Enterprises will now prepare reports on their sustainable development

The Parliament adopted in the second reading changes to the Accounting Law, which introduced an obligation to include a sustainability report in the activity report of the enterprises.

Corporate sustainability should include both an analysis of the property and financial indicators of the enterprise's activity, as well as an analysis of the socio-economic impact as a result of this activity, the reasons for the bill state, BTA reported.

The sustainability report will be prepared by large enterprises and by small and medium-sized enterprises (except micro-enterprises) whose transferable securities are admitted to trading on the regulated market in an EU Member State (public interest enterprises) as well as by parent enterprises of large groups of enterprises.

The obligation is also for subsidiaries and branches of enterprises regulated by the legislation of a third country to publish a report on the sustainability of the enterprise from a third country under certain conditions.

The obligation to prepare an activity report containing a sustainability report is scheduled to enter into force for the accounting year 2024 for large enterprises that are enterprises of public interest and which, as of December 31 of the accounting period, exceed the average number criterion in the financial year of 500 employees, as well as enterprises of public interest, which are parent enterprises in a large group, which as of 31 December exceeds on a consolidated basis the criterion for an average number of employees in the financial year of 500 people, the draft law provides.

The obligation to prepare and publish the report for the remaining enterprises within the scope of the European directive arises gradually in the following reporting years - until 2028.

The explanatory memorandum to the law states that sustainability reporting includes factors in environmental protection, social rights and human rights, as well as governance issues.

What else...

The information in the sustainability report must include the company's plans to ensure that its business model and strategy are compatible with the transition to a sustainable economy and with limiting global warming to 1.5 degrees Celsius in accordance with the Paris Agreement. There should be greenhouse gas reduction targets, a description of the role of management and supervisory bodies in relation to sustainability issues, the main actual or potential impacts related to the enterprise's own activities and its value chain. The information should cover the short, medium and long term time horizons where applicable.

An obligation is introduced for the head of the enterprise to inform the representatives of the workers at the appropriate level and to discuss with them the relevant information and the means of obtaining and verifying the information on sustainability.

For small and medium-sized enterprises, the required information is more limited in view of their capacity and capabilities.

What businesses will prepare such reports

Large enterprises of public interest with a staff of over 500 people - about 50 enterprises;

Enterprises of public interest, which are parent enterprises of a large group and have a staff of more than 500 people - about 20 enterprises;

All other large enterprises, other than those specified in item 1 - about 610 enterprises;

All other enterprises that are mothers of large groups, apart from those specified in item 2 - about 150 enterprises;

Small and medium enterprises of public interest, which are not micro-enterprises, and whose securities are admitted for trading on a registered market in the EU - about 110 enterprises;

The registered auditors, in their capacity as service providers under mandatory sustainability security commitments - about 700 registered auditors (individuals) and 90 auditing companies;

Investors; creditors; employees and workers; citizens and civil organizations.

Data on the number of interested persons are taken from the annual financial statements for 2021.

The bill defines new, higher values ​​of the indicators for the balance sheet value of assets and net sales revenue when categorizing enterprises and groups according to their size.