November 2024 – The Corporate Sustainability Reporting Directive (EU) 2022/2464 (the “CSRD”) required EU member states to complete its transposition by 6 July 2024. However, uneven implementation led the EU Commission to initiate infringement proceedings against 17 member states, including the Czech Republic and Romania, on 26 September 2024, citing their failure to fully communicate the necessary transposition measures. These states now face a two-month deadline to finalise the process and respond to the formal notice.
While the CSRD’s transposition is nearing completion, attention is turning to the Corporate Sustainability Due Diligence Directive (EU) 2024/1760 (the “CSDDD”), an equally significant piece of legislation. Adopted on 26 July 2024, the CSDDD imposes extensive due diligence obligations on corporate operations and supply chains, with a transposition deadline set for 26 July 2026.
How are individual member states approaching the transposition of these directives?
Bulgaria
CSRD
Bulgaria’s CSRD implementation was finalised with amendments to the Accounting Act and the Independent Financial Audit Act, adopted on 14 August and 4 September 2024 respectively. The Accounting Act amendments apply retroactively from 6 July 2024 while the Independent Financial Audit Act (now the Independent Financial Audit and Sustainability Assurance Expression Act) entered into force on 20 September 2024.
The Bulgarian Ministry of Finance and Institute for Certified Public Accountants function as supervisory authorities for the transposed obligations, with sanctions for non-compliance with the sustainability reporting obligations ranging from EUR 255 up to EUR 7,600 depending on the type of offence. The transposed obligations are generally in line with the CSRD with the exception of the definition of public-interest entities.
CSDDD
The government department responsible for the transposition of the CSDDD into Bulgarian law and the expected timing remain unknown, as no public information on the transposition of the CSDDD is currently available.
Croatia
CSRD
On 12 July 2024, Croatia adopted the new Accounting Act and amendments to the Audit Act and the Capital Markets Act. Published in the Official Gazette on 19 July, the Capital Markets Act took effect immediately, while the others became effective on 27 July 2024.
The Croatian Ministry of Finance and Financial Services Supervisory Agency (HANFA) function as the supervisory authorities for the transposed obligations, with sanction for non-compliance with the sustainability reporting obligations ranging from EUR 660 up to EUR 13,270 depending on the type of the offence. The transposed obligations are in line with the CSRD without any gold-plating.
CSDDD
The government department responsible for the transposition of the CSDDD into Croatian law and the expected timing remain unknown, as no public information on the transposition of the CSDDD is currently available.
Czech Republic
CSRD
The Czech Republic’s two-phase approach has stalled its progress due to delays in the new Accounting Act, which was planned to cover the remaining reporting obligations under the CSRD. The government decided to transpose the remaining obligations in the second phase via amendments to the existing Accounting Act and the Act on Auditors. This draft legislation was submitted to Parliament on 29 August 2024, however no progress has been made since then.
The Czech Tax Office functions as supervisory authority for the transposed obligations. Sanctions for non-compliance can be up to 3 % of the company’s assets (for offences relating to the preparation of the sustainability report) and up to 6 % of the company’s assets (for failure to prepare a sustainability report). The transposed obligations under the currently applicable legislation are generally in line with the CSRD with the exception of a broader definition of insurance undertakings as public-interest entities. In contrast, the proposed draft legislation aligns fully with the CSRD.
CSDDD
The government department responsible for the transposition of the CSDDD into Czech law will be the Ministry of Justice. Currently, the ministry is working on the draft text in the form of separate legislation and only minor amendments to existing legislation. The draft is expected to be finalised around mid-2025. However, the legislative process will almost certainly be interrupted by the elections to the lower chamber of the Czech parliament in next autumn.
Hungary
CSRD
Hungary’s CSRD transposition framework is provided by the ESG Act, adopted on 12 December 2023. Recent detailed regulations in the form of an additional decrees (regarding ESG consultants’ accreditation, accreditation institutions requirements, training institutions and preparation of ESG reports) have been adopted and published.
The Hungarian Ministry for National Economy and Supervisory Authority for Regulated Activities (SZTFH) function as supervisory authorities for the transposed obligations. The detailed rules on the amount of sections and the procedure for imposing them have not yet been adopted and will be laid down in a government decree.
CSDDD
It is assumed that the Ministry of National Economy will be the authority responsible for preparing the transposition of the CSDDD into Hungarian law, although no information is available on the timing or details of the transposition.
Romania
CSRD
Even though the EU Commission notified Romania, along with the Czech Republic, in its infringement notice, the transposition of the reporting obligations has already been finalised. Still, some legislative changes under the Transparency and Audit Directives remain pending, and the government expects to finalise these changes by the end of 2024 or early 2025.
The Romanian Ministry of Finance and the National Tax Administration Agency function as supervisory authorities for the transposed obligations, with some entities falling under the supervision of the Romanian National Bank. For failure to comply with reporting obligations sanctions of up to EUR 8,000 may be imposed. The transposed obligations are generally in line with the CSRD.
CSDDD
The CSDDD is currently being evaluated in order to determine the competent government department responsible for the transposition of the CSDDD into Romanian law. No information on the expected timeframe has been made public at this stage.
Slovakia
CSRD
Slovakia’s CSRD transposition was completed through amendments to the Accounting Act, effective from 1 June 2024.
The Slovakian Tax Authority functions as the supervisory authority for the transposed obligations, with sanctions for non-compliance with the sustainability reporting obligations ranging from EUR 100 up to EUR 1,000,000 depending on the type of offence. The transposed obligations are generally in line with the CSRD.
CSDDD
The government department responsible for the transposition of the CSDDD into Slovak law and the expected timing remain unknown, as no public information on the transposition of the CSDDD is currently available.
Authors:
Jan Lehký, Karla Rundtová, Jakub Rubáš, Svilen Issaev, Vedran Kopilović, Franciska Fadljević, Mónika Frank, Balázs Tomaj, Viktória Kárnyáczki, Catalin Graure, Dana Sarbu, Roman Oleksik, Viliam Achberger.For more information, please contact Jan Lehký and Olena Kuchynska.