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Eumedion supports proposed changes to the IFRS Foundation Constitution

Eumedion supports proposed changes to the IFRS Foundation ConstitutionNews · 15-07-2021

Eumedion welcomes the proposed amendments to the constitution of the IFRS Foundation. The proposed amendments pave the way for the establishment of a global sustainability reportings standards setter as propagated by Eumedion. This the key message of today's submitted Eumedion response to the consultation document of the IFRS Foundation.


The proposals expand the objectives of the Foundation to encompass the development of globally accepted sustainability reporting standards. They will mandate the IFRS Trustees to create an International Sustainability Standards Board. The proposals illustrate how well aligned the Foundation's intentions are with the vision Eumedion expressed in its 2020 position paper ‘Towards a global, investor focused standard setter for corporate sustainability reporting’. Eumedion complements its strong support for the overall direction of the Foundation on this matter with feedback on specific topics.

Large investors want to return to in-person shareholders meetings

Large investors want to return to in-person shareholders meetingsNews · 09-07-2021

As in 2020, the coronavirus severely affected the format of and discussions at the annual general shareholder meetings (AGMs) of Dutch listed companies this year. The vast majority of Dutch AGMs (82%) was held digitally this year. A substantial number of the Dutch listed companies (41%) responsed the call made in February by shareholder organisations Eumedion, VBDO and VEB to enable shareholders to raise their questions verbally at the virtual AGM. But because this facility was often only offered to clients of the company's ‘house bank’, most institutional investors were unable to make use of it. As a result, this year too, many shareholders did not have a real opportunity to hold company boards to account through live Q and A and discussion. Institutional investors therefore want a return to in-person or - at most - hybrid AGMs as soon as possible. This is one of the main findings in today’s released Eumedion analysis of the 2021 AGM season.


The presentations and (written) questions at the AGMs were dominated by the expected short and long term impact of the corona pandemic on the company, the impact of climate change on the company and executive remuneration. As in 2020, executive remuneration was the most contentious voting item. Nineteen out of the in total 43 resolutions that received significant shareholder dissent (over 20%) were related to this topic. Shareholders mainly voted against the remuneration reports. In particular, disclosures of bonus performance measures, the selection rationale and an explanation of the outcomes in comparison with the targets set fell short. This year, by contrast, significantly fewer proposals to amend the executive remuneration policy were rejected or withdrawn: five compared to thirteen in 2020. Most listed companies that had their remuneration policy rejected in 2020 put forward a more moderate proposal this year. Such a proposal could count on strong shareholder support.


The 2021 AGM season by the numbers:

- In total, just over 1,200 resolutions were put to the vote this season. 43 of these resolutions received significant shareholder dissent (over 20%). Twelve resolutions were rejected by the AGM and five resolutions were withdrawn or amended ahead of the AGM. Two proposals could only be adopted with the help of a "friendly" Trust Office.

- 82% of the AGMs was held entirely virtual, 4% in a hybrid format and 14% in-person.Of the virtual AGMs, 91% could be followed live via a video webcast (the remaining 9% offered an audio webcast only). At 45% of the virtual AGMs, shareholders could vote live and at 41% of the virtual AGMs shareholders were able to raise questions verbally. The majority of AGMs thus lacked any form of live interaction between shareholders and the company boards.

- New legislation and reduced short selling activities resulted in a record number of votes cast at the AGMs of AEX and AMX companies: an average of 75% and 70.9% respectively (compared to 73.4% and 63.3% in 2020). Only listed companies with a relatively large share of private investors in the total shareholder base are lagging (far) behind.

- For the second year in a row, executive remuneration was the most contentious voting item: 73% of the board proposals rejected by the AGM this year related to the executive remuneration policy or to the remuneration report, and 43% of all board proposalsthat received significant shareholder dissent (over 20%) was related to this topic. Around 30% of the Dutch listed companies reduced or cancelled the executive bonus payments as a result of the corona pandemic. The remaining companies (70%) saw no reason to intervene in bonus payments as a result of the pandemic.

