Are you ready for ESG?

On January 5, 2023, the Corporate Sustainability Reporting Directive (CSRD) came into effect. This new directive modernizes and strengthens the rules regarding social and environmental information that companies must disclose as part of non-financial reporting.

According to the directive, starting from the calendar year 2024 (i.e., in 2025), companies will have to meet detailed requirements for disclosing information about the environment, social aspects, and corporate governance. The directive will also apply to companies outside the EU that engage in significant business activities within the EU. Member states will be obligated to implement the directive’s rules into their legal frameworks within 18 months.

The obligations will be extended to large, medium, and small enterprises whose securities are traded on regulated EU markets, as well as to large groups of companies that exceed two out of three criteria in two consecutive accounting periods (total assets exceeding EUR 20 million, turnover exceeding EUR 40 million, average number of employees exceeding 250).

In the Czech Republic, it is expected that the necessary legal regulation will be part of the new Accounting Act and an amendment to the Auditors Act. A new requirement will also be the audit of these non-financial information, which will be included in the companies’ annual reports.

Therefore, the Chamber of Auditors of the Czech Republic has organized a conference on this topic, attended by partners Radek Stein and David Mrozek from TPA. Radek Stein states, “We expect that many more companies will report on their sustainable business approach in their annual reports than required by the directive. Many of our clients are already interested in this topic, and we are prepared to provide the necessary advisory services. We are also preparing for the specialized auditors’ examination to be able to offer our clients an audit of this part of the annual report.”