Does EU Sustainability reporting affect Non-EU parent groups?
Yes. Consolidated sustainability reporting at the EU-level may be required, in addition to the separate sustainability reporting required for all EU companies in scope.
The new EU Corporate Sustainability Reporting Directive (CSRD) seeks to level the playing field for all companies operating in the EU by requiring consolidated sustainability reporting by third-country undertakings with significant activity in the EU, and ensuring that stakeholders have access to transparent and verifiable information.
Third country undertakings
Third-country undertakings are non-EU parent companies which either:
- have securities listed on an EU regulated market and have more than 500 employees, or
- have a qualifying EU branch or subsidiary (see below), and generate
net turnover of more than €150 million in the EU over two consecutive years.
These third-country undertakings are subject to consolidated sustainability reporting requirements on their EU operations from financial year 2028. The required disclosures are tailored to focus on environmental and social impacts, and will be subject to EU reporting standards specific to third-country undertakings. An exemption may apply if the non-EU parent reports sustainability information in accordance with equivalent sustainability reporting standards.
Qualifying branch or subsidiary
A qualifying EU branch is one having net turnover of more than €40 million. A qualifying EU subsidiary is a large company being one that exceeds any two of: 250 employees; €40 million net turnover; or €20 million total assets, or a small or medium-sized entity (SME) with securities listed on an EU regulated market. An SME is a company that exceeds any two of: 10 employees; €700,000 net turnover; or €350,000 total assets.
The qualifying EU branch or subsidiary is responsible for publishing the consolidated sustainability report on behalf of its non-EU parent, on a best efforts basis, and must include a statement if any required information is not provided. The sustainability report must be accompanied by an assurance opinion issued by persons authorised in the third-country of the non-EU parent or in the member state of the qualifying branch or subsidiary.
Illustration
This illustration aims to demonstrate an example of how a non-EU parent group may be brought into sustainability reporting earlier than required in their home jurisdiction – detailed analysis should always be performed to determine the specific application of the EU Sustainability Reporting rules.
Irish Operating Co – in scope of the CSRD sustainability reporting requirements starting from its 2025 financial year, as it meets the definition of a “large company” due to exceeding at least two of the three size criteria.
German Debt Co – in scope of the CSRD sustainability reporting requirements for SMEs starting from its 2026 financial year with an option to defer to its 2028 financial year, as it has securities listed on an EU regulated market and is assumed to meet the SME size requirements described above.
French Trading Co – not in scope of the CSRD sustainability reporting requirements on its own operations, but it must provide sustainability information to the qualifying EU branch or subsidiary for purposes of EU-level consolidated reporting starting from its 2028 financial year.
US Parent Co – in scope of the CSRD consolidated sustainability reporting requirements on its EU operations from its 2028 financial year, as it meets the third-country undertaking requirements described above. (If US Parent Co had securities listed on an EU regulated market and more than 500 employees, its individual and consolidated reporting obligations would start from its 2024 financial year.)
Ripple effects
The EU sustainability reporting requirements will have ripple effects for other jurisdictions. Decisions taken at EU branch or subsidiary level could impact the wider group’s approach to sustainability. Non-EU parents with substantial operations in the EU are advised to consider carefully their EU sustainability reporting obligations, in good time.
At EisnerAmper we make sustainability simply sustainable.
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Sustainability Assurance is coming, fast!
This week the International Auditing and Assurance Standards Board (IAASB) considered a near-complete draft proposed standard for assurance on sustainability reporting. The current project timeline indicates an Exposure Draft in September 2023 and final approval of the proposed International Standard on Sustainability Assurance (ISSA) 5000 by December 2024 – just in time for the first reporting cycle for EU listed companies and other large EU Public Interest Entities (PIEs).
So, what does this mean for sustainability reporters, and for independent assurance practitioners?
