Recent years have brought the development of obligations in the field of non-financial reporting by entrepreneurs.
Currently, the issues of broadly understood non-financial reporting in Poland concern mainly the following areas:
- ESG reporting – taxonomy in the EU;
- ESG reporting – NFRD and CSRD;
- ESG reporting – SFDR;
- tax strategy;
- the activities of “whistleblowers” in enterprises.
ESG reporting covers non-financial information in the following areas: Environmental, Social and Corporate Governance.
Reporting under the ESG is expected to contribute to the achievement of the objectives of the European Green Deal. The recipients of the information are primarily investors, non-governmental organizations, social partners and other interested parties.
Taxonomy in the EU
The legal act regulating the taxonomy in the EU is Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088.
The purpose of the adopted regulations is to determine whether the activities of entities covered by the regulation can be considered environmentally sustainable, so as to counteract the so-called the phenomenon of “greenwashing”.
The regulation applies to financial market participants, including enterprises required to report under the NFRD (especially public entities) or certain non-EU entities.
The information is intended to be part of the financial statements.
The scope of reporting includes, among others:
- information on the degree of compliance with the objectives of the taxonomy (climate change mitigation, climate change adaptation, the sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and control, the protection and restoration of biodiversity and ecosystems);
- percentage of turnover from products or services related to an economic activity that qualifies as environmentally sustainable;
- percentage share of capital expenditure and operating expenditure corresponding to the assets or processes related to the economic activity that qualifies as environmentally sustainable.
The first reporting should be made in 2022, taking into account data from 2021. Probably from 2023, the reporting obligation will be extended.
ESG reporting – NFRD and CSRD
Currently, the provisions of the Polish Accounting Act provide for the obligation to report non-financial information in the financial statements – this applies to entities such as banks or stock exchange entities (public interest entities), employing over 500 people and exceeding the threshold of PLN 85 million in the balance sheet total or PLN 170 million in sales revenues.
This information is to include, inter alia, a brief description of the entity’s business model, key non-financial performance indicators, a description of social, labor, environmental, human rights and anti-corruption policies, as well as a description of due diligence procedures, selected risks and management of these risks.
These provisions implement the so-called NFRD Directives (Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups).
By the end of 2022, the Council of Ministers is to adopt amendments to the Accounting Act (resulting from amendments to the NFRD) regarding the need for public disclosure of the income tax report by country.
Currently, legislative work is also underway in the field of the CSRD (Corporate Sustainability Reporting Directive), which would enter into force from 2024.
The purpose of the regulations is to change the current model (based on NFRD) – to extend the scope of information for reporting purposes, and from 2026 this obligation would apply to large entities and small and medium-sized public interest entities. Here, however, one should expect the adoption of this directive and its implementation into national law.
ESG reporting – SFDR
From 2021, Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector applies.
It is addressed to financial market participants (insurance companies, credit market institutions, etc.) and financial advisors.
These entities are required to publish specific information, including information on the approach to risks for sustainable development. Information concerns especially investment products so that investors make informed decisions.
Publishing information about the tax strategy being implemented – this applies to entities whose revenues exceeded EUR 50 million.
This information, in turn, includes information, inter alia, o: applied processes and procedures for managing the fulfillment of tax obligations, information on the fulfillment of tax obligations in Poland, selected information on transactions with related entities, restructuring activities, submitted applications for tax interpretations or information, or information on settlements in “tax havens”.
“Whistleblower” activities in enterprises
This issue is regulated by Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law. Currently, work is underway in Poland on its implementation (the project is at the government stage).
According to the proposed solutions, employers employing more than 50 employees will be required to establish internal reporting regulations, specifying the internal procedure for reporting violations of the law and taking follow-up actions.
This threshold does not apply to employers who are active in the fields of financial services, products and markets, and the prevention of money laundering and terrorist financing, transport safety and environmental protection.
Failure to adopt the regulations or drawing them up in violation of the Act shall be subject to a fine, restriction of liberty or imprisonment for up to 3 years.
In case of:
- entities in the private sector, employing at least 250 employees, the deadline for implementing the obligation to establish the internal reporting regulations is 2 months from the entry into force of the act;
- entities in the private sector, employing at least 50 and less than 250 employees, the deadline for the implementation of the obligation to establish the internal reporting regulations was postponed until December 17, 2023.