Quoted companies will now have to report on extra issues including gender representation and greenhouse gas emissions in an effort to make non-financial reporting simpler for shareholders.
Parliament has approved new policy which will hope to reduce the ‘corporate jargon’ which currently fills non-financial reports compiled by listed firms.
Business minister Jo Swinson says that the decision has been made to ‘simplify and strengthen’ companies’ reports, which the government believes are a ‘key tool’ to hold quoted companies to account.
In reforms being implement from 1 October 2013, quoted businesses will now have to include details on human rights issues, greenhouse gas emissions and gender representation.
Swinson comments, ‘In order for shareholders to fully hold a company to account they need to have the right information to hand.
‘Annual reports are a key tool for shareholders to get a good understanding as to how a company is performing, but they need to be produced in an open and transparent way.’
From October, non-financial reports will contain a ‘Strategic Report’, which replaces the previous ‘Business Review’. The coalition says that the new report will enable a business to tell its story relating to strategy and business model.
More on quoted companies:
Disclosure on the amount of men and women on a company board, in senior management positions and through the company as a whole, has been included on the back of recommendations made by Lord Davies in his 2011 review of women on boards.
Greenhouse gas and human rights issues, it is hoped, will encourage firms to find ways to reduce and promote respectively.
Swinson adds, ‘[These changes help] build the trust and confidence that shareholders, and the wider public, need to have in our top companies.’
To satisfy its commitment to reducing the amount of red tape in business, the government says that some reporting requirements will be removed so that there is no overall increase in the burden on business.
The narrative reporting changes will affect all reports produced in relation to financial years ending on or after 30 September 2013.