Just-about-in-time
Enterprises in scope of the EU Corporate Sustainability Reporting Directive (CSRD) starting from FY2024 will be applying European Sustainability Reporting Standards (ESRS) from the European Financial Reporting Advisory Group (EFRAG), currently in draft. The independent assurance practitioners will also be applying the ISSA 5000 sustainability assurance standard, currently in draft, and yet to be endorsed by the European Commission as stipulated in the CSRD. Then there is the International Ethics Standards Board for Accountants (IESBA) nascent project to develop independence and ethics standards relevant to assurance on sustainability reporting by all sustainability assurance practitioners (Professional Accountants are already bound to comply with international or national Codes of Ethics).
This just-about-in-time approach is not familiar territory for standard setters, reporters or practitioners – yet the urgent need to provide comprehensive and reliable sustainability information is driving a collective effort to get this done. A steady hand will be required to navigate over the next few years until the standards, and their application, settles down.
Preparing for assurance
The proposed ISSA 5000 standard is described as an ‘overarching’ standard: the IAASB envisages that a suite of standards will likely need to be developed over time – to provide more specificity. The proposed overarching standard will cover the entire engagement from acceptance to reporting; will apply to assurance on sustainability information reported under different reporting frameworks; and is implementable by all assurance practitioners.
In planning their Sustainability Reporting procedures, reporters should be aware of the options in selecting an independent sustainability assurance practitioner, and the approach their assurance practitioner will apply. Key topics to be considered include:
Independent Sustainability Assurance Practitioners – The CSRD allows Member States to authorise independent assurance services providers (who are accredited in accordance with Regulation (EC) 765/2008 on accreditation and market surveillance) other than statutory auditors or audit firms to carry out assurance of sustainability reporting. Member states are required to ensure that consistent requirements are set out for all persons and firms, including statutory auditors and audit firms, who are allowed to provide the opinion on the assurance of sustainability reporting – providing a level playing field.
Member States are at various stages of consultation leading to transposing the directive into national law – there is no indication whether this option will be taken in Ireland or elsewhere in the Union. Member States that do take the option will need to ensure that appropriate accreditation and surveillance is in place, and assurance providers will need to demonstrate professional competence and capability to carry out the sustainability assurance engagement. This is a topic for another article, but preparers should take this into account when planning their sustainability reporting and assurance process.
Evidence – Assurance practitioners must evaluate the relevance and reliability of information intended to be used as evidence. This also includes determining whether the evidence needed to support the disclosures can be expected to be obtained. Reporters need to consider factors such as document retention policies including electronic information systems. Where evidence is needed from organisations not controlled by the entity, such as value chain actors, the entity will need to consider whether it has contractual arrangements for access to the relevant persons or information, or whether these organisations may provide independent assurance reports on controls, measurements or evaluations of the underlying subject matter.
Documentation – Similar to other assurance standards, sustainability assurance practitioners must maintain documentation to support their conclusions on the sustainability disclosures that is sufficient and appropriate to enable a practitioner experienced in sustainability assurance, having no previous connection with the assurance engagement, to understand the nature, timing and extent of the procedures performed; the results and evidence obtained; and significant matters, judgements and conclusions. This may include evidence obtained from work performed by a Management’s Expert or others outside of the reporting entity. The practitioner must evaluate the competence, capabilities and objectivity of the persons providing such evidence, and the authenticity of the documentation. Any doubts would lead to additional risk assessment and assurance procedures, and possibly a different overall conclusion to the engagement.
Risks of Material Misstatement – The assurance practitioner must perform risk procedures to identify disclosures where material misstatements are likely to arise, and potentially update this risk assessment based on information obtained during the engagement. (Reasonable assurance engagements will require a more robust risk assessment process). This involves understanding the entity’s control environment and internal controls relevant to sustainability disclosures, including information systems and the entity’s own risk assessment process. Based on these assessments, the practitioner will design the nature, timing and extent of assurance procedures to support their conclusion on the sustainability disclosures.
Preparing for assurance on the Sustainability Report is not a task to be taken lightly.
At EisnerAmper we make sustainability simply sustainable.