- The progress in the number of female executives is slowing down. During this AGM season, 20 new executives were nominated; only 5 of them were female (25%; in 2020: 37%). Consequently, the average number of female executives at the AEX companies stagnated at 19%, while the average number of female executives at the AMX companies even decreased from 13% in 2020 to 12% in 2021. The picture at the supervisory or non-executive board level is much more positive. The average number of female supervisory directors at both the AEX and AMX companies is above the soon-to-be-required 33%. Nevertheless, 33 Dutch listed companies do not yet comply with the forthcoming legislation on gender diversity in supervisory or non-executive boards: 31 because they have too few female supervisory directors and two because they have too few male supervisory directors (Avantium and Pegasus Europe). Twelve (small) Dutch listed companies do not yet have a single woman in their supervisory or non-executive board.

- Partly due to the impact of the corona pandemic, the average number of supervisory or non-executive board meetings at AEX-listed companies rose by 20% and at AMX-listed companies by 30%. Several companies established more separate committees within the supervisory or non-executive board, in particular in the area of sustainability.

- 86% of the Dutch AEX companies and 60% of Dutch AMX companies have committed themselves to achieving certain climate-related targets. In total, thirteen Dutch listed companies have committed themselves to having fully climate-neutral operations by 2050 at the latest. However, it is difficult for shareholders to verify how 'hard' and credible these commitments are.

Eumedion: proposed regulatory technical standards on the voting policy of large investment firms are too detailed

Eumedion: proposed regulatory technical standards on the voting policy of large investment firms are too detailedNews · 29-06-2021

Although Eumedion supports the underlying objective of disclosure of voting policy by large investment firms, it does question the level of detail of the proposed regulatory technical standards. This follows from the today’s submitted Eumedion response to the European consultation on the proposed regulatory technical standards on the disclosure of the investment and voting policy by large investment firms.


The European Banking Authority (EBA) has launched a consultation on the draft regulatory technical standards on the investment and voting policy of large investment firms. The objective of investment and voting policy disclosure is to provide transparency to investors and the wider market participants on the influence of investment firms over the companies in which they hold shares. In its response, Eumedion indicates that it supports this underlying objective. In its response Eumedion points out that the regulatory technical standards should be practicable, proportional and not impose unnecessary additional costs on investment firms. According to Eumedion, those criteria are currently not met. In its response, Eumedion questions the level of detail of the proposed technical regulatory standards.In that context, it refers, among other things, to the proposal to publish voting behaviour per theme and to the proposal to publish information on the ratio of approved shareholder proposals.

High compliance rate with Dutch Stewardship Code by Eumedion participants

High compliance rate with Dutch Stewardship Code by Eumedion participantsNews · 16-06-2021

Eumedion participants have been working to further improve the integration of the principles of the Dutch Stewardship Code into their policies and reports. This follows from the today published second Implementation Progress Report.


Compared to the first report (2019), this second report includes further qualitative assessments of the various ways Eumedion participants seek to comply with the Code in a meaningful way. As in 2019, the report addresses the key focus areas of transparency around voting behaviour and engagement programs. Additionally, the current report also discusses if and how participants communicate with other relevant stakeholders of investee companies, in order to enhance their engagement with these companies.


As in 2019, the report shows a high level of compliance with the requirements on voting behaviour transparency. In addition, the report presents the various methods used by participants to explain 'significant votes'. The report discusses and reiterates the importance of providing adequate and easily accessible information to show how participants use their voting rights to contribute to meaningful stewardship outcomes, better checks and balances within Dutch listed companies and long-term value creation of these companies. With regard to engagement programs, the report paints a similar picture. Here, too, the results show that participants can further improve their disclosure on engagement efforts by enhancing the consistency between their reporting on the selection and prioritisation of engagement themes, the objectives and targets that accompany those themes, and the subsequent results.


Lastly, the results confirm that collaboration with other shareholders is common practice among participants. However, it often remains unclear how communication with other stakeholders of an investee company takes shape. Striving to understand the aspirations and motivations of other relevant stakeholders of the company (e.g. banks, creditors, customers, suppliers, the works council and NGOs) may advance the goals of stewardship. Participants are therefore encouraged to show more clearly what their approach is to this aspect of the Code, and if and how such communication, in practice, informs their engagement activities.

