Irish businesses to prepare for new European Sustainability Reporting Standards
The Corporate Sustainability Reporting Directive entered into force on January 5th, 2023. EU Member States now have 18 months in which to transpose the directive into law.
This new EU law requires all large companies and all listed companies (except listed micro-enterprises) to disclose information on their risks and opportunities arising from social and environmental issues, and on the impacts of their activities on people and the environment.
This helps investors, civil society organisations, consumers and other stakeholders to evaluate the sustainability performance of companies, as part of the European green deal.
The Directive introduces mandatory reporting standards developed by EFRAG. Companies in scope will be required to report annually in their management/directors’ report on environmental, social and governance and human rights matters according to the EU mandatory standards. Information reported on will require audit (assurance).
Ireland and other Member States now have 18 months to transpose the Directive i.e., mid 2024, with a view to mandatory requirements commencing for financial years on or after:
- January 2024 for companies and public interest entities in scope of the existing rules (greater than 500 employees);
- 1 January 2025 for other larger companies and public interest entities (greater than 250 employees); and
- 1 January 2026 for listed SMEs, with an ‘opt out’ possible until 2028.
Small firms are not in scope for this Directive but it could impact your supply chain or future procurement bids. SFA will continue to monitor the transposition of this Directive and update members were relevant.