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EisnerAmper Supports UNICEF’s Turkey & Syria Earthquake Appeal
Yesterday, the team at EisnerAmper Ireland held a charity quiz in aid of those affected by the recent earthquake in Turkey and Syria. The earthquake which struck southern and central Turkey and western Syria caused severe and widespread damage. Families have been devastated, losing their homes and the people they love. The combined death toll in Turkey and Syria has now passed 50,000.
The quiz, which was held in our office, was followed by a charity raffle with prizes being kindly donated by local businesses in the Sandyford area. We are proud to have raised over €1,500 which will be donated to UNICEF in aid of Turkey and Syria.
To learn more about how to help or to make a donation, please click here.
At EisnerAmper Ireland, we care about business and we care about the people we work with in business.
Corporate Social Responsibility (CSR) is integral to how we do business and manage interactions, not just with our employees and clients but also our wider community and society as a whole. As a professional services firm, demonstrating ethical high performance in all aspects of our work and how we run our Firm is fundamental to our success. Learn more about our CSR policy here and our CSR initiatives here.
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Latest News →We have already reported on sustainability, what’s new?
The EU Corporate Sustainability Reporting Directive (CSRD) will require companies to publish a comprehensive Annual Sustainability Report, in accordance with the European Sustainability Reporting Standards issued by the European Financial Reporting Advisory Group (EFRAG), and obtain independent assurance on this report. This is a significant step up from the voluntary disclosures published by many companies to date – and a huge leap for companies publishing ESG information for the first time. Compared to voluntary disclosures, reporting under the new standards will provide:
- consistency;
- transparency; and
- verifiability.
The CSRD elevates sustainability reporting to the same level as financial reporting – companies will need to apply the same rigour to sustainability policies, measurements, analysis and disclosures. Boards will also need to exercise consistent governance over sustainability, financial and other operational reports.
Your new Annual Sustainability Report must:
- Be included in your annual report, together with an independent assurance report;
- Show how your business model is compatible with the objective of limiting global warming to 1.5 °C and achieving climate neutrality by 2050, based on the latest science;
- Describe your comprehensive double materiality assessment (sustainability risks to the business and the sustainability impacts of the business) and how you respond to the identified material risks; and
- Disclose historical and forward-looking information on specific quantitative and qualitative datapoints.
Now is the time to review your plans for sustainability reporting readiness.
At EisnerAmper we make sustainability simply sustainable.
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Learn more about our ESG Services here.
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International Women’s Day at EisnerAmper Ireland
We are delighted to be celebrating International Women’s Day in EisnerAmper Ireland. Special thanks to Caroline McDonnell, Chair and Independent Non-Executive Board Director and former Equity Partner at PwC, who joined us today. Caroline shared valuable insights from her own career journey in addition to highlighting the importance and benefits of gender diversity and inclusion.
Caroline McDonnell, Chair and Independent Non-Executive Board Director and former Equity Partner at PwC.
Caroline’s address was followed by a thought provoking and insightful panel discussion, facilitated by Gavin Lee, Director, and Danielle Markham, Assistant Manager. The panel which included Caroline McDonnell, Jennifer Kelly, Partner, Karen Maloney, Director, and Vitalija Mikutaite, Assistant Manager, shared insights from their own journeys in addition to sharing practical advice on career progression and having a healthy work/life balance.
L to R: Gavin Lee, Director and Head of International Trade, Caroline McDonnell, Karen Maloney, Director of Accounting & Compliance, Jennifer Kelly, Partner and Head of Accounting & Compliance, Vitalija Mikutaite, Assistant Manager in Audit and Danielle Markham, Assistant Manager in Tax.
International Women’s Day (IWD) is a global day celebrating the social, economic, cultural, and political achievements of women. The day also marks an important issue that is still very present within our modern society, the much needed acceleration of gender parity.
Alastair MacDonald, Managing Partner.
Our people are critical to our success and we strive to nurture and leverage the talent and unique ability of each individual member of our team. In this regard, we welcome all forms of diversity, and invite everyone to bring their full selves to work. Our Firm is focused on providing a happy, healthy and productive work environment and at EisnerAmper Ireland we pride ourselves on our world-class focus on personal growth and development.
