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Central Europe Update: MANDATORY ESG REPORTING FOR A WIDER GROUP OF COMPANIES – SHOULD YOU BE WORRIED?
12/12/2022On the 23rd November 2022, EFRAG (the European Financial Reporting Advisory Group) announced the submission of the final draft of the European Sustainability Reporting Standards (ESRS) to the European Commission. The ESRS are the rules that certain major companies will have to follow in their mandatory reporting on their activities in the 12 areas covered by ESG (Environmental, Social, Governance).
The aforementioned rules are based on the CSRD Corporate Sustainability Reporting Directive, which was approved by the Council of the EU on 28th November 2022. The CSRD is an extension of the NFRD (Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014), regulating disclosure of non-financial and diversity information by certain large undertakings and groups.
As a direct result of the adoption of the CSRD, certain companies will be obliged to publish reports in the 12 areas mentioned above, e.g. on the environmental impact of their activities, information relating to their own employees, affected communities and, finally, information falling within the area of corporate governance.
The application of the regulation will take place in four stages (depending on which entities are involved), with reporting obligations pending for the applicable fiscal year:
1st of January 2024 | Companies subject to the NFRD. |
1st of January 2025 | Large companies that were not subject to the NFRD. |
1st of January 2026
(possible to opt-out until 2028) | Listed SMEs, small and non-complex credit institutions and captive insurance undertakings. |
1st of January 2028 | Non-EU undertakings with significant activity – a net turnover exceeding EUR 150 million and having at least one branch or subsidiary on EU territory having a net turnover exceeding EUR 40 million |
By Konečná & Zacha law firm, Lithuania, a Transatlantic Law International Affiliated Firm.
For further information or for any assistance please contact centraleurope@transatlanticlaw.com
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