S.I. No. 336/2024 - European Union (Corporate Sustainability Reporting) Regulations 2024

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of 9th July, 2024.

I, PETER BURKE, Minister for Enterprise, Trade and Employment, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972) and for the purpose of giving effect to Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022¹ amending Regulation (EU) No. 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU as regards corporate sustainability reporting, hereby make the following regulations:

PART 1 PRELIMINARY AND GENERAL

Citation and commencement

1.

• (2) These Regulations shall come into operation on 6 July 2024.

Definition

2.

PART 2 AMENDMENT OF PRINCPAL ACT

Amendment of section 299 of Principal Act

3.

Amendment of section 300 of Principal Act

4.

Amendment of section 325 of Principal Act

5.

• “(2) Subsection (1) is in addition to the other requirements of this Act that apply in certain cases with regard to the inclusion of matters in a directors’ report, namely the requirements of –

  • (a) section 167(3) (statement as to establishment or otherwise of an audit committee in the case of a relevant private company),

  • (b) section 225(2) (directors’ compliance statement in case of a company to which that section applies), and

  • (c) sections 1589, 1590 and 1596 (information on key intangible resources and sustainability reporting in the case of a company to which those sections apply).”.

Amendment of section 336 of Principal Act

6.

Amendment of section 347 of Principal Act

7.

Amendment of section 900 of Principal Act

8.

• (a) by the insertion of the following definitions:

“ ‘assurance of sustainability reporting’ has the same meaning as it has in Part 28;

‘assurance report’ has the meaning assigned to it by section 1613;

‘Part 28 function’ means a function conferred on a recognised accountancy body by a provision of Part 28 or Schedule 23 or 24;

‘sustainability reporting’ has the same meaning as it has in Part 28;”,

• (b) in the definition of “applicable provisions”, by the substitution of “Part 27 function or, where applicable, a Part 28 function” for “Part 27 function”,

• (c) in paragraph (b)(ii) of the definition of “relevant contravention”, by the substitution of “Part 27 or, where applicable, Part 28” for “Part 27”,

• (d) in paragraph (b) of the definition of “relevant provisions”, by the substitution of “Part 27 and, where applicable, Part 28” for “Part 27”, and

• (e) by the insertion of the following subsection after subsection (1):

• “(1A) In this Chapter, a reference to a statutory auditor includes a statutory auditor who is approved under Part 28 to carry out the assurance of sustainability reporting.”.

Amendment of section 904 of Principal Act

9.

• (a) in paragraph (b), by the substitution of “profession, including the assurance of sustainability reporting” for “profession”,

• (b) in paragraph (c), by the substitution of “financial statements, accounts or, where applicable, sustainability reporting” for “financial statements or accounts”,

• (c) in paragraph (d), by the substitution of “matters, and the assurance of sustainability reporting” for “matters”, and

• (d) in paragraph (e), by the substitution of “statutory auditors, the conduct of statutory audits and, where applicable, the carrying out of assurance of sustainability reporting” for “statutory auditors and the conduct of statutory audits”.

Amendment of section 905 of Principal Act

10.

• (a) in subsection (2) –

• (i) in paragraph (ea), by the substitution of “Part 27 function or a Part 28 function” for “Part 27 function”,

• (ii) in paragraph (fa), by the substitution of “Part 27, Part 28” for “Part 27”,

• (iii) in paragraph (g), by the substitution of “Part 27 function or Part 28 function” for “Part 27 function”,

• (iv) in paragraph (i), by the substitution of “Part 27, Part 28” for “Part 27”,

• (v) in paragraph (k), by the substitution of “practice notes, and sustainability reporting and assurance standards” for “practice notes”,

• (vi) in paragraph (m), by the substitution of “(within the meaning of that Chapter) including sustainability reporting in accordance with the Accounting Directive” for “(within the meaning of that Chapter)”,

• (vii) by the insertion of the following paragraph after paragraph (ma):

• “(mb) adopt assurance standards for the purposes of Part 28,”,

• (viii) in paragraph (n) –

• (I) by the substitution of “Part 27, Part 28” for “Part 27”,

• (II) by the substitution of “either of those Parts” for “that Part”, and

• (III) by the insertion of the following subparagraph after subparagraph (i):

• “(ia) the approval and registration of statutory auditors (including the registration of Member State audit firms) to carry out the assurance of sustainability reporting under Part 28;”, and

• (b) in subsection (3) –

• (i) in paragraph (a), by the substitution of “statutory auditor and approval to carry out the assurance of sustainability reporting under Part 28” for “statutory auditor”, and

• (ii) in paragraph (b), by the substitution of “auditing, the audit profession and the assurance of sustainability reporting” for “auditing and the audit profession”.

Amendment of section 906 of Principal Act

11.

• (a) in paragraph (d) of subsection (4), by the substitution of “Part 27 function or Part 28 function” for “Part 27 function”, and

• (b) in subsection (5) –

• (i) in paragraph (a), by the substitution of “(within the meaning of that Chapter) including sustainability reporting in accordance with the Accounting Directive” for “(within the meaning of that Chapter)”, and

• (ii) in paragraph (c), by the substitution of “Part 27, Part 28” for “Part 27”.

Amendment of section 907 of Principal Act

12.

• (a) in subsection (2), by the substitution of “subsections (2A), (2B) and (2C)” for “subsections (2A) and (2B)”,

• (b) in subsection (2A), by the substitution of “Schedule 19 and, as appropriate, at least one area relevant to the assurance of sustainability reporting as specified in Schedule 23” for “Schedule 19”, and

• (c) by the insertion of the following subsection after subsection (2B):

• “(2C) On and from 6 July 2024, the Minister shall not appoint a person under subsection (2) as a director if the person –

  • (a) on the proposed date of his or her appointment as a director carries out the assurance of sustainability reporting, or

  • (b) has, at any time during the 3 years immediately preceding the proposed date of his or her appointment as a director, carried out the assurance of sustainability reporting.”.