At EisnerAmper Ireland, we care about business and we care about the people we work with in business.
Corporate Social Responsibility (CSR) is integral to how we do business and manage interactions, not just with our employees and clients but also our wider community and society as a whole. As a professional services firm, demonstrating ethical high performance in all aspects of our work and how we run our Firm is fundamental to our success. Learn more about our CSR policy here and our CSR initiatives here.
Contact Us
Latest News →What is the Social part of ESG?
The Social part is concerned with the quality of the relationships between your business and all stakeholders, including employees, customers, suppliers and affected communities. The social disclosure requirements under the new Corporate Sustainability Reporting Directive (CSRD) are set out in 4 separate draft standards issued by EFRAG:
- Own workforce;
- Workers in the value chain;
- Affected communities; and
- Consumers and end-users.
These standards reflect the UN Guiding Principles on Business and Human Rights (UNG), the OECD Guidelines for Multinational Enterprises, and other internationally recognised principles and frameworks.
Businesses must perform a thorough assessment to identify (i) those areas where their actions have a material impact on stakeholders, and (ii) areas presenting material risks or opportunities to the business. For each identified material impact, risk or opportunity, businesses will need to disclose information on their policies, actions and metrics – for certain companies the standards require disclosures for high-impact areas regardless of materiality.
Workers
The standards require disclosure of processes to engage with own workforce and workers in the value chain and how their interests, views, rights and expectations inform the business’ strategy and business model. Potential material areas to be assessed include topics such as:
- working conditions;
- social partner involvement;
- channels to raise concerns (whistleblowing);
- collective bargaining;
- adequate wages;
- equality;
- non-discrimination;
- diversity and inclusion;
- work-life balance;
- human rights;
- gender pay gap; and
- people with disabilities
Communities
Companies have an impact on communities, either directly linked to the company’s own operations, products or services or through its business relationships. Disclosures should explain the approach to identify and manage any material actual or potential impacts on affected communities and processes for engaging with those communities. This includes time-bound and outcome-oriented targets for reducing negative impacts, advancing positive impacts, and managing material risks and opportunities related to affected communities.
Consumers and end-users
Companies must consider how their strategy and business model impacts consumers and end-users, including those in the downstream value chain – for example, providing products that harm if overused or sales-maximising incentives that put consumers at risk. Disclosures are aimed at enabling users to understand material impacts on consumers and end-users, as well as how dependencies on consumers and end-users may create material risks or opportunities for the company.
Far from being merely a compliance process, the social standards set out a blueprint for companies to create a sustainable workplace for all stakeholders while strengthening their business model.
This is the Social in ESG.
At EisnerAmper we make sustainability simply sustainable.
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Learn more about our ESG Services here.
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EisnerAmper supports LauraLynn’s Annual Heroes Ball
The EisnerAmper Ireland Team was delighted to support, and attend, LauraLynn’s Annual Heroes Ball.
The Charity Ball took place on Saturday, 4 March in the Mansion House, Dawson Street, Dublin. It was a special night to celebrate all the Heroes who come through the doors of LauraLynn Children’s Hospice. We are delighted to be partnering with LauraLynn as a Corporate Partner for the fourth year running, helping LauraLynn to support children with life-limiting conditions and their families to live as fulfilling lives as possible.
The Heroes Ball has become known as one of the most fun-filled charity balls in the calendar. The Ball, which was hosted by Miriam O’Callaghan, included a gala dinner and drinks along with entertainment from Perfect Day. The night also included a Charity Auction hosted by Alan Shortt with prizes including art, holidays, and personal training sessions.
LauraLynn Children’s Hospice’s mission is to provide a Community of Care that delivers evidence-based, personalised services to children with palliative care needs, complex care needs and complex disabilities, while also providing family support services and a home to their residents where quality-of-life is paramount.
To learn more about LauraLynn or to make a donation, please click here.
At EisnerAmper Ireland, we care about business and we care about the people we work with in business.
