EU Legislation Modernization On Economic Entities’ Sustainability Reporting

Abstract

The article is dedicated to the issues of introducing sustainability reporting standards for economic entities in Ukraine which correlates with the strategic goals and objectives set by the Government of Ukraine in the second half of 2024, in particular, the implementation of the requirements of European legislation in this field and the application of the relevant European Standards (ESRS). Deepening into this important issue for domestic business and society is performed on the axiomatic principles of synchronising with the mainstreaming processes in the European Union. Given that the major acts of EU secondary legislation in the field of non-financial reporting came into force ten years ago and more, it is quite legitimate for EU institutions to bring their conceptual and legal approaches, terminology, and rules in compliance with the current strategic and tactical goals of the EU-economic, environmental, social, which constitutes the essence of the dynamic process of modernisation, i.e., the updating of EU legislation on sustainable development reporting. In this context, it is methodologically reasonable to focus the article on the general aspects of EU legislation modernisation which are important at the macro level for our State which, in fulfilment of international treaty obligations, carried out the process of implementing the previously introduced provisions of EU secondary legislation derived from modernisation and is expected to ensure further implementation of the provisions of the EU Corporate Sustainability Reporting Directive (CSRD) in Ukrainian legislation in the future. In furtherance of the general aspects, the article details the key legislative novelties regarding the information to be disclosed at the micro level in the reporting by economic entities of the EU Member States, as well as certain categories of domestic business entities, including public interest entities. The article provides a methodologically and substantively sound analysis of these processes in the dynamics, and also details the principal novelties in the EU acquis regarding the information to be disclosed in the reports of economic entities of the EU Member States, including public interest entities. Considering the number of small and medium-sized enterprises operating as subsidiaries, the article reveals the current requirements for sustainability information to be included by parent companies of a large group in the consolidated management report. The article also addresses important conceptual and legal aspects that will gradually become of significant practical importance for domestic business entities and relate, in particular, to the risks of fines for failure to submit a management report or its submission in violation of the deadlines, the scope of two international standards of the Sustainable Development Board which cover both general requirements for disclosure of information related to sustainable development and specific requirements for disclosure of information related to climate change.