FRC consults on update to its strategic report guidance
The Financial Reporting Council has launched a consultation setting out proposed amendments to its Guidance on the Strategic Report.
The amendments take account of the new reporting requirements introduced by the UK’s implementation of the Non-Financial Reporting Directive (Directive 2014/95/EU). These requirements, which include enhanced disclosure in relation to environmental matters, employees, respect for human rights and anti-corruption and anti-bribery matters, apply for financial years beginning on or after 1 January 2017.
The FRC is also proposing amendments to encourage companies to disclose how directors have fulfilled their duty to promote the success of the company, having regard to the long-term impact of decisions, stakeholder interests and non-financial matters. This is intended to strengthen the link between the purpose of the strategic report and the duty of directors in Section 172 Companies Act 2006. These proposals tie in with the Government’s agenda to improve stakeholder reporting, as addressed in its Green Paper on Corporate Governance. The Government is expected to publish a response to the Green Paper next week.
Finally, the FRC is proposing improvements to reflect recent reporting developments such as the European Commission’s guidance on the Non- Financial Reporting Directive, the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures and the ESMA Guidelines on Alternative Performance Measures.
The deadline for comments is 24 October 2017.