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Comparison of Mandatory CSR Disclosure Systems in the EU and US

Explore the mandatory CSR disclosure frameworks for listed companies in the EU and US, focusing on specific requirements, thresholds, and materiality concepts. Understand the trends and future implications for sustainable development.

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Comparison of Mandatory CSR Disclosure Systems in the EU and US

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  1. Disclosure of material CSR information comparison of the mandatory CSR disclosure systems for listed companies in the EU and the US TRENDS AND FUTURE OF SUSTAINABLE DEVELOPMENT 9-10 June 2011, Tampere, Finland

  2. Agenda • Introduction • The general setup of mandatory CSR reporting • The specific requirements in the US and the EU • The disclosure threshold • Findings and conclusion

  3. Introduction • CSR is a growing interest for many stakeholders • the bottleneck between the company and the stakeholders is CSR reporting • increasing attention is paid to CSR reporting • CSR reporting requirements in the periodic reports • voluntary CSR reporting by the companies

  4. Mandatory CSR reporting • the mandatory reporting requirements are linked to the existing financial reporting framework • the requirements consist of two components: • a specific requirement (such as a line item requirement) and • a threshold or condition (materiality or similar condition) disclosure disclosure non-mandatory mandatory

  5. Specific requirements in the US and the EU • specific requirements in the US: • costs of complying with environmental laws • legal proceedings in progress against the company • Management’s Discussion and Analysis of Financial Condition and Result of Operations • risk factors relevant to a company which make an investment in that company speculative or risky • general disclosure rule • specific requirements in the EU: • non-financial key performance indicators, including environmental and employee matters

  6. Materiality in the US • the development of the concept • the elements of the materiality concept: • the core concept – the reasonable investor/shareholder • the ‘might consider important’ condition • the total mix of information • other relevant circumstances

  7. The condition of reporting in the EU • the condition set by the Modernisation Directive • the elements of the condition: • the intended audience of the disclosure • the “necessary for the understanding” condition • the total mix of information and other circumstances

  8. Findings and conclusion • US system of CSR reporting: • closely integrated in the existing financial disclosure system • more specific requirements • reliant on the financial notion of materiality • the aim is to be objective • EU system of CSR reporting: • loosely integrated in the existing financial disclosure system • less specific requirements • also reliant on a disclosure threshold • allows more subjectivity in the assessment

  9. Thank you for your attention!

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