Four German industry federations have rejected draft EU legislation for large firms to publicly report on their handling of social issues. Details of environmental and employee-related matters would also be required.
The statement released by the German Federation of Employers' Associations (BDA) on Wednesday said amendments to EU corporate accounting legislation sought by Internal Market and Services Commissioner Michel Barnier would impose "unreasonable burdens" on firms.
"Especially grave is that companies would be required in their annual reports to name fields of risk, containing highly sensitive internal information."
The corporate social responsibility sought by the EU parliament in two resolutions passed in February as well as the European Commission would be better achieved through industry's own voluntary efforts, said the BDA and three other federations in a joint statement.
Also included are the German Federation of Industry (BDI), the Association of German Chambers of Commerce and Industry (DIHK) and the Federation of German Craft Trades (ZDH).
Barnier wants transparency
In Brussels on Tuesday, Barnier proposed that existing EU accounting legislation be amended to improve the transparency of Europe-based companies with more than 500 employees. His initiative follows what he called two years of "very intensive" consultations with EU member states, companies and other stakeholders such as non-governmental organizations (NGOs).
"Companies concerned will need to disclose information on policies, risks and results as regards environmental matters, social and employee-related aspects, respect for human rights, anti-corruption and bribery issues, and diversity on the boards of directors," Barnier said.
"This is about providing useful information for companies, investors and society at large - much demanded by the investor community."
"Companies that already publish information on their financial and non-financial performances take a longer term perspective in their decision-making. They have lower financing costs, attract and retain talented employees, and ultimately are more successful," he added. "Best practices should become the norm," Barnier said.
Federations reject initiative
Reacting to the proposed requirement to report publicly on Wednesday, the federations said "German industry firmly rejects this move."
"The essence of social responsibility of companies is instead the voluntary nature of their involvement," the BDA said in their joint statement.
The Commission on Tuesday said "fewer than 10 percent of the largest EU companies disclose such information regularly."
The approach being proposed by the Commission would ensure that administrative burdens "are kept to a minimum," it added.
NGOs endorse EU move
Non-governmental organizations welcomed the draft EU legislation, but want it to be formulated more firmly.
Johanna Kusch of Germanwatch, which critically scrutinizes globalization trends, said large companies should be required to disclose risks from their activities which could endanger the environment and human health, and not just risks that could trim corporate earnings.
Oxfam spokeswoman Franzisk Humbert said the transparency sought by the EU was "overdue" to counter low wages and pesticide risks at workplaces such as plantations.
"Breaches of employee rights are everyday occurrences in manufacturing enterprises," Humbert told the EPD news agency.
ipj/rc (epd, dpa, AFP)