Amendment of section 918 of Principal Act

13.

• (a) in subsection (2), by the substitution of “auditing and, where applicable, carrying out the assurance of sustainability reporting” for “auditing”,

• (b) in subsection (3), by the substitution of “public-interest entities or the assurance of sustainability reporting of public-interest entities” for “public-interest entities”,

• (c) in paragraph (a) of subsection (5), by the substitution of “auditing and, where applicable, carrying out the assurance of sustainability reporting of public-interest entities” for “auditing public-interest entities”, and

• (d) by the insertion of the following subsection after subsection (7):

• “(7A) Notwithstanding that the particular assurance of sustainability reporting of a public-interest entity has been carried out by a statutory auditor, no levy under this section shall be imposed on the statutory auditor if he or she was designated by a statutory audit firm to carry out the assurance, and the levy under this section shall, in those circumstances, be imposed on the statutory audit firm instead.”.

Amendment of section 930 of Principal Act

14.

• (a) in subsection (1) –

• (i) in paragraph (a), by the substitution of “statutory auditor and the approval of a statutory auditor to carry out the assurance of sustainability reporting” for “statutory auditor”,

• (ii) in paragraph (b), by the substitution of “investigation, disciplinary procedures, sustainability reporting and the assurance of sustainability reporting” for “investigation and disciplinary procedures”,

• (iii) in paragraph (d), by the substitution of “Part 27 functions and Part 28 functions” for “Part 27 functions”,

• (b) in subsection (1A), by the substitution of “Part 27 or Part 28 function” for “Part 27”, and

• (c) in subsection (2), by the substitution of “Part 27 functions and Part 28 functions” for “Part 27 functions”.

Amendment of section 930A of Principal Act

15.

• (a) in subsection (1), by the substitution of “statutory auditors, including statutory auditors approved under Part 28 to carry out the assurance of sustainability reporting,” for “statutory auditors”, and

• (b) in subsection (3), by the substitution of “section 1573(1) or section 1641” for “section 1573(1)”.

Amendment of section 930C of Principal Act

16.

Amendment of section 931 of Principal Act

17.

• (a) in paragraph (a), by the substitution of “Part 27 function or Part 28 function” for “Part 27 function”,

• (b) in paragraph (b), by the substitution of “Part 27 function or Part 28 function” for “Part 27 function”, and

• (c) in paragraph (c), by the substitution of “Part 27 function or Part 28 function” for “Part 27 function”.

Amendment of section 931B of Principal Act

18.

• (a) in subsection (1) –

• (i) in the definition of “recognised accountancy body A”, by the substitution of “Part 27 function or Part 28 function” for “Part 27 function”,

• (ii) in the definition of “recognised accountancy body B”, by the substitution of “relevant function” for “relevant Part 27 function”,

• (iii) in the definition of “relevant members”, by the substitution of “relevant function” for “relevant Part 27 function”,

• (iv) by the insertion of the following definition:

“ ‘relevant function’ means the Part 27 function or Part 28 function referred to in the definition of ‘recognised accountancy body A’ that the body is not able to perform;”, and

• (v) by the deletion of the definition of “relevant Part 27 function”,

and

• (b) in subsection (2), by the substitution of “relevant function” for “relevant Part 27 function” in each place where it occurs.

Amendment of section 933 of Principal Act

19.

• (a) in subsection (3), by the substitution of “Part 27 function or Part 28 function” for “Part 27 function”,

• (b) in paragraph (c) of subsection (4), by the substitution of “Part 27 function or Part 28 function” for “Part 27 function”,

• (c) in paragraph (a)(ii) of subsection (6), by the substitution of “Part 27 function or Part 28 function” for “Part 27 function”, and

• (d) in paragraph (b) of subsection (12), by the substitution of “Part 27 function or Part 28 function” for “Part 27 function”.

Amendment of section 933A of Principal Act

20.

Amendment of section 934C of Principal Act

21.

• (a) by the insertion of the following paragraph after paragraph (d):

• “(da) a declaration by the Supervisory Authority that the assurance report concerned does not meet the requirements of section 1613;”,

• (b) by the insertion of the following paragraph after paragraph (e):

• “(ea) a direction by the Supervisory Authority to the specified person (being a statutory auditor approved under Part 28 or a key sustainability partner (within the meaning of that Part)) prohibiting him or her, for the period specified in the direction (which may be up to and including a period of three years), from carrying out the assurance of sustainability reporting or signing assurance reports, or both;”, and

• (c) in paragraph (h), by the substitution of “bodies or from having his or her particulars entered, or continuing to be entered, in the public register in relation to his or her approval under Part 28 to carry out the assurance of sustainability reporting” for “bodies”.

Amendment of section 935 of Principal Act

22.

• (a) in paragraph (a) of subsection (1), by the substitution of “firm or approval under Part 28 to carry out the assurance of sustainability reporting” for “firm”,

• (b) in subsection (2) –

• (i) by the substitution of “Part 27 or Chapters 4 to 7 of Part 28” for “Part 27”, and

• (ii) by the substitution of “the relevant Part” for “that Part”,

• (c) in subsection (4), by the substitution of “Part 27 or Part 28” for “Part 27”, and

• (d) in subsection (5), by the substitution of “Part 27 or Part 28” for “Part 27”.

Amendment of section 1484 of Principal Act

23.

Sustainability Reporting

24.

