

The year 2014 was a landmark in the history of sustainability. That year it became mandatory for all large companies and their suppliers in the EU to report on their environmental, social, human rights, gender and anti-corruption strategies and results. The global corporate non-financial reporting landscape was decisively shaped by the European Union (EU) with the introduction of the ground-breaking Directive on the disclosure of non-financial and diversity information by certain large undertakings and groups (Directive 2014/95/EU). The Directive charters a clear course towards greater business transparency and accountability on social and environmental issues.

This Directive came largely about through a coalition of the willing, led by Michel Barnier, EU Commissioner Internal Markets, in which GRI played a key role. We developed a strategy, which lasted almost five years (2010 – end 2014) which was built around the so-called ‘Report or Explain’ campaign.

The Report or Explain Campaign was invented by the three of us: Ernst Ligteringen, Pietro Bertazzi and me. It was inspired by the then new Danish national Report of Explain regulation. Danish regulation mandating businesses to account for human rights and climate impact reduction was put in place in 2012. Similar to the EU Directive, the Danish Financial Statements Act is very flexible, only obliging companies to be open about the sustainability choices they make.

While the NGO’s of the corporate justice coalition demanded full descriptive disclosure by business, and the private sector lobbied against any disclosure on environment, social and human rights issues, we promoted a balanced and flexible approach in which large companies had to report on their risks, strategy and results in the fields of climate, environment, human rights and corruption; and if they had no such strategy or results in their annual reports, they would have to explain why not. We engaged with key players in the EU Parliament and with the GRI Governmental Advisory Group; and were supported by our big European network.

teresa with michel barnier on regulationIn addition, I served as an advisor on this matter to Michel Barnier and his team.

In 2013 Commissioner Barnier gave a keynote address at the GRI Global Conference. Slowly, many experts, civil society organisations, EU member state representatives and even business organisations became convinced of the Report or Explain approach as the most promising one.

And that was the approach which was finally accepted by the EU parliament and the member states. When the Directive was adopted in the end, we organised a Thank You dinner for all key players in a cosy restaurant in Brussels. A successful five year two-person campaign had paid off with a big victory for European sustainability and accountability.

By now, all EU Member States have transposed these rules into their relevant national legislation, and some innovative and progressive practices have emerged. It is estimated that some 60.000 companies are affected by this regulation.

Photos:

  • Speaking at EU Forum the Future of Energy, 2018;
  • With Michel Barnier in 2013.