In January 2023, the Corporate Sustainability Reporting Directive (CSRD) came into force, increasing companies' responsibility in the ESG dimension, i.e. environmental, social and corporate governance. The directive introduces a number of changes to the reporting of sustainability-related information, including: 1) broadens the scope of companies covered by the reporting - not only public interest companies with more than 500 employees (in line with the previous NFRD), but also all large companies not subject to the NFRD (from 2025) and listed SMEs (from 2026) will be obliged to report; 2) introduces uniform ESRS reporting standards; 3) imposes an obligation to compile audited reports; 4) significantly broadens the scope of required information.
Sustainability reporting under the CSRD is to be based on the new, uniform ESRS standards. The European Commission is expected to publish the first set of standards (2 cross-cutting and 10 thematic) before the end of August 2023. These will already be applied in the 2024 reports (concerning companies currently subject to the NFRD). Subsequently, sectoral standards are to be adopted (first for sectors with high sustainability risks, i.e. agriculture, coal mining, mining, refining, energy, land transport, automotive, food, clothing), as well as simplified standards for SMEs.
In this report, we present the construction of the ESRS baseline standards, with an indication of the industries in which particular thematic areas of reporting may be more relevant. In our view, it may be particularly challenging for Polish companies to meet the requirements regarding climate change (due to the high carbon and relatively high energy intensity of the Polish economy compared to EU economies), biodiversity (due to limited experience in determining the relationship between business activities and biodiversity) and the closed loop economy (due to delays in implementing some EU regulations into Polish law, and the need to transform business models based on circularity principles). Issues related to water management, as well as in the area of pollution, seem to be less of a challenge.
We estimate that the new sustainability reporting rules may cover more than 4,000 companies in Poland, including nearly 200 listed SMEs, while in 2022 non-financial reports were published by only 150 of the largest companies listed on the WSE. The CSRD emphasises the importance of a sustainable approach throughout the entire value chain of companies and requires the presentation of information concerning not only the entity itself, but also its suppliers and customers, so indirectly, the need to implement activities that reduce the negative impact on the environment (and document them) will affect a much larger group of entities, especially smaller companies that are suppliers of companies subject to the reporting obligation.
The EU's commitment to achieve climate neutrality in 2050 implies the need for companies to move towards sustainability. Many Polish companies are already on this path and are successfully implementing solutions to minimise the negative impact of their operations on the environment. In our opinion, the new reporting rules should be viewed not only through the prism of regulatory obligations, but also as an opportunity to strengthen the market position of companies.
