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The Safe Harbour Principle of Mandatory Corporate Sustainability Reporting in the European Union

Opinnäytetyöt 1.6.2022, Gradut ja muut tutkielmat

In the European Union, public-interest entities of a certain size and number of employees are required to issue a sustainability disclosure under Directive 2014/95/EU. The legislation is currently under changes since in April 2021 a proposal for a new directive was issued. Both the current directive and the proposal include a safe harbour principle, which allows information to be exceptionally omitted from the disclosures if the information relates to impending developments or matters in the course of negotiation and the disclosure of the information would be seriously prejudicial to the commercial position of the company. The principle has been transposed into the national legislation of nearly all member states.

The principle has, over the years, received some criticism, especially regarding its rather imprecise phrasing which leaves the interpretation of it partly open. Despite the criticism, the principle has not, so far, been adressed by the EU nor has it been studied comprehensively. The purpose of the thesis is to thus contribute to the research on mandatory corporate sustainability reporting in the EU. The purpose behind the principle will first be addressed, and the findings show that the purpose behind the principle is not clear. Moving on to the interpretation of the principle on EU level, unclarities can again be noted due to the imprecise phrasing of some parts the principle. Due to the unclarities on EU level, and since the phrasing of the principle gave room for manoeuvre for the transposition of the principle, member state observations will be conducted, too. The member state observations show that many member states have, in fact, deviated from the phrasing of the principle on EU level.

Considering the partly unclear interpretation and the often deviating transposition of the principle, the effect that the principle has on reaching the purposes behind the overall legislation on corporate sustainability reporting will be addressed. The findings show that the principle can have an undermining effect on the legislation as a whole, and its current state can cause problems not only to the companies reporting, but also to the users of such reporting and the EU itself. Lastly, suggestions on the future of the principle are made.

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• Euroopan unioni - Kestävä kehitys - Yhteiskuntavastuu - Yritystoiminta