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

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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- N Other Other, please specify -open reply- Global Networking organization to research and develop business reporting issues. Name(s) (of respondent and of your organisation / company) -open reply- WICI Country where your organisation / company is located -single choice reply- BE - Belgique / België Please provide the name and location of parent company Your address Your address: -open reply- yoshiko.shibasaka@jp.kpmg.com Short description of the general activity of your organisation / company: Is your organisation registered in the Interest Representative Register? 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- Please specify the Register ID number in the Interest Representative Register - open reply- Can the Commission contact you if 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

2 Page 2 of 5 Questionnaire 1. How would you consider the current regime of disclosure of nonfinancial information applicable in your country? -single choice reply- Sufficient 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. It is true that we can see some information useful for decision-making of a company. However, the most desirable situation is not that readers earnestly chose such information from the huge amount of disclosed one, but that a company discloses only information useful for decision-making for a company. We should not have a prejudice that non-financial information in a certain category can be useful for decision-making in every company. Rather we need to recognize the category of information useful for decision-making of a company may be totally different from the one of another company. (please note: in case of Japan) 2. Have you evaluated the effects, and costs and benefits, of any current corporate disclosure of environmental and social information? -single choice reply- For example, CSR reports in Japan are rarely utilized by investors, though the number of published reports is more than Of course, the cost of concluding a CSR report for a company is quite burdensome, including setting up a specific team for CSR issues. 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? It is desirable to have an integrated report which describes a comprehensive picture of the company's strategy which combines financial performance and business strategy based on the recognition of its own way of value creation, value chain, specific assets for the company as origins of creating values, strategy for using those assets and risk in the future which the company think is influential for its future business. To focus only on a certain category like ESG related information might cause a passive and tick the box type response from the company, resulting in the lack of materiality which stakeholders ask for in the disclosed information. Rather, we should take an approach to encourage a company to disclose information which the company thinks 'material' or substantial for the corporate strategy while showing its relationship or causality with the financial performance. This idea has a common nature with the substance of PS on MC published by IFRS in December In your opinion, should companies Other be required to disclose the following (check all relevant boxes): -multiple Other, please specify: -open reply- Fixing a priori the category of information to be disclosed and mandatorily requiring the disclosure are not appropriate ways as was indicated in the comment to Q1 and Q3 above. In substance, business risk and opportunities in the second box is quite important for a company since it may relate closely to the future business strategy. Yet, it does not necessarily fall in the category of social or environmental issues. Moreover, for some companies risk and opportunities originated from those categories might not be relevant. Elements shown in the third box is also important. However, this is not categorically important, but important as long as those elements are related to the company's own value creation or business strategy. In sum, the most critical point is to encourage a company to disclose the core part of information related to its own value creation or strategy, which is quite diversified, company specific one. Therefore, it is impossible to determine the category of information to be disclosed, but it is desirable, as was mentioned in the answer to Q3, to encourage a company to present its own way of value creation, value chain, specific assets for it as origins of creating values, strategy for using those assets and risk or opportunity in the future which the company think influential for its future business, in connection with the business strategy and financial performance. 5. In your opinion, for a EU measure Principles

3 Page 3 of 5 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 woudl like to provide you with summary of WICI guideline and WICI KPI concept Material or substantial elements and indicators for a company are company specific. Therefore, a model embracing the following functions is necessary. - identifying the sources of differentiation of a company from others - making clear the value creation mechanism unique to the company which can last longer - presenting an integrated picture of the company's activities including financial data, financial performance and non-financial elements - providing clues for stakeholders to predict future performance of the company - allowing companies to freely choose the substance without requiring tick the box type disclosure - explaining material issues for the company with a certain reliability and comparability of the disclosed information for users - reducing the total cost of reporting for companies To realize the above mentioned functions, we believe our basic approach as follows would be most appropriate one. - WICI presents the skeleton of a narrative story to explain the value creation and corporate strategy of the company. This approach is taken to avoid regulating the substance of disclosure by each company, while making the story understandable to as many people as possible. - WICI asks companies to include measurable key performance indicators (KPIs) to support the narrative story. At the same time, WICI presents a paper on the concept and principles of KPIs in order to avoid the risk that referring to KPI might make a company feel to be obliged to disclose a certain set of KPIs. WICI believes that such a one-size-fits-all approach might have a negative effect on the materiality of the disclosure. Rather, WICI prefers to provide a framework to allow a company to choose the most material KPIs by itself., This approach of asking for inclusion of KPIs is taken to raise the reliability and verifiability of the report, avoiding the risk that a report only with narrative story might be complacent or self-sufficient. - WICI recommends companies to use XBRL format. This approach is taken to improve the comparability and analysis of reports through empowering readers of reports by using the flag information which can be easily and conveniently used for searching. 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- Information related to human rights should also be disclosed as long as it is a part of the company's core business strategy or its value creation mechanism. It is not necessary to require every company to disclose such kind of specific information. WICI may understand the situation that some EU people are positive to introduce some regulation, because European people might tend to forget the importance of human rights without it. However, WICI strongly oppose to press introduction of such a regulation globally. This does not mean that WICI does not see the human right issue important. WICI believes that in many companies, respecting human rights is the very fundamental rule of long term business. Rather, WICI is afraid of the mandatory disclosure of this kind of information will induce some companies to pretend respecting human rights though they work otherwise. 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- As was indicated in the response to Q7, bribery and corruption issues should be addressed as long as it is a part on the company's core business strategy or its value creation mechanism. I hope bribery and corruption is not part of core business! Maybe say As was indicated in the response to Q7, issues should only be addressed if they are relevant and material to the company's core business strategy or its value creation mechanism. In the case of bribery and corruption, then it would be important to address this issue, and what the company does to mitigate the risk, if the company does significant volumes of business in jurisdictions that have a poor record in this area.

4 Page 4 of 5 9. In your opinion, what companies should be required to disclose nonfinancial information (check only one box)? -single choice reply- 10. In your opinion, should 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- None No 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. Institutional investors just need to make clear their policy on its own way of investment. Moreover, it is meaningless to ask for every investor to behave in the same way to put high priority on social and environmental issues. It is quite natural for an investor to decide their own investment based on their own sense of value. 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. Integrated reporting which connect financial elements with non-financial ones is desirable. This might make it possible for stakeholders to grasp a company's total picture. In addition, this might decrease the total cost of reporting through streamlining current non-financial reports. However, if the new business reporting focuses only on some specific elements like ESG, WICI is seriously afraid that it might cause negative effects of creating non-material reports and raising the cost of reporting for companies. 12. In your opinion, should disclosed No opinion 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. 13. If you have relevant documents you want to share with us, please attach them here. (optional) -multiple Uploaded files: I attach additional documents kpi_concept_paper_ver1_final_june_2010.pdf wici_concept_paper_annex_wici_framework.pdf

5 Page 5 of 5 wici_concept_rev.1_jan_2011.pdf WICI_aug_23_2010.pdf WICI Comment to the EC Workshop ofesg Disclosure.pdf mc_wici_comment_march01_2010.pdf PRINT EXPORT RECORD