“PART 28

SUSTAINABILITY REPORTING

Chapter 1 Preliminary and General

Interpretation – Part 28

1585. (1) In this Part and Schedules 23 and 24 –

‘Accounting Directive’ means Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013² on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC, as amended by the Corporate Sustainability Reporting Directive;

‘applicable company’ shall be construed in accordance with section 1586;

‘applicable holding company’ has the meaning assigned to it by section 1596(1);

‘assurance of sustainability reporting’ means the performance of procedures resulting in the opinion expressed by a statutory auditor or statutory audit firm in accordance with section 1613(3);

‘assurance report’ has the meaning assigned to it by section 1613;

‘Audit Directive’ means Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006³ on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC, as amended by the Corporate Sustainability Reporting Directive;

‘Commission’ means the Commission of the European Union;

‘Corporate Sustainability Reporting Directive’ means Directive 2022/2464 of the European Parliament and of the Council of 14 December 2022⁴ amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting;

‘credit institutions’ means credit institutions referred to in point (b) of the first subparagraph of Article 1(3) of the Accounting Directive;

‘Delegated Regulation (EU) 2019/815’ means Commission Delegated Regulation (EU) 2019/815 of 17 December 2018⁵ supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format;

‘Directive 2004/109/EC’ means Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004⁶ on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC, as amended by the Corporate Sustainability Reporting Directive;

‘Directive 2009/138/EC’ means Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009⁷ on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II)(recast);

‘directors’ report’ has the meaning assigned to it by section 325(1);

‘group directors’ report’ has the meaning assigned to it by section 325(3);

‘insurance undertakings’ means insurance undertakings referred to in point (a) of the first subparagraph of Article 1(3) of the Accounting Directive;

‘key intangible resources’, in relation to an applicable company, means resources without physical substance on which the business model of the applicable company fundamentally depends and which are a source of value creation for the applicable company;

‘key sustainability partner’, in relation to the assurance of sustainability reporting, means –

• (a) the statutory auditor or statutory auditors designated by a statutory audit firm for a particular assurance engagement concerning sustainability reporting as being primarily responsible for carrying out the assurance of sustainability reporting on behalf of the statutory audit firm,

• (b) in the case of the assurance of consolidated sustainability reporting, the statutory auditor or statutory auditors designated by a statutory audit firm as being primarily responsible for carrying out the assurance of sustainability reporting at the level of the group and the statutory auditor or statutory auditors designated as being primarily responsible at the level of material subsidiaries, or

• (c) the statutory auditor or statutory auditors who sign the assurance report in relation to the assurance of sustainability reporting;

‘Member State’ means a Member State of the European Union or an EEA State;

‘Member State auditor’ means an auditor approved in accordance with the Audit Directive by the counterpart authority of another Member State to carry out the assurance of sustainability reporting as required by European Union law;

‘Member State audit firm’ means an audit firm approved in accordance with the Audit Directive by the counterpart authority of another Member State to carry out the assurance of sustainability reporting as required by European Union law;

‘net turnover’, in relation to a company –

• (a) subject to paragraphs (b), (c) and (d), has the same meaning as ‘turnover’ within the meaning of Part 6,

• (b) in the case of undertakings falling within the scope of Chapter 3, means the revenue as defined by or within the meaning of the financial reporting framework on the basis of which the financial statements of the undertaking are prepared,

• (c) in the case of insurance undertakings, shall be defined in accordance with Article 35 and point 2 of Article 66 of Council Directive 91/674/EEC of 19 December 1991⁸ , and

• (d) in the case of credit institutions, shall be defined in accordance with point (c) of Article 43(2) of Council Directive 86/635/EEC of 8 December 1986⁹ ;

‘public-interest entities’ means undertakings that –

• (a) have transferable securities admitted to trading on a regulated market of any Member State,

• (b) are credit institutions,

• (c) are insurance undertakings, or

• (d) are undertakings that are otherwise designated, by or under any other enactment, to be entities referred to in point (d) of Article 2(1) of the Accounting Directive;

‘recognised accountancy body’ has the meaning assigned to it by section 900;

‘Regulation (EU) No 537/2014’ means Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014¹⁰ on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC;

‘Regulation (EU) No 575/2013’ means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013¹¹ on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012;

‘Regulation (EU) 2020/852’ means Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020¹² on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088;

‘Regulation (EU) 2019/2088’ means Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019¹³ on sustainability- related disclosures in the financial services sector;

‘Regulation (EU) 2021/1119’ means Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021¹⁴ establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’);

‘relevant provisions’ has the meaning assigned to it by section 900;

‘statutory audit firm’ has the same meaning as it has in Part 27;

‘statutory auditor’ has the same meaning as it has in Part 27;

‘sustainability matters’ means environmental, social and human rights, and governance factors, including sustainability factors defined in point (24) of Article 2 of Regulation (EU) 2019/2088;

‘sustainability reporting’ means reporting information related to sustainability matters in accordance with Chapter 2 or 3;

‘sustainability reporting standards’ means the sustainability reporting standards adopted by the Commission pursuant to Article 29b of the Accounting Directive;

‘third-country undertaking’ means an undertaking that is established in, and governed by the law of, a third country;

‘third country’ means a country or territory that is not a Member State or part of a Member State.

• (2) A word or expression that is used in Chapter 2 or 3 and is also used in the Accounting Directive has, unless the context otherwise requires, the same meaning in Chapter 2 or 3 as it has in the Accounting Directive.

• (3) A word or expression that is used in Chapter 4, 5, 6 or 7 and is also used in the Audit Directive has, unless the context otherwise requires, the same meaning in Chapter 4, 5, 6 or 7 as it has in the Audit Directive.

