UK accounting bodies have given their backing to new European Commission legislation requiring large companies to disclose non-financial and diversity information as part of their corporate reporting.

Under the draft proposals, companies will have to include a statement within their annual report covering policies, results and risk aspects relating to the company's environmental, social, employee-related matters, respect of human rights, anti-corruption and bribery aspects. Those that do not include this information will have to explain why.

There will also be a requirement to include details on the company's diversity policy in the corporate governance statement.

ACCA gave its backing to what it described as an 'important move towards enhancing the transparency of large businesses on social and environmental matters'.

The institute said that previous legislation had left such disclosure to each organisation's discretion, with the result that 'less than 10% of the largest EU companies are currently disclosing such information regularly - and properly, which led to a lack of consistency of reporting practices across the EU and made benchmarking between companies difficult'.

Rachel Jackson, head of sustainability at ACCA, said: 'This approach will build trust with stakeholders, attract investors and help with the transition to operating in a green economy.'

ICAEW also supported the Commission's draft legislation, describing the proposals as a 'generally balanced and proportionate approach'.

Dr Nigel Sleigh-Johnson, head of ICAEW's financial reporting faculty, said: 'The "comply or explain" aspect of the new regime is welcome, as is the decision to limit the impact of the proposals to the group level and to the largest EU businesses - those with over 500 employees. It will, nonetheless, be important to ensure that a reasonable period of transition is provided, not least for the large private companies subject to the more rigorous regime.'

Sleigh-Johnson also cautioned against the use of too much 'boilerplate' in the new reports, and said that the information supplied should be bespoke and relevant to investors.

ACCA agreed that more guidance was needed as to the content of the new non-financial disclosures. Jackson said: 'Simply disclosing a policy is quite straightforward so ensuring fundamental corporate change from these proposals is imperative. The EU now needs to provide information as to how such measures will be enforced, and what would be the consequences of non-compliance.'