Corporate Social Responsibility (CSR) is integral to how we do business and manage interactions, not just with our employees and clients but also our wider community and society as a whole. As a professional services firm, demonstrating ethical high performance in all aspects of our work and how we run our Firm is fundamental to our success. Learn more about our CSR policy here and our CSR initiatives here.
Contact Us
Latest News →Does Sustainability Reporting impact Business Conduct?
Definitely. Under the new EU Corporate Sustainability Reporting Directive (CSRD), companies must disclose information on business conduct matters, including:
- corporate culture;
- relationships with suppliers;
- avoiding corruption and bribery;
- protection of whistle-blowers;
- animal welfare; and
- payment practices
These requirements are set out in the (draft) European Sustainability Reporting Standard G1 – Business Conduct. Companies must describe the role and the expertise of administrative, management and supervisory bodies, and the process to identify and assess material impacts, risks and opportunities arising from business conduct matters.
Preparing meaningful disclosures under the Business Conduct standard will require companies to re-examine how they conduct business at the deepest level. Boards and Executives will need to embrace sustainability by adopting transparent business practices aligned with the global frameworks embodied in the standard. Adopting these business practices will benefit your business and all stakeholders. Putting your head in the sand is not an option.
At EisnerAmper we make sustainability simply sustainable.
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Learn more about our ESG Services here.
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EisnerAmper Ireland hosts Alumni Reunion 2023
On Thursday 23rd February, we were delighted to host our first EisnerAmper Alumni Reunion since 2019 in the Blue Room at the Dean Hotel. It was a fantastic evening and provided an opportunity for both current and former team members to catch up while enjoying delicious food and drinks in the heart of Dublin.
Alastair MacDonald, Managing Partner, welcomed our guests and emphasised the importance of our Alumni Community to EisnerAmper. It also provided an opportunity to update our Alumni on the Firm’s progress including the appointment of seven new Partners since 2019.
Included below is a selection of photos from the evening.
L to R: Alastair MacDonald, Tom Brennan, Yevgeniy Podkladnev and Audrey Rigley-Smyth
L to R: Hannah Willis, Thomas Territt, Sarah Ryan and Aideen Conneely
L to R: Maureen Smyth, Andrew Stokes, Jennifer Kelly and Brian Frawley
L to R: Hannah Willis, Liz Cahill and Kun Liu
L to R: Ian Wilson, Philip Bergin, David Marmion and Emma Guilfoyle
L to R: David Gaule, Dean Roche and David Marmion
We care about business and we care about the people we work with in business.
At EisnerAmper Ireland, our happy, healthy and productive team design and deliver sustainable services and solutions to make trade happen. For more information on our services, click here.
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Latest News →Is the European Green Deal a BIG DEAL for my business?
Yes, and here are a few reasons why –
The European Green Deal aims to decouple economic growth from resource use and ensure that all regions and Union citizens participate in a socially just transition to a sustainable economic system whereby no person and no place is left behind. This is addressed through several policy initiatives, including the Non-Financial Reporting Directive (NFRD), the Taxonomy Directive, the Sustainable Finance Reporting Directive (SFDR) and the Corporate Sustainability Directive (CSRD).
As part of the Green Deal initiative, the CSRD requires all in-scope companies to publish a comprehensive Annual Sustainability Report starting from 2024, including policies, business models, targets, actions and metrics, and how these are aligned with environment, social and governance objectives. This directive expands on the NFRD by bringing many more companies into scope and requiring more extensive disclosures. Companies will need to assess the impact of their actions on the environment, employees and communities in addition to considering the risks to their business from climate change and other external factors. This impact and risk assessment informs the policies, targets, actions and metrics to be disclosed.
But, transitioning to a sustainable business model also has direct benefits for your business:
- customers demand more sustainable products and services;
- employees want their work to be fair and positive for the environment;
- investors seek out opportunities to deploy their capital responsibly; and
- communities favour companies that care.
Preparing to tell a compelling and verifiable story in your first Annual Sustainability Report will shape your transition to a sustainable business model, and bring lasting benefits to your business and all stakeholders.
Going sustainable is simply good business.
At EisnerAmper we make sustainability simply sustainable.