Definition of ‘applicable company’

1586. (1) In this Part, ‘applicable company’ means –

• (a) a company that, in relation to a financial year, qualifies as a large company under section 280H,

or

• (b) a company that, in relation to a financial year –

• (i) qualifies as a small company under section 280A or a medium company under 280F, excluding a company which qualifies as a micro company under section 280D, and

• (ii) falls within paragraph (a) of the definition of ‘public-interest entities’.

• (2) For the purposes of determining whether a company qualifies as a company referred to in either paragraph (a) or (b)(i) of the definition of ‘applicable company’, a reference in Part 6 to the turnover of a company shall be construed as a reference to the net turnover of the company within the meaning of this Part.

• (3) For the purposes of this Part, a reference in the definition of ‘applicable company’ in subsection (1) to a company shall include an unlimited company that is a ‘designated ULC’ within the meaning of section 1274.

Application of Part

1587. (1) Subject to section 1588, Chapter 2 shall apply –

• (a) subject to paragraph (c)(ii), for financial years commencing on or after 1 January 2024, to an applicable company falling within paragraph (a) of the definition of ‘applicable company’ that, in relation to a financial year –

• (i) has an average number of employees that exceeds 500 and is a public-interest entity, or

• (ii) in the case of a holding company, the company is the holding company of a group, the aggregate average number of employees of which exceeds 500, and is a public-interest entity,

• (b) subject to paragraph (a) and (c)(ii), for financial years commencing on or after 1 January 2025, to an applicable company falling within paragraph (a) of the definition of ‘applicable company’, and

• (c) for financial years commencing on or after 1 January 2026, to –

• (i) an applicable company falling within paragraph (b) of the definition of ‘applicable company’, and

• (ii) an applicable company falling within paragraph (a) or (b) of the definition of ‘applicable company’ that is either –

• (I) a small and non-complex institution as defined in point (145) of Article 4(1) of Regulation (EU) No 575/2013, or

• (II) a captive insurance undertaking as defined in point (2) of Article 13 of Directive 2009/138/EC, or a captive reinsurance undertaking as defined in point (5) of Article 13 of that Directive.

• (2) Chapter 3 shall apply for financial years commencing on or after 1 January 2028.

• (3) Save where otherwise provided, Chapters 4, 5, 6 and 7 shall apply –

• (a) in so far as they relate to the assurance of sustainability reporting and the duties and powers of statutory auditors and audit firms in relation thereto, to the conduct of the assurance of sustainability reporting for financial years commencing on or after 1 January 2024, and

• (b) as regards each other matter provision for which is made by those Chapters, on and from 6 July 2024.

• (4) For the purposes of subsection (1)(a), the average number of employees of a company in the financial year concerned shall be determined by applying the methods specified in section 317 in respect of determining the average number of persons employed by a company for purposes of subsection (1)(a) of that section.

• (5) For the purposes of subsection (1)(a), the aggregate average number of employees of a holding company in the financial year concerned shall be determined by aggregating the equivalent figures determined in accordance with subsection (4) for each member of the group.

• (6) For the purposes of subsection (5), the figures for each subsidiary undertaking of the holding company shall be those included in its entity financial statements for –

• (a) where its financial year ends with that of the holding company, that financial year, and

• (b) where it does not, the financial year ending last before the end of the financial year of the holding company.

Non-application to certain financial products and undertakings

1588. This Part shall not apply to –

• (a) financial products listed in points (b) and (f) of point (12) of Article 2 of Regulation (EU) 2019/2088, or

• (b) undertakings listed in points (2) to (23) of Article 2(5) of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013¹⁵ .

Chapter 2 Sustainability Reporting

Key intangible resources

1589. The directors of an applicable company shall, when preparing a directors’ report in accordance with Chapter 9 of Part 6, include in the directors’ report –

• (a) information on the key intangible resources in relation to the applicable company, and

• (b) an explanation of how the business model of the applicable company fundamentally depends on such resources and how such resources are a source of value creation for the applicable company.

Sustainability reporting

1590. (1) Subject to this section and sections 1592 and 1594, the directors of an applicable company shall, for each financial year, include in a clearly identifiable dedicated section of the directors’ report –

• (a) information necessary to understand the company’s impacts on sustainability matters, and

• (b) information necessary to understand how the sustainability matters affect the company’s development, performance and position.

• (2) The information referred to in subsection (1) shall contain the following:

• (a) a brief description of the applicable company’s business model and strategy, including –

• (i) the resilience of the applicable company’s business model and strategy in relation to risks related to sustainability matters,

• (ii) the opportunities for the applicable company related to sustainability matters,

• (iii) the plans of the applicable company, including implementing actions and related financial and investment plans, to ensure that its business model and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5°C in line with the Paris Agreement under the United Nations Framework Convention on Climate Change adopted on 12 December 2015 (the ‘Paris Agreement’) and the objective of achieving climate neutrality by 2050 as established in Regulation (EU) 2021/1119, and, where relevant, the exposure of the applicable company to coal-related, oil-related and gas-related activities,

• (iv) how the applicable company’s business model and strategy take account of the interests of the applicable company’s stakeholders and of the impacts of the applicable company on sustainability matters, and

• (v) how the applicable company’s strategy has been implemented with regard to sustainability matters;

• (b) a description of the time-bound targets related to sustainability matters set by the applicable company, including, where appropriate, absolute greenhouse gas emission reduction targets at least for 2030 and 2050, a description of the progress the applicable company has made towards achieving those targets, and a statement of whether the applicable company’s targets related to environmental factors are based on conclusive scientific evidence;

• (c) a description of the role of the administrative, management and supervisory bodies in the applicable company with regard to sustainability matters, and of their expertise and skills in relation to fulfilling that role or the access such bodies have to such expertise and skills;

• (d) a description of the applicable company’s policies in relation to sustainability matters;

