The information provided below is not intended to be a legal interpretation of Part 28 of the Companies Act 2014 as introduced by SI No 336 of 2024 European Union (Corporate Sustainability Reporting) Regulations 2024.
Scope
For which financial years do respective categories of companies come within scope of the new requirements for sustainability reporting, pursuant to the CSRD?
Companies come within scope of the CSRD requirements, as transposed into Irish law, commencing for financial years on or after:
- 1 January 2024 for public interest entities in scope of EU non-financial reporting rules (public-interest entities being credit institutions, insurance undertakings and undertakings with transferable securities listed on a main EU market, with more than 500 employees)
- 1 January 2025 for large companies (with at least 2 of: balance sheet greater than €25 million, turnover greater than €50 million, and employees greater than 250)*
- 1 January 2026 for listed SMEs, with an ‘opt out’ possible until 2028
- 1 January 2028 for large subsidiaries and branches of non-EU companies with a net turnover of €150 million in the EU
* In line with the Irish transposition of the EU Accounting Directive (Directive 2013/34/EU) through the Companies (Accounting) Act 2017, companies deemed ‘large’ for the purpose of the Irish transposition of that Directive are also deemed ‘large’ for the purpose of CSRD reporting under SI 336/2024. See Section 280H of the 2014 Act, and the definition of “ineligible entities” under sections 275, 1116A, 1267A and 1400A of the 2014 Act.
Are not-for-profit undertakings in scope of the new rules?
The Corporate Sustainability Reporting Directive amends a series of directives including the Accounting Directive. The Accounting Directive excludes not-for-profit undertakings from its scope in line with point (g) of Article 50(2) of the Treaty on the Functioning of the European Union (TFEU) and therefore the requirement for sustainability reporting does not follow. It is a matter for an individual undertaking to establish whether it is not-profit making.
Consolidation
When does the option for consolidation of sustainability reporting by EU subsidiaries of a third country undertaking commence?
SI No 498 of 2024 European Union (Corporate Sustainability Reporting) (No 2) Regulations 2024 clarify that EU subsidiaries of a third country undertaking may report on a consolidated basis at EU level from the date of operation of the regulations.
What undertakings may not avail of the exemption from sustainability reporting on an individual or consolidated basis for certain subsidiaries, if the information is otherwise included in consolidated reporting?
SI No 498 of 2024 European Union (Corporate Sustainability Reporting) (No 2) Regulations 2024 clarify that only large undertakings with transferable securities listed on a main EU market, may not avail of the exemption.
What is the requirement for the group director’s report in the case of the subsidiary exemption where it is prepared in another EU member state?
In the case of a subsidiary whose group directors’ report is prepared in another EU member state, the reference to section 325 can be understood as a reference to the group directors’ report prepared in accordance with the Accounting Directive under the law of any EU member state.
Value chain
When do the value chain reporting requirement commence?
The new rules require in scope companies to report information on the value chain if it is material, in terms of impacts or financially. For the first three financial years, on which an in-scope company reports, this is on a ‘comply or explain’ basis. That is in the event that not all the necessary information regarding its value chain is available, the directors of the applicable company may elect to explain their inability to obtain the information.