Overview of all questions and answers from the document on the implementation of EU rules for reporting on corporate sustainability

Document "240807-faqs-corporate-sustainability-reporting_en" contains an extensive list of questions and answers (FAQs) regarding the implementation of the Corporate Sustainability Reporting Directive (CSRD). Below you will find all the questions and answers organized, divided into sections by topic.

Section I: Glossary of relevant terms and applicable legislation

This section does not contain any questions and answers. It serves as a glossary with definitions of key terms and a list of relevant legislation.

Section II: Overview of the sustainability reporting requirements introduced by the CSRD Directive

This section does not contain any questions and answers. It provides a general overview of the new sustainability reporting requirements introduced by the CSRD Directive.

Section III: Frequently asked questions about sustainability information to be provided under Articles 19a/29a of the Accounting Directive (individual and consolidated sustainability statement)

Scope and dates of application

1. Question: Which fiscal year determines when a business falls into a certain business size category: the reporting fiscal year or the fiscal year prior to the reporting year?

Answer: The rules for determining the size of an enterprise for sustainability reporting purposes are based on existing financial reporting rules applied to an enterprise based on the Member State in which it is established. These rules are laid down in national measures transposing the previous accounting directive.

2. Question: If an enterprise develops during a given accounting year in such a way that it meets the criteria for inclusion in a different category of enterprises, it must start reporting on sustainability information according to the rules that apply to this new category already in the same accounting year, or only after meet the criteria for two consecutive accounting years?

Answer: If an enterprise fulfills the criteria for inclusion in a different category of enterprises during a given accounting year, the sustainability reporting rules applicable to this category will only apply to it from the following accounting year. In other words, a business must meet the criteria for a new category for two consecutive accounting years in order to be subject to the sustainability reporting rules for that new category.

3. Question: How is the average number of employees calculated for the purposes of business categorization under the Accounting Directive?

Answer: The legal regulations of the Union do not regulate the calculation of the average number of employees for the purpose of categorizing the company according to the accounting directive. However, Member States could adopt national rules or provide guidelines on this matter. In the absence of national rules or guidelines, businesses can use Article 5 of the Commission's Recommendation of 6 May 2003 on the definition of micro, small and medium-sized enterprises as a guideline for measuring the number of employees.

4. Question: Do SMEs without securities admitted to trading on an EU regulated market have to report on sustainability information under Articles 19a/29a of the Accounting Directive?

Answer: SMEs without securities admitted to trading on an EU regulated market are not required to report sustainability information at an individual level under Article 19a of the Accounting Directive (individual sustainability statement). However, they are required to report sustainability information at a consolidated level under Article 29a of the Accounting Directive (consolidated sustainability statement) if they are parent companies of a large group. Article 29a of the Accounting Directive applies regardless of the size of the parent company.

5. Question: Are credit institutions and insurance companies required to report sustainability information under Articles 19a and 29a of the Accounting Directive regardless of their legal form?

Answer: Yes. According to article 1 par. 3 of the Accounting Directive are credit institutions and insurance companies, including cooperatives and mutual insurance companies, included in the scope of Article 19a of the Accounting Directive (individual sustainability statement), regardless of their legal form, if they are large enterprises or SMEs (with the exception of micro-enterprises) with securities accepted for trading on a regulated EU market. They are also included in the scope of Article 29a of the Accounting Directive (consolidated sustainability statement), regardless of their legal form, if they are the parent company of a large group.

6. Question: Are financial institutions – apart from insurance companies and credit institutions – required to report on sustainability information under Articles 19a/29a of the Accounting Directive?

Answer: Yes, financial institutions - except insurance companies and credit institutions - are obliged to report on sustainability information according to Articles 19a/29a of the Accounting Directive, if they meet the conditions of legal form according to Article 1 para. 1 of the Accounting Directive and if they meet the company size criteria according to Articles 19a and 29a of the Accounting Directive.