• (e) information about the existence of incentive schemes linked to sustainability matters which are offered to members of the administrative, management and supervisory bodies in the applicable company;

• (f) a description of –

• (i) the due diligence process implemented by the applicable company with regard to sustainability matters, and, where applicable, in line with the requirements of European Union law on applicable companies to conduct a due diligence process,

• (ii) the principal actual or potential adverse impacts connected with the applicable company’s own operations and with its value chain, including its products and services, its business relationships and its supply chain, actions taken to identify and monitor those impacts, and other adverse impacts which the applicable company is required to identify pursuant to other requirements of European Union law on applicable companies to conduct a due diligence process, and

• (iii) any actions taken by the applicable company to prevent, mitigate, remediate or bring an end to actual or potential adverse impacts, and the result of such actions;

• (g) a description of the principal risks to the applicable company related to sustainability matters, including a description of the applicable company’s principal dependencies on those matters, and how the applicable company manages those risks;

• (h) indicators relevant to the disclosures referred to in paragraphs (a) to (g).

• (3) The information referred to in subsection (2)(a) shall include information related to short-term, medium-term and long-term time horizons.

• (4) The information referred to in subsections (1) and (2) shall, subject to subsection (5), contain information about the applicable company’s own operations and its value chain, including its products and services, its business relationships and its supply chain.

• (5) For the first three financial years of the application of these Regulations, and in the event that not all the necessary information regarding its value chain is available, the directors of the applicable company shall explain the efforts made to obtain the necessary information about its value chain, the reasons why not all of the necessary information could be obtained, and its plans to obtain the necessary information in the future.

• (6) Where applicable, the information referred to in subsections (1) and (2) shall also contain references to, and additional explanations of, the other information included in the directors’ report in accordance with Chapter 9 of Part 6 and section 1589, and the amounts reported in the company’s statutory financial statements.

• (7) Information relating to impending developments or matters in the course of negotiation may be omitted from the sustainability reporting of an applicable company in exceptional cases where, in the duly justified opinion of the directors of the applicable company, the disclosure of such information would be seriously prejudicial to the commercial position of the applicable company, provided that such omission does not prevent a fair and balanced understanding of the applicable company’s development, performance and position, and the impact of its activity.

• (8) The directors of an applicable company shall report the process carried out to identify the information included in the directors’ report in accordance with subsection (1).

• (9) The directors of an applicable company shall report the information referred to in subsections (1) to (8) in accordance with the sustainability reporting standards.

Consultation with employees’ representatives

1591. (1) The directors of an applicable company shall provide information to, and consult with, employees’ representatives at the appropriate level in relation to the sustainability information required under section 1590 and the means of obtaining and verifying such information.

• (2) Any opinion of the employees’ representatives in relation to the information referred to in subsection (1) shall be communicated, where applicable, to the directors of the applicable company.

• (3) For the purposes of this section, ‘employees’ representatives’, in relation to an applicable company, means –

• (a) in the case of an applicable company to whom the Employees (Provision of Information and Consultation) Act 2006 applies, the employees’ representative within the meaning of that Act, or

• (b) in the case of any other applicable company, any persons duly appointed or elected by employees of the company as an employees’ representative for the purposes of this section.

Derogation from section 1590 for certain applicable companies

1592. (1) The directors of an applicable company referred to in section 1587(1)(c) may limit the sustainability reporting required under section 1590 to the following information:

• (a) a brief description of the applicable company’s business model and strategy;

• (b) a description of the applicable company’s policies in relation to sustainability matters;

• (c) the principal actual or potential adverse impacts of the applicable company on sustainability matters, and any actions taken to identify, monitor, prevent, mitigate or remediate such actual or potential adverse impacts;

• (d) the principal risks to the applicable company related to sustainability matters and how the applicable company manages those risks;

• (e) key indicators necessary for the disclosures referred to in paragraphs (a) to (d).

• (2) The directors of an applicable company that limits the company’s sustainability reporting in accordance with subsection (1) shall report in accordance with the sustainability reporting standards for small and medium-sized undertakings adopted by the Commission pursuant to Article 29c of the Accounting Directive.

• (3)
• (a) For financial years commencing before 1 January 2028, the directors of an applicable company falling within paragraph (b) of the definition of ‘applicable company’ may decide not to include in the company’s directors’ report the sustainability reporting required under section 1590.

• (b) In such cases, the directors of the applicable company concerned shall briefly state in the directors’ report why the sustainability reporting was not provided.

Deemed compliance with section 327(3)(b)

1593. An applicable company that complies with the requirements of –

• (a) subsections (1) to (9) of section 1590, or

• (b) subsections (1) and (2) of section 1592,

shall be deemed to have complied with section 327(3)(b).

Exemption from section 1590 for certain subsidiaries

1594. (1) Subject to subsection (4), an applicable company that is a subsidiary shall be exempted from the obligations set out in sections 1590 and 1592, as applicable, if –

• (a) the applicable company and its subsidiary undertakings (if any) are included in the group directors’ report of a holding company, drawn up in accordance with section 325 and section 1596, and

• (b) the conditions set out in section 1595 are met.

• (2) Subject to subsection (4), an applicable company that is a subsidiary of a third-country undertaking shall be exempted from the obligations set out in sections 1590 and 1592, as applicable, if –

• (a) the applicable company and its subsidiary undertakings (if any) are included in the consolidated sustainability reporting of the third-country undertaking,

• (b) the consolidated sustainability reporting of the third-country undertaking is carried out in accordance with the sustainability reporting standards or in a manner equivalent to those sustainability reporting standards, as determined in accordance with an implementing act on the equivalence of sustainability reporting standards adopted pursuant to the third subparagraph of Article 23(4) of Directive 2004/109/EC, and

• (c) the conditions set out in section 1595 are met.

