Non-financial reporting – burden or benefit?
On April 19th, the Ministry of Development and the Ministry of Finance jointly held a conference entitled 'Responsible Business Management in Light of New Legislation on Non-Financial Reporting.'
The conference was opened by Wiesław Janczyk, the Ministry of Finance's Secretary of State. The panel dedicated to statutory requirements for social, employment and environmental policies pursued by companies was comprised of Mirosław Kochalski, Vice President of the PKN ORLEN Management Board for Corporate Affairs, Joanna Dadacz, Director of the Accountancy and Financial Auditing Department of the Ministry of Finance, Janusz Górski, CEO of Schenker, Jacek Siwiński, General Manager of Velux Polska, and Tomasz Wiśniewski, Deputy Director of the Information Products and Indices Development Department of the Warsaw Stock Exchange.
Under the new Accountancy Act, which came into force on January 26th 2017, implementing Directive 2014/95/EU on disclosure of non-financial and diversity information by certain large undertakings and groups, as of 2018, some 300 Polish companies (and nearly 6,000 undertakings across the EU under their respective legislation) will be required to submit non-financial statements along with reports on their operations.
The Act provides that such statements should include a description of the policies followed with respect to social, employee, and environmental matters, respect for human rights, anti-corruption and bribery, along with information on the outcomes of the implementation of those policies, and should also describe the principal company-related risks that could have an adverse impact on such policies. A description of a company's business model and presentation of non-financial key performance indicators relevant to the particular operations will also be important elements. The new requirements apply to public-interest entities which meet the following criteria:
- Average annual number of employees of 500 or more,
- Total assets on the balance sheet in excess of PLN 85m or total net revenue from sale of merchandise and products in excess of PLN 170m.
In addition to extended non-financial disclosures, large listed companies which meet two of the following criteria will also be required to report information on their diversity policies:
- Average annual number of employees in excess of 250,
- Total assets on the balance sheet in excess of PLN 85m, or
- Net revenue from sale of merchandise and products in excess of PLN 170m.
During the panel discussion, Mirosław Kochalski underscored that the new regulations posed a considerable challenge for companies. However, reliable, accurate, well-thought-out and consistently reported non-financial data will help increase companies' reputational value, will serve as a basis for investment decisions, and will facilitate a better understanding of companies' operations by their stakeholders.
The participants, who represented companies which had been developing CSR and sustainability approach and practices for years, agreed that the new non-financial reporting requirements would ultimately benefit companies in many ways, resulting in more robust internal strategic management systems, strengthened stock market position, improved image and relations with local communities, and greater transparency.
PKN ORLEN has pioneered CSR / non-financial reporting in Poland, making it a fixed and important part of our communication with the stakeholders and the general public. Since its inception, PKN ORLEN has released 10 corporate social responsibility (CSR) reports. Since 2008, we have produced our CSR reports in line with the Global Reporting Initiative standards for non-financial information. Until 2013, PKN ORLEN also issued separate ecology and environmental reports. Since 2014, we have been releasing a single publication in the form of an online integrated report presenting interactions and interrelations between the financial and non-financial aspects of the ORLEN Group's operations. It reflects global standards and trends in corporate reporting, promoted by organisations such as the International Integrated Reporting Council (IIRC).