Out of many discussions in the European Union concerning corporate social responsibility (CSR) a new directive on non-financial information was issued. This directive has been implemented across all, currently 28, member states. Its goal is the enhancement of corporate reporting through integration of sustainability, diversity and responsibility factors in those publications. Yet Austrian businesses either omit the topic of diversity, or only mention it briefly.
The aforementioned directive has the melodious name “Directive on the disclosure of non-financial and diversity information”. In accordance with the zeitgeist, corporations are held to a higher standard than in the past. This becomes especially relevant when it comes to their accountability and transparency relating to environmental and social issues. Publications need to deal with social matters, employee matters, environmental issues, human rights and details in respect to corruption.
Corporate social responsibility in Austria
Austria implemented the EU-directive by means of the Nachhaltigkeits- und Diversitätsverbesserungsgesetz (NaDiVeG). It came into force on 17 January 2017 and amended the Austrian Commercial Code (the Unternehmensgesetzbuch, UGB) with sections 243b and 267a. At this point, there are no further changes planned to these laws.
Following the new legal situation, the reporting of non-financial information grew. This was due to the simple fact that sustainability reports became a major source of information for potential future investors, increasing transparency. Moreover, a possible independent audit further helps to create a positive, more trustworthy image of a company in the view of the general public.
Some businesses of a certain size (e.g. large stock entities pursuant to sec 243c para 2a UGB) are also required to include their diversity concepts in these reports. These concepts should describe how aspects such as age, gender, race, qualification, and educational background influence corporate decision-making. This could concern executive choices, in particular, the selection of members of the supervisory and the executive boards.
The reality of diversity
However, the unfortunate truth is that merely 26% of Austrian companies offer a detailed description of their diversity concept in their corporate governance reports. A detailed report includes specific aims and measures of how a company tries to achieve these goals. Yet, 67% of affected businesses mention diversity only briefly and 7% do not cover this topic at all.
The number of non-financial reports in Austria is growing as a result of the implemented EU directive. The popularity of said reports with investors may also play a vital role in the increase.
Nevertheless, the downside to this is that most of the published reports are still lacking detailed descriptions of actual implementations and diversity concepts. The intended scope of non-financial reports is very broad, which is to be welcomed but also has its flaws. There are no detailed legal prerequisites for a diversity concept, for example. Furthermore, companies not meeting these standards will not face sanctions.
What can be done?
In the future, there is still a lot of work to be done concerning diversity reporting in Austria. One possible way to improve this situation is to strengthen and elaborate on the legal framework. Following this, it would be necessary to hold businesses accountable, in case they completely omit to include or even implement a diversity concept.
We have also published an article on working against discrimination in the workplace, that gives a more hands-on description. It discusses the challenges of working in a law firm, but the suggestions can also be applied to other professional environments as well.