Assess record for 'Disclosure of Non-Financial Information by Companies'

Transcription

1 Page 1 of 5 Assess record for 'Disclosure of Non-Financial Information by Companies' Meta Informations Creation date Last update date User name null Case Number Invitation Ref. Status Background Information For the purpose of analysis of this consultation you want to be identified as -single choice reply- If you are preparer, are you -single choice reply- Please indicate your size: -single choice reply- Are you listed on regulated market? - single choice reply- N Preparer Non-financial company Large In which country(ies) you are listed: -open reply- Primary listings in the UK and Australia and the secondary ones in the US, France and Belgium Name(s) (of respondent and of your organisation / company) -open reply- Hugh Porteous for Rio Tinto plc. Country where your organisation / company is located -single choice reply- UK - United Kingdom Please provide the name and location of parent company Your address Your address: -open reply- Hugh.Porteous@RioTinto.com Short description of the general activity of your organisation / company: Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto plc, a London and NYSE listed company, and Rio Tinto Limited, which is listed on the Australian Securities Exchange. Rio Tinto's business is finding, mining, and processing mineral resources. Major products are aluminium, copper, diamonds, energy (coal and uranium), gold, industrial minerals (borax, titanium dioxide, salt, talc) and iron ore. Activities span the world but are strongly represented in Australia and North America with significant businesses in South America, Asia, Europe and southern Africa. Is your organisation registered in the Interest Representative Register? No If your organisation is not registered, you have the opportunity to register here before you submit your contribution. Responses from organisations not registered will be published separately from the registered organisations. -single choice reply- Can the Commission contact you if

2 Page 2 of 5 further details on the information you submitted is required? -single choice reply- Publication: Do you object to publication of the personal data on the grounds that such publication would harm your legitimate interests? -multiple Questionnaire 1. How would you consider the current regime of disclosure of nonfinancial information applicable in your country? -single choice reply- Good In replying to this question, please provide information on what way current reporting provides useful information, and to what extent it is sufficiently tailored to the circumstances of the company. Please also comment on whether you find non-financial information useful for the decision-making of a company. In the UK, Section 417 of the Companies Act 2006 requires companies to include a business review in their annual report (unless they are subject to the small companies regime). The purpose of the business review is to inform the members of the company and help them assess how the directors have performed their duty to promote the success of the company. The business review must contain a fair review of the company s business and a description of the principal risks and uncertainties facing the company. In the case of a quoted company, the business review must, to the extent necessary for an understanding of the development, performance or position of the company s business, include information about environmental matters (including the impact of the company s business on the environment), the company s employees and social and community issues as well as information about any policies of the company in relation to those matters and the effectiveness of those policies. In respect of quoted companies providing such non-financial information, the business review must include, where appropriate, an analysis using key performance indicators, including information relating to environmental matters and employee matters, to the extent necessary for an understanding of the development, performance or position of the company s business. It should be noted that the purpose of the business review is to assist shareholders to assess the company s performance and is not specifically intended to address the concerns of other stakeholders. However, the UK Corporate Governance Code (which applies from 2011 to all companies with a Premium Listing of equity shares in the UK regardless of the jurisdiction of incorporation) requires directors to include in the annual report an explanation of the basis on which the company generates or preserves value over the longer term (the business model) and the strategy for delivering the objectives of the company. The UK s Financial Reporting Council believes that the business model disclosure obligation will fill a perceived gap in narrative reporting currently and that this move will result in companies... setting out in layman s terms the company s strategy for generating long term value would enhance the ability of investors and other users of reports to assess the disclosures required under the Business Review. During 2010, the UK Department for Business, Innovation and Skills published a consultation paper entitled The Future of Narrative Reporting. A summary of the responses to the consultation was published in December In our own response, we commented that we believed that the current principles - based and flexible reporting regime applying in the UK drove standards of corporate reporting which were amongst the best in the world. The general experience of our members was that there was no noticeable demand on the part of investors for any more detailed reporting on the companies in which they invested, and given the relatively recent introduction of the Companies Act 2006 coupled with the changes to the UK Corporate Governance Code which would only apply financial years on or after 29 June 2010, it would be premature to introduce new changes to the UK regime. 2. Have you evaluated the effects, No and costs and benefits, of any current corporate disclosure of environmental and social information? -single choice reply- 3. If you think that the current regime of disclosure of non-financial information should be improved, how do you suggest that this should be done?