Eumedion supports SEC involvement in sustainability reporting

Eumedion supports SEC involvement in sustainability reportingNews · 14-06-2021

Eumedion encourages the US securities regulator SEC to oblige US listed companies to publish sustainability information. Eumedion also encourages the SEC to strive for international convergence of sustainability reporting through the International Sustainability Standards Board (ISSB) of the IFRS Foundation, which is to be established shortly. This is what Eumedion writes in its input for the SEC consultation on climate and sustainability reporting. Last March, the SEC requested stakeholders whether the stock exchange regulator should draw up reporting standards in the field of climate and any other sustainability areas. Eumedion encourages the SEC to indeed take up this topic, partly because sustainability information for institutional investors is increasingly important information for taking investment decisions. Moreover, this information is a precondition for the shareholders' ability to hold a company's board to account for its sustainability performance. Eumedion does urge the SEC to work towards international harmonisation of sustainability reporting as soon as possible. Eumedion had already done so earlier with the European Commission regarding its proposal to prepare European reporting standards for sustainability information.

Eumedion supports proposed European gender pay gap directive

Eumedion supports proposed European gender pay gap directiveNews · 23-04-2021

Eumedion supports the proposal that requires companies with at least 250 workers to publish information on the gender pay gap. This follows from Eumedion’s response to the European Commission's proposal for a directive on the principle of equal pay for equal work.


In the proposed directive provisions are introduced with the aim of combating inequality in pay between women and men. In its response, Eumedion indicates that inexplicable pay differences between women and men are unacceptable and that it sees fair and equal pay as an essential part of good employer practices. Eumedion also indicates that the primary responsibility for complying with the legal provisions on equal pay rests with the company board(s) but that shareholders also have a role to play. Eumedion points out that a necessary condition for fulfilling this role is that shareholders have sufficient information. Eumedion therefore welcomes the proposal that requires companies with at least 250 workers to publish information on the gender pay gap. Eumedion indicates that shareholders can include that information in their dialogues with companies and raise this topic at shareholders meetings. In addition Eumedion indicates in its response that the aforementioned proposal would help institutional investors to comply with their own reporting obligations under the regulation on sustainability-related disclosures in the financial services sector (SFDR). Eumedion points out that currently the data needed to report on this is not available. Furthermore Eumedion advocates that the information on the gender pay gap is included in the management report.

Eumedion moderately positive about proposed European directive on corporate sustainability reporting

Eumedion moderately positive about proposed European directive on corporate sustainability reportingNews · 21-04-2021

Eumedion supports the European Commission's proposal to soon develop European sustainability reporting standards. However, these European reporting standards should, as far as possible, make way for international sustainability reporting standards in the medium term. Only if the European Union (EU) has specific policy objectives in the area of sustainability, there is room for a European sustainability reporting standard in that area. In all other cases, the EU should follow the international reporting standards prepared by the IFRS Foundation’s International Sustainability Standards Board. This is Eumedion’s key message regarding the European Commission's proposal for a directive on corporate sustainability reporting that was published today.


Eumedion is pleased that the European Commission has included a mechanism in the proposed directive whereby the sustainability reporting standards are to be reviewed every three years, taking into account the developments with regard to international standard. Eumedion also welcomes the proposal that the external auditor should provide at least limited assurance on the sustainability information reported by listed companies. Eumedion believes, however, that the external auditor should provide reasonable assurance on the specific sustainability targets and indicators that need to be disclosed in conformity with the sustainability reporting standards. According to Eumedion, this would enhance the quality and reliability of the reported sustainability information. 

Eumedion advocates far-reaching transparency on tax payments by multinationals

Eumedion advocates far-reaching transparency on tax payments by multinationalsNews · 15-04-2021

Eumedion believes that every multinational should not only disclose their tax contributions for all EU Member States, but for all countries they operate in. In addition, this country-by-country tax information must be audited by the external auditor. This follows from the statement Eumedion published today with respect to the proposed European directive on country-by-country tax reporting.


Eumedion has always supported the European Commission’s proposal to introduce an obligation for multinationals to publicly report where taxes are paid (‘country-by-country tax reporting’). Promoting greater disclosure of taxes paid per jurisdiction increases overall transparency and allows for a more detailed analysis by investors and better engagement on tax-related topics. In the light of the current negotiations between the EU institutions, Eumedion has published a statement with some comments on the positions of the European Parliament and the European Council. In the statement Eumedion writes that it supports the position of the European Parliament that the country-by-country information should not only be provided for each EU Member State but also for each tax jurisdiction outside the European Union. Furthermore, Eumedion states that it believes that the directive should be strengthened by requiring that the information in the country-by-country report should be audited by the external auditor. And by requiring that the aforementioned information shall be published as an annex to the annual financial statements.

