Corporate Sustainability Reporting Directive in Irish Law: Key Information and Scope

The CSRD IAASA-IAFA Conference 1 November 2024 The Corporate Sustainability Reporting Directive in Irish Law Orla O Brien Department of Enterprise Trade & Employment

Background Commitment in the European Green Deal, the 2019 strategy to transform the Union into a modern, resource efficient and competitive economy with no net emissions of greenhouse gases by 2050. Commitment in the Action Plan: Financing Sustainable Growth to reorient capital flows towards sustainable investment to achieve sustainable inclusive growth, manage financial risks stemming from climate change, resource depletion, environmental degradation and social issues, and foster transparency and long termism in financial and economic activity. Corporate Sustainability Reporting Directive (2022/2464) entered into force in January 2023 one of a suite of instruments including the EU Taxonomy (2020/852) and the Sustainable Financial Disclosures Regulation (2019/2088). 2 An Roinn Fiontar, Tr d la agus Fosta ochta | Department of Enterprise, Trade and Employment

High Level Objective Commissioner McGuinness Keynote Speech 6 May 2021 Europe wants to lead on sustainable finance. .sustainability is no longer on the margins but has moved to the mainstream, and it has done so at lightning speed. It is now at the heart of policy, business and finance. Ultimately, sustainable investment is about making the right choices. And to make the right choices, you need good information. .And that is the reason we have proposed the Corporate Sustainability Reporting Directive. To put sustainability reporting on the same footing as financial reporting To transform the way companies performance is valued 3 An Roinn Fiontar, Tr d la agus Fosta ochta | Department of Enterprise, Trade and Employment

Key Information Annual reporting by companies on sustainability matters - environmental, social and governance including human rights matters. Reporting underpinned by European Sustainability Reporting Standards (ESRS) adopted by the EU Commission. Directors are responsible for ensuring the sustainability information is prepared in accordance with the ESRS. Information should be clearly identifiable within the management/directors report in a dedicated section. Reporting is on a double materiality basis. ie. Impact materiality (looking out) and financial materiality (looking in) includes value chain. Limited assurance (audit) opinion initially by suitably qualified statutory auditor. 4 An Roinn Fiontar, Tr d la agus Fosta ochta | Department of Enterprise, Trade and Employment

Scope All large undertakings. SMEs listed on a regulated EU stock market excluding micros. Subsidiaries and branches with turnover > 40 million of non-EU companies with turnover > 150million in the EU must submit an equivalent sustainability report at group level. Phasing Large PIEs (banks, insurance undertakings, listed companies) > 500 employees FY after 1 January 2024 Large undertakings FY after 1 January 2025 Listed SMEs FY after 1 January 2026 with an opt out possible until 1 January 2028 Large subsidiaries and branches of non-EU companies at group level FY after 1 January 2028 Flexibilities Three years reporting before mandatory value chain reporting; exemptions for commercially sensitive information. 5 An Roinn Fiontar, Tr d la agus Fosta ochta | Department of Enterprise, Trade and Employment

Sustainability Reporting Subs/Branches 3rd country parent (group) FY 2028 Listed SMEs ex. micros FY 2026 PIEs > 500 FY 2024 Large FY 2025 FY 2028 Large FY 2027 PIEs >500 Value Chain (mandatory) Large = 2 of 3 of Turnover > 50m, Balance Sheet > 25m, Employees > 250 Listed SMEs may opt out of reporting until 2028 FY = financial years starting 1 January Listed SMEs ex. micros 6 An Roinn Fiontar, Tr d la agus Fosta ochta | Department of Enterprise, Trade and Employment

European Sustainability Reporting Standards ESRS specify the information that an undertaking shall disclose about its materialimpacts,risksandopportunities (IROs) in relation to environmental, social, and governancesustainability matters. 12 Standards to date developed by EFRAG in an independent, expert led capacity. Adopted by the EU Commission in July 2023 by way of Commission Delegated Regulation (2023/2772) The Global Reporting Initiative (GRI) standards and others acted as inspiration, but the EU standards go further. Continuous dialogue including with the International Sustainability Standards Board (ISSB) to ensure interoperability to the greatest degree possible. 7 An Roinn Fiontar, Tr d la agus Fosta ochta | Department of Enterprise, Trade and Employment

European Sustainability Reporting Standards Sector Agnostic Standards Adopted Proportionate Listed SME Standards Cross Cutting Standards Environment Social Governance ESRS 1 General Requirements ESRS E1 Climate Change ESRS S1 Own Workforce ESRS G1 Business Conduct Voluntary SME Standards ESRS 2 General Disclosures ESRS E2 - Pollution ESRS S2 Workers in the Value Chain ESRS E3 Water & Marine Resources ESRS S3 Affected Communities Sector Specific Standards ESRS E4 Biodiversity & Ecosystems ESRS S4 - Consumers & End Users ESRS E5 Resource Use & Circular Economy 8 An Roinn Fiontar, Tr d la agus Fosta ochta | Department of Enterprise, Trade and Employment

ESRS 1 General Requirements Provides the rules and guidance on how to apply the topical standards. Double materiality and how this should be applied to the standards. Due Diligence reporting and how are the entities actual and potential impacts on the environment and people addressed. Value chain reporting and how to conduct it - specific additional guidance published by EFRAG. Timeline, reporting periods, reporting progress against base year and definitions of short, medium and long term. How to prepare and present sustainability information. Phase-ins for individual data points (Appendix C). 9 An Roinn Fiontar, Tr d la agus Fosta ochta | Department of Enterprise, Trade and Employment

ESRS 2 General Disclosures Description of the materiality assessment specific additional guidance published by EFRAG. The governance processes, controls and procedures put in place to monitor, manage and oversee sustainability matters. Elements of the undertaking s strategy that relate to or affect sustainability matters, how stakeholder's views are addressed in strategy, its business model and its value chain and the outcome of the undertaking s assessment of material impacts, risks and opportunities. General characteristics of the sustainability reporting, addressing previous reporting errors, statements of compliance and value chain characteristics. 10 An Roinn Fiontar, Tr d la agus Fosta ochta | Department of Enterprise, Trade and Employment

Implementation Guidance from EU Commission on the directive and EFRAG on standards FAQs on IE Transposition in Part 28 of the Companies Act 2024 Sign-up to the mailing list for updates on future developments csrd@enterprise.gov.ie Thank-you 11 An Roinn Fiontar, Tr d la agus Fosta ochta | Department of Enterprise, Trade and Employment