7. Question: If a small and non-complex institution (SNCI) is currently required to report non-financial information under Directive 2014/95/EU (NFRD), it must continue to report non-financial information in accordance with the provisions of the NFRD until the CSRD regime applies to small and non-complex institutions (ie from accounting periods beginning on or after 1 January 2026)?

Answer: Yes. On the basis of Article 5 par. 2 of the CSRD, a small and non-complex institution that is a large enterprise or an SME (excluding micro-enterprises) with securities admitted to trading on an EU regulated market will be required to report on sustainability information in accordance with the ESRS (or alternatively the LSME ESRS) from accounting period 2026. A small and non-complex institution that is currently required to submit non-financial information according to Article 19a of the Accounting Directive, as introduced by Directive 2014/95/EU (NFRD), would have to continue to report under the NFRD regime until the CSRD regime applies to small and non-complex institutions (ie from the accounting period 2026).

8. Question: If a small and non-complex institution (SNCI) is the parent company of a large group, this SNCI can use the exemption under Article 19a, paragraph 6 of the Accounting Directive and prepare sustainability reports in accordance with LSME ESRS?

Answer: If an enterprise (regardless of size or specific type, e.g. including SNCI) is the parent enterprise of a large group, it must publish a consolidated sustainability statement according to Article 29a of the Accounting Directive, which is prepared in accordance with the ESRS. Possibility to use LSME ESRS in accordance with article 19a par. 6 of the Accounting Directive applies only to SMEs (with the exception of micro-enterprises) with securities listed on an EU regulated market and to small and non-complex institutions, captive insurance companies or captive reinsurance undertakings (provided that they are either large enterprises or SMEs - with the exception of micro-enterprises – with securities listed on a regulated EU market) to develop their individual sustainability statement.

9. Question: If a small and non-complex institution (SNCI) is the parent company of a large group, when does it have to start reporting on sustainability information?

Answer: If SNCI is the parent company of a large group, it must publish a consolidated sustainability statement using the ESRS either from the accounting period 2024 (if SNCI is a public interest entity which, on the balance sheet date, exceeds on a consolidated basis the average number of employees during the accounting period of 500) or from period 2025 (in all other cases).

10. Question: If SNCI is the parent company of a large group but is not required to issue consolidated financial statements because all its subsidiaries are insignificant, is this SNCI still required to prepare and publish a consolidated sustainability statement?

Answer: If a parent company is not required to publish consolidated financial statements (for example because it meets the conditions of the exemption set out in Article 26 of the Accounting Directive), that parent company is not obliged to prepare and publish a consolidated sustainability statement. However, if such a parent company is itself a large company within the meaning of Article 3 par. 4 of the Accounting Directive and therefore would fall within the scope of Article 19a of the Accounting Directive, this enterprise must prepare and publish an individual sustainability statement in accordance with Article 19a of the Accounting Directive. This individual sustainability statement would have to be prepared in accordance with the ESRS or, if the business is an SME with securities admitted to trading on an EU regulated market, alternatively with the LSME ESRS.

Continuation of the overview of questions and answers from the document "240807-faqs-corporate-sustainability-reporting_en (1).pdf"

Section III: Frequently asked questions about sustainability information to be provided under Articles 19a/29a of the Accounting Directive (individual and consolidated sustainability statement)

Scope and dates of application

11. Question: Do the sustainability reporting requirements under Articles 19a and 29a of the Accounting Directive also apply to companies that manage investment funds or other financial products?

Answer: It depends on the type of managed financial product. According to article 1 par. 4 of the Accounting Directive, the requirements for reporting on sustainability according to Articles 19a and 29a of the Accounting Directive they do not apply to the businesses they manage Undertakings for Collective Investment in Transferable Securities (UCITS) or Alternative Investment Funds (AIFs).

However, the businesses they manage other types of investment funds or financial products, which fall within the scope of the accounting directive, will have to to report on sustainability, if they meet the size criteria according to Articles 19a and 29a.

