Changes that aim to simplify and enhance non-financial company reports will take effect from October, the UK´s business minister Jo Swinson has announced.
The new rules will reflect shareholders´ strengthened position in keeping the management of companies accountable for much more than financial results. From 1 October, annual reports will also have to include other information on issues like human rights, gender representation across the company´s structure and disclosures on greenhouse gas emissions. The reform also addresses concerns that reports are often confusing and loaded with corporate jargon that hinders understanding.
According to Swinson, shareholders need to have the right information to be able to fully hold a company to account. That is why annual reports should be produced in an open and transparent way to build trust and confidence, she said.
The legislation will affect companies with financial years finishing on 30 September or later. Those companies should produce annual reports divided into two separate documents: a Strategic Report and a detailed Director´s Statement.
The former will serve the purpose of what is currently known as the Business Review and will include information relating to financial results, business model and strategy and environmental and social issues. It will also state the number of women working at the company, both in management positions and in the company as a whole.
Environmental policies should also be included, as well as reports on greenhouse gas emissions as defined by the Climate Change Act, which will be part of the Directors´ Statement, Out-Law website reported.