Eumedion in favour of targeted European harmonisation of insolvency law

Eumedion in favour of targeted European harmonisation of insolvency lawNews · 25-03-2021

Eumedion believes that targeted harmonisation of certain definitions and procedures would help investors better manage legal risks of their cross-border exposures. This is the view of Eumedion in its response to the Eurpean Commission's consultation on the convergence of insolvency law of EU Member States that was submitted today.


In December 2020, the European Commission published a consultation document on the convergence of insolvency law. Eumedion is of the opinion that discrepancies between the Member States' insolvency laws may create barriers to the free movement of capital in the internal market. In its response Eumedion refers to the diverging time-limits, lengths of procedures as well as diverging overall procedural efficiency. This may make it more difficult to anticipate the outcome for value recovery, making it harder to price risks, including for debt instruments. Eumedion points out that generally the longer restructuring processes take, the more value is destructed for investors. In its response Eumedion endorses the remark in the Final Report of the High Level Forum on the Capital Markets Union that targeted harmonisation of certain definitions and procedures would help investors better manage legal risks of their cross-border exposures. 

Eumedion supports the establishment of a European Single Access Point

Eumedion supports the establishment of a European Single Access PointNews · 03-03-2021

Financial and non-financial information of listed companies should as soon as possible be made available in a centralised European database. This publicly accessible database will support institutional investors in gathering and processing relevant information on investee companies, as Eumedion writes today in its response to the European Commission’s consultation on the establishment of a European Single Access Point (ESAP).

Essential to the success of this database is a large coverage of structured data. It is therefore of crucial importance that also non-financial information is digitally tagged and filed in a uniform manner. Of particular importance to institutional investors is furthermore the alignment of company filings in ESAP with reporting requirements such as those stemming from the Sustainable Finance Disclosure Regulation and the Taxonomy Regulation. To ensure a speedy start to the ESAP, Eumedion suggests the European Commission limits the scope of the ESAP to both financial and non-financial information that listed entities are required to make public due to the fact they have, or aim to list, securities on a European regulated market.

Eumedion pushes for legal embedding of stakeholder model at European level

Eumedion pushes for legal embedding of stakeholder model at European levelNews · 05-02-2021

The boards of all European listed companies should be required to balance the interests of all relevant stakeholders when taking their decisions. They should also be obliged to report on how the various interests have been considered in the discussions and decision-making. This follows from the today’s submitted Eumedion response to the European Commission’s consultation document on the contents of the forthcoming proposal for a European directive on sustainable corporate governance and due diligence. 


Eumedion is in favour of incorporating the ‘stakeholder principle’ into European law. This stakeholder principle can be elaborated in more detail at national level, given the specificities of the corporate governance model in individual EU Member States. Eumedion is also in favour of mandatory due diligence rules for listed companies, provided that these are fully in line with international standards, such as those of the OECD and the United Nations. Furthermore, Eumedion suggests some technical amendments to the European Company Law Directive regarding share buybacks and supports the European Commission’s idea to require companies to consider environmental, social and/or human rights expertise in the director’s nomination and selection process. Eumedion is not in favour of additional EU legislation regarding the design and content of executive remuneration policies.

Eumedion supports the majority of proposed revisions to the ICGN Global Governance Principles

Eumedion supports the majority of proposed revisions to the ICGN Global Governance PrinciplesNews · 20-01-2021

Eumedion is generally positive about the proposals to revise the Global Governance Principles (GGP) of the International Corporate Governance Network (ICGN). Eumedion only has a number of reservations regarding the proposals that are mainly inspired by Anglo-Saxon practices and regarding a number of proposals in the field of financial and non-financial reporting. This follows from the today’s submitted Eumedion reponse to the ICGN consultation document on the proposed revisions to the GGP. The GGP are used by many institutional investors in shaping their international voting and engagement policies. In its comments, Eumedion questions the proposal that all the company's directors should stand for re-election on an annual basis. Eumedion doubts whether the concept of annual re-election of all board directors is an already widely accepted principle amongst institutional investors. Eumedion points out that this concept is not common practice in a number of important continental-European countries. Eumedion suggests that shareholders of all listed companies should at least have the opportunity to put a proposal for the dismissal of one or more directors on the agenda of a shareholders meeting. Eumedion also criticises the introduction of the principle of conservatism regarding the valuation of assets and liabilities and the calculation of income and expenses. Eumedion believes that useful reporting is generally best served by standard setters to set neutral standards, and by a requirement for listed companies to apply these standards in a neutral manner. 

