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EU Non-Financial Reporting Directive – Am I a PIE?

New reporting regulations will require around 537 companies in the United Kingdom to report on non-financial reporting metrics – this is according to a BEIS Impact Assessment (BISCFA001). This will only affect you if you qualify as a PIE (Public Interest Entity), but many of our clients are unsure if they fall into this bracket.

 

The EU Non-Financial Reporting Directive (NFRD) 2014/95/EU entered into force in December 2014 and has now been transposed into UK legislation by The Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016. The scope includes non-financial matters relating to environment, social & employees, respect for human rights, anti-bribery & corruption and diversity.

The policy objective is to enhance the effectiveness of non-financial reporting by Public Interest Entities (PIEs), which are companies whose activities are likely to have a significant impact on the economy and society.

The new regulations are a positive step for environmental and social reporting as they legally bring them in line with financial reporting within the annual report. The most significant impact will be seen by large non-listed PIEs who will be required to report on these matters for the first time. However, there will also be notable changes for large listed companies who will need to include a number of social matters for the first time and also provide justification for any omissions.

The NFRD requirements apply to PIEs that have more than 500 employees; PIEs are defined as entities that: 

  • Have transferable securities admitted to trading on an EU regulated market; or
  • Are credit institutions and/or insurance undertakings.

How do I know if I’m a PIE?

BEIS carried out an Impact Assessment to review how many UK companies would be affected by the new regulations. Using a combination of publically available sources, BEIS estimates that around 800 UK incorporated companies with equity are listed on an EU regulated market. Further to this, BEIS estimates that there are a further 600 companies that issue only debt or derivatives. 

The impact assessment also points towards a list of about 340 insurers that would be affected and around 150 Banks. According to the requirements, Building Societies and Lloyds Syndicates are out of scope of the NFRD requirements. 

Using the same data utilised by BEIS, WSP has developed a simple ‘PIE Checker Tool’ to determine whether your business falls within the scope of a Public Interest Entity. If you already know that you have over 500 employees in the UK but are unsure as to whether you are a PIE – then get in touch and we will run your company name through our tool for free.

If it turns out your company falls within the scope of NFRD (PIE with over 500 employees) then there’s no need to panic – just contact us and we can discuss recommended next steps. Even if you are not within scope of the new regulations it is still worth considering upping your non-financial reporting to keep up with competitors who are within scope.

Robbie Epsom is environment and sustainability principal consultant at WSP in London