12. Question: Do undertakings managing UCITS and AIFs have to report on sustainability information under Articles 19a and 29a of the Accounting Directive?

Answer: Nope. Article 1 par. 4 of the Accounting Directive aims to exclude UCITS and AIFs from the sustainability reporting requirements under Articles 19a and 29a of the Accounting Directive.

However, businesses that managed by UCITS and AIF, would fall within the scope of the Accounting Directive if they meet the conditions legal form referred to in article 1 par. 1 of the directive on accounting. If such a company also meets size criteria according to Articles 19a and 29a of the Accounting Directive, it will have to in its management report include a sustainability statement.

13. Question: Do pension funds have to report on sustainability under the Accounting Directive?

Answer: Yes. If the pension fund meets the conditions legal form according to article 1 par. 1 of the Accounting Directive and falls within the scope of Articles 19a and 29a of the Accounting Directive, it will have to include in its management report include a sustainability statement. Unlike UCITS or AIF with pension funds do not apply to the exclusion from the sustainability reporting requirements set out in Article 1 par. 4 directives on accounting.

14. Question: Do the sustainability reporting requirements under the Accounting Directive also apply to companies that are established outside the EU (so-called third-country companies) but have subsidiaries in the EU?

Answer: Yes, if the company from a third country meets conditions referred to in Article 40a of the Accounting Directive. Specifically, if a company from a third country achieves net turnover more than EUR 150 million in the Union (for each of the last two consecutive accounting periods) and has subsidiary in the Union, which is subject to Articles 19a/29a of the Accounting Directive, or in the absence of such a subsidiary, branch in the Union, which achieved net turnover more than EUR 40 million (in the previous accounting period), then the subsidiary or branch will have to disclose and make available information on sustainability at the group level of the parent company from the third country.

15. Question: Is a sustainability statement published as part of a management report by the issuer of securities admitted to trading on a regulated EU market considered "regulated information" according to Article 2, paragraph 1 letter k) directives on transparency?

Answer: Yes. According to article 2 par. 1 letter k) transparency directives are considered to be regulated information, among other things, "all information that the issuer or any other person who has applied for the acceptance of securities for trading on a regulated market without the issuer's consent, is obliged to disclose according to this directive [ie the transparency directive ] […]“. Article 4 par. 5 of the Transparency Directive obligates publishers to publish a sustainability statement, which therefore considered "regulated information"

16. Question: Can small and medium-sized enterprises (SMEs) with transferable securities admitted to trading on an EU regulated market choose not to report on sustainability for a certain period?

Answer: Yes. According to Article 19a paragraph 7 of the Accounting Directive, SMEs (with the exception of micro-enterprises) with transferable securities admitted to trading on an EU regulated market may decide that they will not report on sustainability according to Article 19a of the Accounting Directive for accounting periods beginning before January 1, 2028 (e.g. for accounting periods 2026 and 2027). In such cases, the SME must in its management report to state briefly, why sustainability reports were not provided.

This exception also applies to small and non-complex institutions, as well as on capital insurance companies and reinsurance companies, provided they are SMEs (excluding micro-enterprises) with transferable securities admitted to trading on a regulated EU market.

Exemption rules

17. Question: If the parent company reports on sustainability at a consolidated level according to Article 29a of the Accounting Directive (consolidated sustainability statement), it must provide information on key performance indicators in accordance with Article 19 para. 1 third subparagraph of the Accounting Directive in its consolidated management report?

Answer: Nope. Article 19 par. 1 third subparagraph of the Accounting Directive, which regulates the individual management report, requires the disclosure of information on key performance indicators within the individual management report. Article 29 par. 1 of the Accounting Directive, which governs the consolidated management report, requires the disclosure of information that enables the development, performance and position of the companies included in the consolidation to be assessed as a whole.

