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
What companies are included in the first wave of sustainability reporting, that is, for financial years commencing 1 January 2024?
Public-interest entities being credit institutions, insurance undertakings and undertakings with transferable securities listed on a main EU market, with more than 500 employees.
What companies are included in the second wave of sustainability reporting, that is, for financial years commencing 1 January 2025?
Large companies being companies satisfying at least 2 of 3 criteria – balance sheet greater than €25 million, turnover greater than €50 million and more than 250 employees.
What companies are included in the third wave of sustainability reporting, that is, for financial years commencing 1 January 2026?
Small and medium-sized undertakings (excluding micros) with transferable securities admitted to trading on the EU regulated markets, and small and non-complex institutions under the Capital Requirements Directive, and captive re/insurance undertakings.
Small – at least 2 of 3 of balance sheet no greater than €7.5 million with a net turnover of €15 million and 50 employees
Medium – at least 2 of 3 of balance sheet no greater than €25 million with a net turnover of €50 million and 250 employees
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.