Beginning in 2024, the obligation to report ESG (Environmental, Social, and Governance) will include businesses that meet at least two out of three criteria: employ over 250 workers, generate revenues exceeding 40 million euros per year, or possess assets worth more than 20 million euros. This requirement is imposed by the EU directive CSDR. On 21st November, the Sejm (Polish Parliament) accepted a modification to the law regarding reporting obligations in the area of sustainable development. The obligation to submit an ESG report for 2024 will apply to over 3,000 companies in Poland. In subsequent years, the regulations will encompass a broader group – in 2026 small and medium enterprises listed on regulated markets as well.
Yesterday evening, the Sejm adopted changes in the accounting and internal audit law, implementing European ESG reporting standards. The new regulations oblige entrepreneurs to consider environmental and social risks in their activities, including those related to climate change. Thanks to mandatory data auditing and public access to information about the impact of business on the environment, the Polish economy is approaching sustainable development standards, supporting more responsible and transparent business practices.
One of the main elements of the ESG report is to demonstrate the CO2 emissions in tons by the given company. Organizations must detail the actions they are taking to reduce these emissions equally precisely. The document should contain results that are measurable, verified, and comply with recognized reporting standards, such as the GHG Protocol. These requirements closely relate to the decarbonization goals of the European Union outlined in the European Green Deal and the climate neutrality strategy for 2050. Ultimately, companies will have to achieve net-zero emissions, and ESG reports will assist the Union in current monitoring of progress.
Accuracy of reported data, however, is one of the biggest challenges for companies. In the PwC CSRD Survey, 59% of respondents from Europe identified it as a high or very high obstacle for their organizations in ESG reporting. One way companies can facilitate the process of managing these data is to choose methods of emission reduction that allow for precise monitoring and verification of results. This includes the use of renewable energy sources, which can be reported based on the amount of produced renewable energy (in MWh), comparing CO2 emissions associated with energy use from renewable and traditional sources. Another method is increasing energy efficiency, for instance, through new lighting or better building insulation. After implementing such modernizations, a company can compare the level of energy consumption (in kWh) and thus demonstrate the degree of CO2 reduction.
In Europe, the popularity of carbon credits is also increasing – their sales in 2022 rose by 82% compared to the previous year. A carbon credit is a confirmation of the removal of 1 ton of COâ‚‚ from the atmosphere, allowing companies to offset hard-to-eliminate emissions. In this way, organizations support environmental projects, effectively contributing to the fight against climate change. They originate from environmental projects, such as reforestation, regenerative agriculture, or projects related to renewable energy sources. Each transaction must be confirmed by independent entities, ensuring that an actual reduction of emissions has occurred.
Besides specific requirements regarding data reported within the scope of ESG, the European Union also stipulates far-reaching consequences in the event of non-compliance with the obligation to submit a report. Starting from financial penalties, which in Poland can reach hundreds of thousands of zlotys, through legal issues – inspection procedures may result in additional sanctions, and in the case of listed companies, even delisting on the stock exchange – to a loss of reputation among consumers, investors, or business partners. Despite such serious repercussions, awareness regarding ESG reporting remains low. According to Grant Thornton’s research, nearly 2/3 of the heads of large and medium-sized companies in Poland do not know whether and when their organization will be subject to this obligation.
At the same time, a sustainable development strategy is not just a legal obligation for companies, but often a matter of survival. In a survey conducted by PwC in 2021, almost 30% of investors surveyed declared that they would lower the valuation or even withdraw from the investment if ESG risks were too high. In the report “Green finance in Poland” from 2023, every one of the representatives of 12 banks, whose assets account for about 66% of the total balance sheet sum of the Polish banking sector, indicated that they take into account the evaluation of ESG risk results during the loan granting processes.
Source: https://managerplus.pl/sejm-przyjal-przepisy-dotyczace-raportowania-esg-obowiazek-obejmie-ponad-3000-polskich-firm-25789
