The European Sustainability Reporting Directive (CSRD) was incorporated into Greek law last week, which has immediate effect for large companies. European Sustainability Reporting Standards (ESRS) are mandatory for all companies that fall within the scope of CSRD.

But when and which companies fall under the obligation under the new law?

As Katerina Katsouli, ESG & Sustainability Principal of Grant Thornton in Greece, reports to APE/MPE, the deadline for compliance with the obligations differs for entities in terms of scope:

– Large public interest entities and parent companies of large public interest groups with more than 500 employees: from the fiscal year 01.01.2024.

– Large entities and parent companies of large groups, other than those mentioned above: start of use 01.01.2025

– Small and medium entities of public interest, and associated insurance and reinsurance companies: from the fiscal year 01.01.2026.

– Subsidiaries whose parent company is based outside the EU: from the financial year 01.01.2028 (provided that the total turnover in EU countries – of the Group based outside the EU – exceeds 150 million Euros).

In other words, we find that the new law amends law 4548/2018 and extends the obligation to publish a Sustainable Development Report to large companies, small and medium-sized companies of public interest, and to non-EU companies that have subsidiaries with significant activities in the EU (e.g. revenues third country companies either at group level, or individually, over 150 million euros in the EU in the last two years).

Accordingly, as mentioned by Ms. Katsoulis, N. is also amended. 3556/2007 for listed companies, specifying indicatively that the Management Report will also include the sustainability information according to new European sustainability reporting standards (ESRS).

External verification/assurance of Sustainable Development Reports

External verification of Sustainability Reports is mandatory and must come from an accredited independent auditor or certification body, ensuring that sustainability information complies with EU-approved certification standards. Initially, the scope of the audit is limited (limited assurance) and in three years it will become analytical – reasonable assurance (reasonable assurance) following the level of audits applied to the Financial Statements.

Additionally, according to the CSRD, the Commission is expected to introduce legislation to provide for limited assurance standards (October 1, 2026), as well as further legislation to provide for reasonable assurance standards (October 1, 2028).

What do ESRS European Standards include?

The EFRAG-ESRS European Sustainability Reporting Standards are structured to cover all CSRD reporting requirements on sustainability.

The Climate Standard (ESRS E1) is mandatory for all entities that fall within the scope of CSRD and by extension the relevant Greek legislation. In addition, certain workforce disclosure requirements (ESRS S1) are also mandatory for all entities employing more than 250 employees.

All relevant disclosures in the coming years will be extended to the value chain of each business, including products and services, business relationships and the supply chain.

What will the Sustainability Reports include?

Sustainability reports should include, among other things, the Company’s business model, and how it is developed to address climate-related risks, the sustainability policies it has adopted, the governance framework, the sustainability strategy, as well as and supply chain impacts. The Sustainable Development Report is an integral part of the Management Report of the Board. The sustainability reports and the information of those responsible for their publication must be published in the General Commercial Register (GEMI).

For this reason, the development of Sustainability Reports is becoming a necessary and very useful tool for companies. Its development is much more demanding and will only be successful under a new framework of systematic action (ESG strategy), recording and monitoring of all Sustainable Development issues.

Dual Materiality, the backbone of Sustainable Development Accounts

As Ms. Katsoulis emphasizes, double materiality is a cornerstone of the Sustainability Reporting Directive (CSRD). In-scope companies will now have to report with a dual materiality perspective, as a result of sustainability risks and opportunities, as well as the company’s impact on people and the environment. This means that companies should determine both the external impact on society and the environment, as well as the impact on business value.

In this context, companies need to develop and implement new internal processes in order to implement on a regular basis:

– double materiality analysis

– conducting due diligence procedures for any material issue arising from the dual materiality process

– implementation of actions under an overall strategic plan with SMART objectives and performance monitoring points.

The development of the Reports according to these new standards will only be successful under a new framework of systematic action (ESG strategy), recording and holistic monitoring of all Sustainable Development issues.

Over the years, the principles of sustainable development will be fully integrated into the way businesses operate, as well as into the culture of employees.