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Learn more about our ESG Services here.
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Already gone green, so what’s the fuss?
The fuss is that most businesses are only scratching the sustainability surface. The EU Corporate Sustainability Reporting Directive (CSRD) which was adopted by the European Council on 28 November 2022 is a game changer.
All EU companies that exceed any two of:
- 250 employees;
- €20 million turnover; or
- €40 million total assets,
will be required to publish a comprehensive Annual Sustainability Report, together with their 2025 Annual Financial Report. The Sustainability Report must comply with the European Sustainability Reporting Standards (ESRS) developed by the European Financial Reporting Advisory Group (EFRAG). The first set of draft standards includes 84 Disclosure Requirements across Environment, Social and Governance topics. These standards will be complemented by sector specific standards.
EU Commissioner Mairead McGuiness noted as hugely significant that, for the first time, the EU is putting sustainability reporting on an equal footing with financial reporting – “We need accurate and reliable information to ensure that investments are being made towards a more sustainable future. This is ground-breaking legislation.”
Businesses that transparently report sustainable policies, actions and metrics will attract investors, customers and employees, adding long-term value for all stakeholders.
At EisnerAmper we make sustainability simply sustainable.
How EisnerAmper Ireland can help
At EisnerAmper Ireland, we have the technical knowledge to simplify the complexity of your regulatory, compliance and reporting obligations, and the business experience to support your sustainability transformation. We apply our proven governance, risk, accounting and assurance methodologies to deliver practical and sustainable solutions, tailored for your business.
Our sustainability solutions and services enable you to:
- Understand how ESG impacts your business, workforce, customers, and community;
- Develop your sustainability goals, policies and relevant metrics;
- Map your current state to the regulatory requirements;
- Design action plans to remediate and enhance processes;
- Tell a compelling and verifiable story in your Sustainability Report;
- Prepare for independent assurance on your sustainability disclosures; and
- Embed sustainability in your continuous improvement business cycle.
If we can help you or your business in any way, please do get in touch – we’d be delighted to help.
Contact Us
Learn more about our ESG Services here.
Authors
Making Sustainability Simply Sustainable
The European Green Deal is a roadmap to making the EU’s economy sustainable by turning climate and environmental challenges into opportunities across all policy areas and making the transition fair and inclusive for all.
In implementing the Green Deal, the EU has introduced several new policy instruments, including the Corporate Sustainability Reporting Directive (CSRD), which will require companies in scope to disclose information on:
- risks and opportunities arising from social and environmental issues; and
- impacts of their activities on people and the environment.
This will help investors, civil society organisations, consumers and other stakeholders to evaluate the sustainability performance of companies, alongside their financial performance.
The CSRD extends the scope and reporting requirements of existing EU corporate reporting initiatives, such as the Non-Financial Reporting Directive (NFRD) and the Taxonomy Directive. The transition to a sustainable economy means that collecting and sharing reliable sustainability information is good business practice for companies of all sizes.
Transitioning to a sustainable business model will prepare you to tell a compelling and verifiable story in your Annual Sustainability Report, and deliver value for all stakeholders, making a difference for business, communities and the planet.
At EisnerAmper we make sustainability simply sustainable.
How EisnerAmper Ireland can help
At EisnerAmper Ireland, we have the technical knowledge to simplify the complexity of your regulatory, compliance and reporting obligations, and the business experience to support your sustainability transformation. We apply our proven governance, risk, accounting and assurance methodologies to deliver practical and sustainable solutions, tailored for your business.
Our sustainability solutions and services enable you to:
- Understand how ESG impacts your business, workforce, customers, and community;
- Develop your sustainability goals, policies and relevant metrics;
- Map your current state to the regulatory requirements;
- Design action plans to remediate and enhance processes;
- Tell a compelling and verifiable story in your Sustainability Report;
- Prepare for independent assurance on your sustainability disclosures; and
- Embed sustainability in your continuous improvement business cycle.
If we can help you or your business in any way, please do get in touch – we’d be delighted to help.
Contact Us
Learn more about our ESG Services here.
Authors
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