Due to the fact that Article 29a para. 7 of the Accounting Directive stipulates that a parent company that meets the requirements set out in Article 29a, paragraph 1 to 5, is considered to be an enterprise that has met the requirements set forth in Article 19 par. 1 third subparagraph and in article 19a, and since the content of the consolidated management report according to article 29 par. 1 also includes the information required under Article 19 par. 1, exemption from duty would also apply to consolidated report on business management according to Article 29a.

18. Question: If an SME with securities admitted to trading on an EU regulated market decides to voluntarily prepare and publish a consolidated sustainability statement under Article 29a of the Accounting Directive, will it be exempted from the obligation to prepare and publish its individual sustainability statement under Article 19a of the Accounting Directive?

Answer: Yes. An SME with securities admitted to trading on an EU regulated market that voluntarily publishes a consolidated sustainability statement referred to in Article 29a of the Accounting Directive is exempted from the obligation to prepare and publish an individual sustainability statement referred to in Article 19a of the Accounting Directive, provided that the consolidated sustainability statement is prepared in accordance with European Sustainability Reporting Standards (ESRS).

19. Question: What are the conditions for a subsidiary within the scope of Articles 19a/29a of the Accounting Directive to be exempted from the obligation to submit sustainability reports under Articles 19a/29a of the Accounting Directive (sustainability statement)?

Answer: According to Article 19a paragraph 9 and article 29a par. 8 of the Accounting Directive, a company that is a subsidiary is exempt from the obligations set out in Article 19a, paragraph 1 to 4 of the Accounting Directive (or Article 29a, paragraphs 1 to 5 of the Accounting Directive, if the subsidiary is itself the parent company of a large group), if certain conditions are met conditions referred to in Article 19a paragraph 9, second subparagraph of the Accounting Directive (or Article 29a, paragraph 8, second subparagraph of the Accounting Directive, if the subsidiary is itself the parent company of a large group).

Specifically the report on the management of the exempted enterprise must contain:

• the name and registered office of the parent undertaking reporting the information at group level;
• web link(s) to the consolidated management report or consolidated sustainability reporting of the parent company; a
• information that the company is exempt from the obligation to publish an individual sustainability statement (or a consolidated sustainability statement if the subsidiary is itself the parent company of a large group).

If the parent company is established in a third country, its consolidated sustainability reporting a auditor's conclusion must be published in accordance with the legal regulations of the member state governing the subsidiary, and disclosures set out in Article 8 of the Taxonomy Regulation (which relate to the activities carried out by the subsidiary) must be included either in the subsidiary's governance report or in the consolidated sustainability reporting carried out by the parent company established in a third country.

If the Member State requires it translation of the consolidated management report or consolidated reporting on the sustainability of the parent company, this translation should be either verified (for example by a translator or the authority responsible for the verification of translations in the relevant Member State), or should contain statement, stating that it has not been verified.

According to Article 19a paragraph 10 and article 29a par. 9 of the directive on accounting large companies with securities admitted to trading on a regulated EU market – including cases involving small and non-complex institutions, capital insurance and reinsurance companies, and including cases involving undertakings from third countries – they cannot claim this exemption.

20. Question: Does the parent company's consolidated governance/consolidated sustainability reporting have to be already published by the time its subsidiary publishes its own governance report in order for the subsidiary to be exempt from publishing its own sustainability statement?

Answer: Nope. In order for the subsidiary to be exempted from the obligation to publish its own sustainability statement in accordance with Article 19a par. 9 or Article 29a par. 8 of the Accounting Directive, the management report published by the subsidiary must include a web link to the consolidated management report or consolidated sustainability reporting of the parent company. If this consolidated governance report or consolidated sustainability reporting is not yet available at the time of publication of the subsidiary's governance report, the subsidiary seeking exemption may include in its governance report a link to a general web link, at which the relevant documents will be available in the future. A Union subsidiary could, for example, consider obtaining a declaration from the parent company guaranteeing the commitments entered into by the subsidiary and publishing this declaration together with its management report within the deadline set by its own Member State.

