trends and future of sustainable development - TransEco

espect to voting or trading decision, but refers to the understanding of the company's development,performance or position.However, it is unsure whether the Directive infers a notion of reasonable investor or reasonableshareholder or infers a broader stakeholder approach. Arguably, a notion of the reasonable investor andreasonable shareholder, as can be seen in the US disclosure regime, could be beneficial for the EUdisclosure system, since it could mean an objective guideline in determining what information needs tobe disclosed for the understanding company's development, performance or position and what may beleft out. Without such an objective reasonable investor figure the disclosure requirement might becomedependent on individual investors’ and shareholders’ understanding. Thus, it may become rathersubjective, with which it is difficult for the companies to comply.3.2.2. The “necessary for the understanding” conditionThe ‘necessary for the understanding of the company's development, performance or position’ conditionof the Modernisation Directive does not seem to resemble the condition of the US disclosure regime,which refers to information that might be considered important (Mills v. Electric Auto-Lite Co. [1970]396 U.S. 375). The EU provision seems to be more subjective than the US regime’s materiality definition,since it refers to the understanding of the development, performance or position of a specific company. Areference to companies’ development, performance or position in general would be rather ambiguous,since different companies may have very different performances and position and might proceedthrough a very different development. At the same time, it also has to be acknowledged that by thisreference the Modernization Directive may predefine what a reasonable investor should find important.It might be argued that the CSR related information of individual companies might fulfil thiscondition in a different manner, depending on whether the information is necessary for theunderstanding of the company's development, performance or position. For example, for theunderstanding of the development, performance or position of a company in the green energy industry,CSR related information might be more necessary, than for a company in a classical industry. Thissolution of CSR disclosure seems to be an advantage in comparison to the US importance of informationto a reasonable investor or reasonable shareholder condition, since theoretically, it might serve as a basisfor demanding different amount of CSR information disclosure from different companies. Thisobservation seems to be underpinned by the requirement of the Directive providing that the analysis inthe Annual Report or the Consolidated Annual report has to be consistent with the size and complexityof the business (Directive 2003/51/EC of the European Parliament and of the Council of 18 June 2003:Article 1(14)(a) and Article 2(10)(a)).Further, the provision of the Modernisation Directive mandates the disclosure of CSR information ifit is necessary for either the development or the performance or the position of a company. This wordingwould seem to suggest that the Directive requires the disclosure of non-financial key performanceindicators in order to give a fair review of the past, present and future of the company (Directive2003/51/EC of the European Parliament and of the Council of 18 June 2003: Article 1(14)(a) and Article2(10)(a)). Accordingly, this provision, depending on the specific company, might mandate the disclosureof a significant amount of CSR related information.However, without proper interpretation and further elaboration on what kind of information ismandatory to disclose by different kind of companies within the ambit of this provision, it might have395