• (3) For the purposes of this section –

• (a) where Article 10 of Regulation (EU) No 575/2013 applies, credit institutions that are permanently affiliated to a central body which supervises them under the conditions laid down in Article 10 of that Regulation shall be treated as subsidiary undertakings of that central body, and

• (b) insurance undertakings that are part of a group, on the basis of financial relationships as referred to in point (c)(ii) of Article 212(1) of Directive 2009/138/EC, and which are subject to group supervision in accordance with points (a) to (c) of Article 213(2) of that Directive, shall be treated as subsidiary undertakings of the holding undertaking of that group.

• (4) This section shall not apply to an applicable company falling within paragraph (a) of the definition of ‘applicable company’ that is a public-interest entity.

Conditions to be met for exemption in section 1594

1595. (1) The exemption in section 1594 shall be subject to the following conditions:

• (a) subject to subsection (3), the directors’ report of the exempted undertaking contains all of the following information:

• (i) the name and registered office of the holding undertaking that reports information at group level in accordance with section 1596 or in a manner equivalent to the sustainability reporting standards as determined in accordance with an implementing act on the equivalence of sustainability reporting standards adopted pursuant to the third subparagraph of Article 23(4) of Directive 2004/109/EC,

• (ii) links to the website containing –

• (I) in the case of an exempted undertaking referred to in section 1594(1), the group directors’ report of the holding company, or

• (II) in the case of an exempted undertaking referred to in section 1594(2), the consolidated sustainability reporting of the third-country undertaking,

• (iii) links to the website containing the assurance opinion referred to in section 1613(3) or paragraph (b), as applicable;

• (iv) information confirming that the undertaking is an exempted undertaking;

• (b) in the case of an exempted undertaking referred to in section 1594(2), the consolidated sustainability reporting of the third-country undertaking and the assurance opinion on that consolidated sustainability reporting, expressed by one or more persons or firms authorised to give an opinion on the assurance of sustainability reporting under the law governing that holding company, are published in accordance with Article 30 of the Accounting Directive and this Part;

• (c) in the case of an exempted undertaking referred to in section 1594(2), the disclosures laid down in Article 8 of Regulation (EU) 2020/852, covering the activities carried out by the exempted undertaking and its subsidiary undertakings (if any), are included in the directors’ report of the exempted undertaking or in the consolidated sustainability reporting of the holding undertaking.

• (2) Where the group directors’ report of the holding company or, where applicable, the consolidated sustainability reporting of the third-country undertaking, as referred to in subsection (1), is in a language other than the English language or the Irish language, there shall be annexed to the directors’ report of the exempted undertaking, a translation of the document concerned in the English language or the Irish language certified in the prescribed manner to be a correct translation.

• (3) An exempted undertaking that stands exempted from the provisions of section 347 and 348 in accordance with section 357 shall not be obliged to provide the information referred to in subsection (1)(a)(i) to (iii) where it publishes a group directors’ report in accordance with those sections.

• (4) In this Regulation, ‘exempted undertaking’ means an applicable company referred to in section 1594(1) or (2).

Consolidated sustainability reporting

1596. (1) The directors of an applicable company falling within paragraph (a) of the definition of ‘applicable company’ that is the holding company of a group (in this Part referred to as an ‘applicable holding company’) shall include in a clearly identifiable dedicated section of the group directors’ report –

• (a) information necessary to understand the group’s impacts on sustainability matters, and

• (b) information necessary to understand how sustainability matters affect the group’s development, performance and position.

• (2) The information referred to in subsection (1) shall contain:

• (a) a brief description of the group’s business model and strategy, including –

• (i) the resilience of the group’s business model and strategy in relation to risks related to sustainability matters,

• (ii) the opportunities for the group related to sustainability matters,

• (iii) the plans of the group, including implementing actions and related financial and investment plans, to ensure that its business model and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5°C in line with the Paris Agreement and the objective of achieving climate neutrality by 2050 as established in Regulation (EU) 2021/1119 and where relevant, the exposure of the group to coal-related, oil-related and gas-related activities,

• (iv) how the group’s business model and strategy take account of the interests of the group’s stakeholders and of the impacts of the group on sustainability matters, and

• (v) how the group’s strategy has been implemented with regard to sustainability matters;

• (b) a description of the time-bound targets related to sustainability matters set by the group, including, where appropriate, absolute greenhouse gas emission reduction targets at least for 2030 and 2050, a description of the progress the group has made towards achieving those targets, and a statement of whether the group’s targets related to environmental factors are based on conclusive scientific evidence;

• (c) a description of the role of the administrative, management and supervisory bodies in the group with regard to sustainability matters, and of their expertise and skills in relation to fulfilling that role or the access such bodies have to such expertise and skills;

• (d) a description of the group’s policies in relation to sustainability matters;

• (e) information about the existence of incentive schemes linked to sustainability matters which are offered to members of the administrative, management and supervisory bodies in the group;

• (f) a description of –

• (i) the due diligence process implemented by the group with regard to sustainability matters, and, where applicable, in line with the requirements of European Union law on undertakings to conduct a due diligence process,

• (ii) the principal actual or potential adverse impacts connected with the group’s own operations and with its value chain, including its products and services, its business relationships and its supply chain, actions taken to identify and monitor those impacts, and other adverse impacts which the parent undertaking is required to identify pursuant to other the requirements of European Union law to conduct a due diligence process, and

• (iii) any actions taken by the group to prevent, mitigate, remediate or bring an end to actual or potential adverse impacts, and the result of such actions;

• (g) a description of the principal risks to the group related to sustainability matters, including the group’s principal dependencies on those matters, and how the group manages those risks;

• (h) indicators relevant to the disclosures referred to in paragraphs (a) to (g).