21. Question: Must the consolidated management report or consolidated sustainability reporting of the parent company be available in a language accepted by the Member State whose national law governs the subsidiary in order for the subsidiary to be exempt from the obligation to publish its own sustainability statement?

Answer: The Member State whose national law governs the subsidiary may require that the consolidated management report (or, where appropriate, the parent company's consolidated sustainability reporting) be published in a language accepted by that Member State and that any necessary translation be provided into this language. In this case, these requirements must be met in order for the subsidiary to be exempt from the obligation to publish its own sustainability statement.

22. Question: How should an exempt subsidiary report that it is exempt?

Answer: On the basis of Article 19a para. 9 and article 29a par. 8 of the Accounting Directive, the exempted subsidiary must include in its management report the information that it is exempt from the obligations set out in Article 19a, paragraph 1 to 4 (or in Article 29a paragraphs 1 to 5, if the subsidiary is itself the parent company of a large group). In addition, the exempted subsidiary continues to be subject to the other provisions of the Accounting Directive that apply to undertakings within its scope, including the obligation to submit a management report to the National Business Register pursuant to Article 30 of the Accounting Directive in conjunction with the provisions in Chapter III of Title I of the Directive on the law of commercial companies. The digital sustainability reporting requirements set out in Article 29d of the Accounting Directive do not apply. If a subsidiary using the exemption from the obligation according to article 19a par. 9 or article 29a par. 8 of the Accounting Directive has transferable securities accepted for trading on a regulated market, must continue to comply with the provisions of the Transparency Directive, in particular with regard to the publication of the management report.

23. Question: If a subsidiary publishes a consolidated sustainability statement of the parent company that does not include disclosures under Article 8 of the Taxonomy Regulation regarding the activities carried out by that subsidiary, must the subsidiary disclose this information in its own governance report?

Answer: Yes. If the subsidiary is located in the territory of the Union and its parent company is established in a third country and publishes consolidated sustainability reporting, the disclosures under Article 8 of the Taxonomy Regulation that relate to the activities carried out by the subsidiary company established in the Union and its subsidiaries must be included either in the subsidiary's governance report or in the consolidated sustainability reporting carried out by the parent company established in a third country.

24. Question: Can large companies with securities admitted to trading on a regulated EU market benefit from the exemption from the obligation to submit sustainability reports under Article 19a, paragraph 9 and article 29a par. 8 directives on accounting?

Answer: Nope. Large firms with securities admitted to trading on an EU regulated market - including small and non-complex institutions, capital insurance and reinsurance companies, and including third-country firms - cannot benefit from this reporting exemption about sustainability. They must therefore report on sustainability according to Article 4, paragraph 5 of the Transparency Directive and Articles 19a/29a of the Accounting Directive.

25. Question: How can a company fulfill the obligation to prepare and publish an individual or consolidated sustainability statement when it is not obliged to prepare and publish a consolidated management report under Article 29 of the Accounting Directive?

Answer: An enterprise that must prepare and publish an individual or consolidated sustainability statement, but is not required to prepare and publish a consolidated management report, may include the individual or consolidated sustainability statement in a separate document to be published in accordance with Article 30 of the Accounting Directive.

However, this separate document – which contains an individual or consolidated sustainability statement – must comply with the format and labeling requirements set out in Article 29d of the Accounting Directive.

26. Question: How can a company fulfill the obligation to prepare and publish a consolidated sustainability statement when it is exempt from the obligation to prepare consolidated financial statements?

Answer: An enterprise that is required to prepare and publish a consolidated sustainability statement but is exempt from the obligation to prepare consolidated financial statements should nevertheless prepare and publish a consolidated sustainability statement. The consolidated sustainability statement should state that the company is not required to prepare consolidated financial statements and, where appropriate, refer to the additional information included in the management report and to the amounts reported in the individual financial statements.