3 Page 3 of 5 As noted above, we believe that current regime of disclosure for the UK works well. 4. In your opinion, should companies be required to disclose the following (check all relevant boxes): -multiple a) Corporate social responsibility is difficult to define, and can mean different things to different organisations. To include an absolute requirement along the lines suggested would therefore be difficult to implement in practice. We believe that the current approach in the UK, as referred to in our response to Question 1 above should continue to apply. b) We believe that it is right that a company should disclose principal risks within the context of the company s overall strategy whether the risks are, for example, financial or whether they arise specifically from social or environmental issues. In practice, it is our experience that companies do not treat different categories of risks differently when applying their own risk management approaches and we believe it would be artificial and unhelpful for regulation to make them do so. c) We believe that disclosure of information in the categories described may well be useful for shareholders and other shareholders. However the relevance of these issues will vary from company to company and will be dependant on such matters as their size, business model and the market and countries in which they operate. It would not be helpful to produce an exhaustive list of these issues. 5. In your opinion, for a EU measure Principles on reporting of non-financial information to achieve materiality and comparability it should be based upon (check all relevant boxes): - multiple 6. In your opinion, what should be the process to identify relevant principles and/or indicators (whether general or sector-specific)? In replying to this question, please comment on whether the Commission should endorse or make reference to any existing international frameworks (or a part of them), such as Global Reporting Initiative (GRI), UN Global Compact, the OECD Guidelines, ISO 26000, or other frameworks; or whether companies should be required to select relevant indicators together with their investors and other stakeholders and to disclose information according to such indicators, depending on the use that different stakeholders would make of such information. We believe that any system of non-financial reporting should be principles based. Companies may well choose to adopt key performance indicators but the right KPIs will vary by company and we do not believe it would be useful to impose mandatory KPIs. It should be a matter for the company concerned to decide the principles or indicators upon which they base non-financial reporting. Best practice should be aligned on a global, rather than EU wide basis. We do not believe it would be appropriate for the Commission to introduce its own rules or endorse any particular framework. 7. In your opinion, should companies No be required to disclose the steps they take to fulfill the corporate responsibility to respect human rights? -single choice reply- Human rights are not precisely defined, and law and practice in the field is still developing. It should be for individual companies to decide which issues (and associated risks) could fall into this category and are relevant to understanding their company s business. If companies decide such issues are relevant they should be disclosed in the context of the company s general strategy and/or risk review, based upon developing global (rather than simply EU) best practice. 8. In your opinion, should companies No be required to disclose the risks they face and the policies they have in the field of corruption and bribery? -single choice reply- The same principle applies to corruption and bribery. It should be left to companies to judge the appropriate form of disclosure of corruption risk for their particular company. 9. In your opinion, what companies Other should be required to disclose non-

4 Page 4 of 5 financial information (check only one box)? -single choice reply- Other, please specify -open reply- This depends on the intended audience for disclosure. If disclosure is purely for shareholders, the regime, should only apply to listed companies. If disclosure is intended for other stakeholders, the regime should apply to all businesses. Businesses are increasingly concerned with risks associated with their supply chain, and to avoid smaller suppliers receiving multiple requests for information, it might be useful to encourage all companies to comply with common disclosure standards. 10. In your opinion, should No institutional investors be subject to specific or additional disclosure requirements, for example to disclose whether and how they take into account environmental and social issues in their investment decisions? -single choice reply- In replying to this question, please provide information on which issues seem to be the most relevant and why; and which institutional investors should be subject to such an obligation. We believe that the matters which investors take into account in their investment decisions are matter between them and their clients. 11. In your opinion, should European policy promote the concept of "integrated reporting"? Integrated reporting refers to a report that integrates the company's key financial and non-financial information to show the relationship between financial and non-financial performance (environmental, social, and governance). -single choice reply- In replying to this question, please indicate the advantages and disadvantages of an integrated report, as well as possible specific costs of integrated reporting. If integrated reporting recognises that investors need to be informed on both financial and non-financial issues in order to assess the true performance and prospects of the company, we would support this. 12. In your opinion, should disclosed No non-financial information be audited by external auditors? -single choice reply- In replying to this question please provide any evidence you may have regarding costs of auditing non-financial information, as well as your views on other possible forms of independent reviews besides external auditing. We do not believe this would be appropriate for three principal reasons: 1) In many cases, and in particular where strict key performance indicators are not appropriate, it may not be possible to produce quantitative information capable of external audit. 2) Even where such information is capable of external audit, there will inevitably be questions of judgement which are likely to lead to a more cautious approach to disclosure therefore reducing the practical use of the information. 3) It will increase audit and compliance costs for companies. 13. If you have relevant documents you want to share with us, please attach them here. (optional) -multiple

5 Page 5 of 5 PRINT EXPORT RECORD