• (3) The information referred to in subsection (2)(a) shall include information related to short-term, medium-term and long-term time horizons.

• (4) The information referred to in subsections (1) and (2) shall contain information about the group’s own operations and about its value chain, including its products and services, its business relationships and its supply chain.

• (5) For the first three financial years of the application of this Part, in the event that not all the necessary information regarding its value chain is available, the directors of the applicable holding company shall explain the efforts made to obtain the necessary information about its value chain, the reasons why not all of the necessary information could be obtained, and its plans to obtain the necessary information in the future.

• (6) Where applicable, the information referred to in subsections (1) and (2) shall also include references to, and additional explanations of, the other information included in the group directors’ report in accordance with sections 318, 325, 327 and 1373 and the amounts reported in the consolidated financial statements.

• (7) Information relating to impending developments or matters in the course of negotiation may be omitted in exceptional cases where, in the duly justified opinion of the directors of the applicable holding company, the disclosure of such information would be seriously prejudicial to the commercial position of the group, provided that such omission does not prevent a fair and balanced understanding of the group’s development, performance, and position, and the impact of its activity.

• (8) The directors of an applicable holding company shall report on the process carried out to identify the information included in the group directors’ report in accordance with subsection (1).

• (9) Where the directors of the applicable holding company identify significant differences between the risks for, or impacts of, the group and the risks for, or impacts of, one or more of its subsidiaries, the directors shall provide an adequate understanding of, as appropriate, the risks for, and impacts of, the subsidiary or subsidiaries concerned.

• (10) The directors of the applicable holding company shall indicate which subsidiary undertakings included in the consolidation are exempted from the sustainability reporting required under this Part pursuant to sections 1594 and 1598.

• (11) The directors of the applicable holding company shall report the information referred to in subsections (1) to (8) in accordance with the sustainability reporting standards.

• (12) An applicable holding company that complies with the requirements set out in subsections (1) to (11) shall be deemed to have complied with the requirements set out in section 327(3)(b) and section 1590.

Consultation with employees’ representatives

1597. (1) The directors of an applicable holding company shall provide information to, and consult with, employees’ representatives at the appropriate level in relation to the sustainability information required by section 1596 and the means of obtaining and verifying such information.

• (2) The opinion (if any) of the employees’ representatives shall be communicated, where applicable, to the directors of the applicable holding company.

• (3) For the purposes of this section, ‘employees’ representatives’, in relation to an applicable holding company, means –

• (a) in the case of an applicable holding company to whom the Employees (Provision of Information and Consultation) Act 2006 applies, the employees’ representative within the meaning of that Act, or

• (b) in the case of any other applicable holding company, any persons duly appointed or elected by employees of the group as an employees’ representative for the purposes of this section.

Exemption from section 1596 for certain subsidiaries

1598. (1) Subject to subsection (4), an applicable holding company that is a subsidiary of another undertaking shall be exempted from the obligations set out in section 1596 if –

• (a) the applicable holding company and its subsidiaries are included in the group directors’ report of that other undertaking drawn up in accordance with Part 6 and this Part, and

• (b) the conditions set out in section 1599 are met.

• (2) Subject to subsection (4), an applicable holding company that is a subsidiary of a third-country undertaking shall be exempted from the obligations set out in section 1596 if –

• (a) the applicable holding company and its subsidiaries are included in the consolidated sustainability reporting of that third-country undertaking,

• (b) that consolidated sustainability reporting has been carried out in accordance with the sustainability reporting standards or in a manner equivalent to those sustainability reporting standards, as determined in accordance with an implementing act on the equivalence of sustainability reporting standards adopted by the EU Commission pursuant to the third subparagraph of Article 23(4) of Directive 2004/109/EC, and

• (c) the conditions set out in section 1599 are met.

• (3) For the purposes of this section –

• (a) where Article 10 of Regulation (EU) No 575/2013 applies, credit institutions that are permanently affiliated to a central body which supervises them under the conditions laid down in Article 10 of that Regulation shall be treated as subsidiary undertakings of that central body, and

• (b) insurance undertakings that are part of a group, on the basis of financial relationships referred to in point (c)(ii) of Article 212(1) of Directive 2009/138/EC, and which are subject to group supervision in accordance with points (a) to (c) of Article 213(2) of that Directive shall be treated as subsidiary undertakings of the holding undertaking of that group.

• (4) This section shall not apply to an applicable holding company that is a public-interest entity.

Conditions for exemption in section 1598

1599. (1) The exemption in section 1598 shall be subject to the following conditions:

• (a) the directors’ report of the exempted undertaking contains all of the following information:

• (i) the name and registered office of the holding undertaking that reports information at group level in accordance with section 1596 or in a manner equivalent to the sustainability reporting standards as determined in accordance with an implementing act on the equivalence of sustainability reporting standards adopted pursuant to the third subparagraph of Article 23(4) of Directive 2004/109/EC;

• (ii) links to the website containing –

• (I) in the case of an exempted undertaking referred to in section 1598(1), the group director’s report of the other undertaking referred to in that subsection, or

• (II) in the case of an exempted undertaking referred to in section 1598(2), the consolidated sustainability reporting of the third-country undertaking referred to in that subsection;

• (iii) links to the website containing the assurance opinion referred to in section 1613(3) or paragraph (b), as applicable,

• (iv) information confirming that the applicable holding company is an exempted undertaking;

• (b) in the case of an exempted undertaking referred to in section 1598(2), the consolidated sustainability reporting of the third-country undertaking referred to in that subsection and the assurance opinion on that consolidated reporting, expressed by one or more persons authorised to give an opinion on the assurance of sustainability reporting under the law governing the holding undertaking, are published in accordance with Article 30 of the Accounting Directive and this Part;

• (c) in the case of an exempted undertaking referred to in section 1598(2), the disclosures laid down in Article 8 of Regulation (EU) 2020/852, covering the activities carried out by the subsidiary undertaking exempted from sustainability reporting pursuant to section 1594, shall be included in the group directors’ report of the exempted undertaking or in the consolidated sustainability reporting carried out by the third-country undertaking.