EFRAG PTF NFRS Outreach Event - Financial Institutions Focus

EFRAG PTF NFRS Outreach Event - Financial Institutions FocusAgenda · 18-01-2021

The EFRAG Project Task Force on preparatory work for the elaboration of possible EU non-financial reporting standards (PTF-NFRS) organises an online outreach event for collecting views of stakeholders from financial institutions on tentantive proposals of the PTF-NFRS. Click here for more information and registration.

EFRAG PTF NFRS Outreach Event - European organisations and other European countries focus

EFRAG PTF NFRS Outreach Event - European organisations and other European countries focusAgenda · 15-01-2021

The EFRAG Project Task Force on preparatory work for the elaboration of possible EU non-financial reporting standards (PTF-NFRS) organises an online outreach event for collecting views of stakeholders on tentantive proposals of the PTF-NFRS. Click here for more information and registration.

Eumedion: independence is key in possible European sustainability reporting standard setting process

Eumedion: independence is key in possible European sustainability reporting standard setting processNews · 07-01-2021

If the European Commission decides to create a European standard setter for sustainability reporting, then a non-politicised, independent process for developing such standards is key. Eumedion underlines the importance of an independent standard-setting process in its response to the preliminary proposals of the chairman of the board of the European Financial Reporting Group (EFRAG) regarding changes to the governance and financing of EFRAG. In June 2020, the European Commission invited EFRAG Chair Jean-Paul Gauzès to make recommendations on this matter if EFRAG were entrusted with the development of possible EU non-financial reporting standards. The European Commission will probably take a decision on this topic in March. 


In its response, Eumedion writes that the future members of the so-called European Non-Financial Reporting Board should be selected on the basis of professional competence, relevant experience, track record, professional background and diversity instead of a specific number of representatives from the relevant stakeholder groups. Eumedion also endorses the importance of an open and transparent non-financial reporting standard-setting process, including a consultation period of at least three months on proposed non-financial reporting standards.

Eumedion supports the IFRS Foundation's intention to create a Sustainability Standards Board

Eumedion supports the IFRS Foundation's intention to create a Sustainability Standards BoardNews · 17-12-2020

Eumedion fully supports the IFRS Foundation Trustees' plan to expand the mission of the IFRS Foundation from financial reporting to (also) sustainability reporting. Eumedion first tested the idea of a Sustainability Standards Board in a Green Paper issued in October 2019. Ever since then, the momentum for this major change in strategic direction for the IFRS Foundation has been building up strongly. Up until Eumedion's position paper in July 2020 the call for a global standard setter was most noteably echoed by Accountancy Europe and also ESMA Chair Steven Maijoor after the European Commission announced its intention to create a European standard setter. Ahead of the publication of the Trustees’ consultation paper in September, indications of support came from key stakeholders like the International Federation of Accountants and the International Organization of Securities Commissions.


Eumedion’s response today highlights the real risk that the existing 'alphabet soup' of sustainability frameworks and standard setters could spill over to a like-wise divergence in practices amongst jurisdictions. Eumedion therefore advises the IFRS Foundation to fast track as much as possible the diligent establishment of a Sustainability Sstandards Board. The sooner this Board is established, the better it can provide a global alternative for the already emerging legal initiatives of local jurisdictions. Related to this risk is our support for giving priority to developing standards for climate-related disclosures, on the condition that the Sustainability Standards Board should from the start also make inroads into other areas of sustainability reporting.

Policy Workshop on Sustainability Reporting | IFRS Consultation

Policy Workshop on Sustainability Reporting | IFRS ConsultationAgenda · 04-12-2020

The IFRS Foundation has launched a public consultation on a global approach to sustainability reporting and on the possible role of the Foundation. The European Corporate Governance Institute and the Impact Economy Foundation are organising an online workshop to discuss the consultation document. Eumedion Executive Director Rients Abma will present his views in a panel discussion on the EU perspective. For more information and registration please click here.

Eumedion focuses on climate reporting and executive remuneration in the 2021 AGM season

Eumedion focuses on climate reporting and executive remuneration in the 2021 AGM seasonNews · 13-10-2020

Climate reporting and executive remuneration are the two Eumedion focus points for the 2021 AGM season. These topics tend to be discussed in the dialogues Eumedion facilitates in the run-up to the 2021 general meetings, and occasionally also at the general meeting itself. Earlier this week, the so-called Eumedion Focus Letter 2021 was sent to all Dutch listed companies. 


