Sustainability reporting obligations under the Corporate Sustainability Reporting Directive (CSRD), as transposed into Irish law, commence for large Irish-incorporated companies (which were not already in-scope under the first phase of reporting) for financial years commencing on or after 1 January 2025 (reporting year 2026).

In-scope companies are required to report annually on sustainability matters in accordance with European Sustainability Reporting Standards (ESRS). Companies within scope of the CSRD are also subject to disclosure obligations under Article 8 of the EU Taxonomy Regulation, regarding the extent to which their activities are associated with economic activities which are “environmentally sustainable”.

New Guidance 

There have been several recent developments regarding technical guidance on both the ESRS and the EU Taxonomy Regulation:

• ESRS Q&A

In December 2024, EFRAG published the latest batch of Explanations on its ESRS Q&A Platform, providing explanations for five new environmental questions related to climate change mitigation and adaptation targets, biodiversity and ecosystems. The Explanations are provided as part of EFRAG’s role as a technical advisor to the European Commission, to support implementation of the ESRS.

• Draft Transition Plan Implementation Guidance

In November 2024, EFRAG published draft Implementation Guidance on Transition Plan for Climate Change Mitigation, which provides non-authoritative support for companies reporting transition plans for climate change mitigation in accordance with the ESRS, including guidance on how to implement the requirements of ESRS E1. In addition to companies reporting under CSRD, EFRAG notes that the guidance may also be of relevance to entities that are in scope of other EU legislation that requires a transition plan, including the Corporate Sustainability Due Diligence Directive (CS3D). The draft guidance also sets out FAQs in relation to transition plans.  It is anticipated that that final form guidance will be published later this spring.

• FAQs on EU Taxonomy Regulation

In November 2024, the European Commission published a set of draft FAQs providing technical explanations on various aspects of the EU taxonomy including the application of general requirements, technical screening criteria for specific activities outlined in the Climate and Environmental Delegated Acts, and the generic ‘do no significant harm’ (DNSH) criteria for climate change adaptation, pollution prevention and control and protection and restoration of biodiversity and ecosystems. The Commission published separate FAQs on KPI reporting under the Disclosures Delegated Act supplementing Article 8 of the EU Taxonomy Regulation.

SME Voluntary Reporting Standard

EFRAG published a voluntary sustainability reporting standard for non-listed SMEs (VSME) that are not within scope of the CSRD. The VSME aims to provide a simple standardised reporting tool to assist non-listed SMEs in responding to requests for sustainability information from businesses for which they are suppliers (such as banks, investors or larger companies) efficiently and proportionately.  The VSME, as a voluntary standard, is non-binding and the materiality analysis (applied under the ESRS) is replaced with an “if applicable” principle.

Potential Omnibus Regulation

As covered in our recent insights, a material update is expected from the European Commission on 26 February 2025 relating to an “omnibus simplification package” intended to streamline sustainability reporting and due diligence obligations under the CSRD, EU Taxonomy Regulation and CS3D. We are closely monitoring this development and we will provide an update once further details are available.