New CSR rules for big players | KPMG | CZ

New CSR rules for big players

New CSR rules for big players

Many years ago in the Czech city of Zlín, Tomáš Baťa built a school for his employees. If he had done so nowadays (more precisely, in 2017), he would have had to report it, as his sizeable firm would surely have fallen under the category of large businesses, which as of 2017 will have to deal with a new dose of requirements relating to non-financial reporting.

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Specifically, this entails the annual reporting of activities related to sustainable development and corporate social responsibility (CSR). The potential spectrum of such activities is wide indeed – reducing a company’s environmental impact, supporting the non-profit sector, ensuring that employees are healthy and well-trained, etc. 

The new requirements are based on an EU directive, which is being gradually integrated by individual member states into their legal frameworks so that the respective laws become effective from 1 January 2017. “Originally, we wanted non-financial reporting to be voluntary and let companies decide whether to apply it. Alas, the EU made it mandatory. Nevertheless, we will at least try to make the process as easy as possible for companies,” said Martin Šabo, a representative of the Ministry of Finance, at a conference on the topic.

The new duties will only apply to the truly big players in their respective industries; in the Czech Republic, this will include approximately 30 companies. Under the directive, the requirements will affect so-called “public interest entities” with more than 500 employees and with assets of at least half a billion Czech crowns or a net turnover of at least 1.5 billion, i.e. companies whose problems could jeopardise other parts of the economy as well. This includes banks, insurers, companies quoted on an EU stock exchange, etc.  

Information about corporate citizenship, as well as about financial performance, forms an increasingly important part of a large company’s presentation. According to people who prepare reports for major multinational firms, socially responsible companies have better access to bank financing and, not surprisingly, see an improvement in the public perception of their products. 

What should a CSR report look like?

To find examples of firms that do not take corporate responsibility lightly, one doesn’t need to search abroad, though. In the Czech Republic good quality reports are awarded by Business for Society, an association of firms abiding by CSR principles. “The award is reserved for companies that comprehensively, transparently and effectively measure and communicate their social responsibility and sustainability activities,” says the website presenting the competition. 

“The exact shape of the legislation that will be adopted in the Czech Republic will also play an important role. We base our work on international methodologies, while the directive expressly requires member states to allow companies to use domestic, EU-wide or international frameworks as a basis. It’s also possible that the law will not mention specific methodologies and companies will have the freedom of choice, as everything which is not forbidden is allowed. However, since member states have until 6 December 2016 to implement the new rules, we must wait and see what approach is selected by the Ministry of Finance (which is responsible for implementation) and how the entire legislative process plays out,” concludes Viktor Dušek. 

“We prepared our report in accordance with the GRI G4 – Core Sustainability Reporting Guidelines, which helped us cover the topics that our stakeholders find most relevant. We offer the same tried-and-true approach to our clients,”says KPMG Legal’s Viktor Dušek, who has been specialising in this field for a long time. 

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