Eumedion expects Dutch listed companies to align their climate reporting as much as possible with the recommendations of the Task Force on Climate-related Disclosures (TCFD) and of the European Commission. Eumedion also urges companies to formulate ambitious greenhouse gas emission reduction targets and to report clearly on the progress made in that respect. Furthermore, Eumedion encourages companies to set a deadline for becoming a ‘carbon neutral’ company.


Eumedion also believes that executives should feel the 'pain' of the current corona crisis if the company is forced to apply for government support, lay off employees or (significantly) reduce or cancel the dividend pay-out. In such situations, Eumedion expects the supervisory board to temporarily reduce the executives’fixed salary, cancel the 2020 annual bonus and/or not grant (conditional) performance shares or options in 2021. 

“Virtual AGMs are here to stay"; report of the webinar on the future of the AGM

“Virtual AGMs are here to stayNews · 05-10-2020

The possibility of holding a digital shareholders' meeting (AGM) must be structurally incorporated into Dutch company law. It should also be made possible for listed companies, within the framework of the shareholders' meeting, to decouple the discussion and accountability part of an AGM from the voting part. This was the view of a majority of participants in the webinar on The Future of AGMs held on 30 September. The webinar was organised by Eumedion, Clifford Chance and Euronext. The speakers and participants agreed that Dutch listed companies should have more flexibility in choosing the best AGM format.


During the webinar, Clifford Chance civil law notary and partner Mark Jan Arends gave an overview of the emergency law drawn up this Spring that made it possible for the Dutch listed company to hold a virtual AGM this year. He noted, among other things, that companies have dealt with the right of shareholders to ask questions in quite different ways. For example, DSM limited the number of questions that could be submitted prior to the AGM to a maximum of five per shareholder, Airbus did not offer shareholders the opportunity to ask follow-up questions, and Royal Dutch Shell held the Q and A session between the board and shareholders prior to the voting deadline for shareholders. He was in favour of a structural, legal embedding for the possibility of holding digital AGMs.


Subsequently, Adyen’s corporate secretary Brigitte van den Bosch, gave a presentation on how Adyen prepared and held the virtual AGM this year. Important topics included talks with investors and shareholders on AGM-related matters prior to the AGM. She said that this preparation was one of the reasons why the virtual AGM was a success. She too was very much in favour of being able to hold a virtual AGM in the future.


Eumedion executive director Rients Abma then presented the main findings and conclusions of institutional investors regarding the virtual AGM season 2020. He listed seven positive points, including better opportunities for foreign shareholders to participate and a lower AGM carbon footprint. Nevertheless, he also mentioned a number of points for improvement. He found the lack of live interaction between management, the supervisory board, the auditor and shareholders at most AGMs to be the main drawback. He also found the inability of a shareholder to make a live statement at the AGM to be a shortcoming. He felt that in the future listed companies should be given more flexibility to choose the 'AGM format': the physical AGM, the hybrid AGM, the virtual AGM and the possibility to split the discussion part of the AGM from the voting part, as Royal Dutch Shell did this season. However, these options should first be embedded into the company’s articles of association.


During the subsequent virtual discussion with the public, the advantages and disadvantages of the various AGM formats, the need to embed the formats in the articles of association and the advantages and disadvantages of a 'split' AGM were highlighted.

Eumedion calls on IASB to enhance disclosures on reverse factoring arrangements

Eumedion calls on IASB to enhance disclosures on reverse factoring arrangementsNews · 02-10-2020

An increasing number of companies are asking a financial institution to pay their suppliers, while paying the financial institution at a later instance. Such arrangements are identified as reverse factoring or Supply Chain Financing (‘SCF’) arrangements. Surprisingly few companies report on these arrangements. The IFRS Interpretations Committee tentatively concluded that the IFRS standards are sufficiently clear in how reverse factoring arrangements should be treated. If there is a material difference in the payment term of the supplier and the financial institution, the entire resulting liability should be categorised as a financial liability. In such a case, the reported amounts payables become meaningless. In Eumedion's response to the tentative IFRIC interpretation, Eumedion explains why payables are important for investors and why this results an overly pessimistic picture of the company. We suggest what disclosure would help investors assess what part of the liability resulting from the SCF arrangement is an in-substance payable and what part is an in-substance financial liability.