• (2) Where the group directors’ report of the holding company or, where applicable, the consolidated sustainability reporting of the third-country undertaking, as referred to in subsection (1), is in a language other than the English language or the Irish language, there shall be annexed to the directors’ report of the exempted undertaking, a translation of the document concerned in the English language or the Irish language certified in the prescribed manner to be a correct translation.

• (3) An exempted undertaking that stands exempted from the provisions of section 347 and 348 in accordance with section 357 shall not be obliged to provide the information referred to in subsection (1)(a)(i) to (iii) where it publishes a consolidated management report in accordance with those sections.

• (4) In this Regulation, ‘exempted undertaking’ means an applicable holding company referred to in section 1598(1) or (2).

Single electronic reporting format of directors’ report of applicable companies

1600. (1) The directors of an applicable company subject to the requirements of section 1590 shall prepare the directors’ report in the electronic reporting format specified in Article 3 of Delegated Regulation (EU) 2019/815 and shall mark-up the sustainability reporting, including the disclosures provided for in Article 8 of Regulation (EU) 2020/852, in accordance with the electronic reporting format specified in Delegated Regulation (EU) 2019/815.

• (2) The directors of an applicable holding company subject to the requirements of section 1596 shall prepare the group directors’ report in the electronic reporting format specified in Article 3 of Delegated Regulation (EU) 2019/815 and shall mark-up the consolidated sustainability reporting, including the disclosures provided for in Article 8 of Regulation (EU) 2020/852, in accordance with the electronic reporting format specified in Delegated Regulation (EU) 2019/815.

Documents to be annexed to annual return: applicable companies

1601. (1) Without prejudice to the requirements of Chapter 13 of Part 6, where an applicable company is subject to the requirements of section 1590 or 1596 –

• (a) a copy of the directors’ report, including any group directors’ report, referred to in section 347(1)(b) shall be annexed to the annual return in the electronic reporting format referred to in section 1600, and

• (b) a copy of the assurance report on the sustainability reporting in that directors’ report shall, in addition to the documents referred to in section 347, be annexed to the annual return.

• (2) Subsections (2) to (4) of section 347 shall apply to the documents referred to in subsection (1) in the same manner as they apply to the documents referred to in subsection (1) of section 347 and for that purpose, a reference in those subsections to subsection (1) of section 347 shall be construed as a reference to subsection (1) of this section.

Chapter 3 Sustainability Reporting Concerning Third-Country Undertakings

Interpretation – Chapter 3

1602. (1) In this Chapter –

‘applicable branch’ means a branch of a third-country undertaking where, in relation to a financial year –

• (a) the branch is located in the State and generated a net turnover of more than €40 million in the preceding financial year,

• (b) the third-country undertaking at its group level or, if not applicable, the individual level, generated a net turnover of more than €150 million in the European Union for each of the preceding two consecutive financial years, and

• (c) the third-country undertaking –

• (i) is either not part of a group or is a subsidiary of another third-country undertaking, and

• (ii) does not have an applicable subsidiary;

‘applicable subsidiary’ means a subsidiary undertaking that, in relation to a financial year –

• (a) is an applicable company, and

• (b) is a subsidiary of a third-country undertaking which, at its group level or, if not applicable, the individual level, generated a net turnover of more than €150 million in the European Union for each of the preceding two consecutive financial years.

• (2) For the purpose of this Chapter, a reference to a branch or an undertaking shall include a branch or an undertaking, as the case may be, whose legal form is comparable with the types of undertakings listed in Annex I of the Accounting Directive.

Sustainability reporting for applicable subsidiaries and applicable branches

1603. (1) An applicable subsidiary of a third-country undertaking shall publish and make accessible, in accordance with section 1604, a sustainability report for each financial year covering the information specified in paragraphs (a)(iii) to (v), (b) to (f) and, where appropriate, paragraph (h) of section 1596(2) at the group level of the third-country undertaking.

• (2) An applicable branch of a third-country undertaking shall publish and make accessible, in accordance with section 1605, a sustainability report for each financial year covering the information specified in paragraphs (a)(iii) to (v), (b) to (f) and, where appropriate, paragraph (h) of section 1596(2) at the group level, or, if not applicable, the individual level, of the third-country undertaking.

• (3) A sustainability report referred to in subsection (1) and (2) shall be drawn-up in accordance with –

• (a) the standards adopted pursuant to Article 40b of the Accounting Directive, or

• (b) the sustainability reporting standards or in a manner equivalent to those sustainability reporting standards, as determined in accordance with an implementing act on the equivalence of sustainability reporting standards adopted pursuant to the third subparagraph of Article 23(4) of Directive 2004/109/EC.

• (4)
• (a) Where the information required to draw-up the sustainability report referred to in subsection (1) or (2) is not available, the applicable subsidiary or applicable branch, as the case may be, shall request the third-country undertaking concerned to provide them with all information necessary to enable them to meet their obligations.

• (b) In the event that not all of the required information is provided, the applicable subsidiary undertaking or branch, as the case may be, shall draw-up, publish and make accessible the sustainability report, containing all information in its possession, obtained or acquired, and issue a statement indicating that the third-country undertaking did not make the necessary information available.

• (5) The publication of the sustainability report shall be accompanied by an assurance opinion expressed by one or more persons authorised to give an opinion on the assurance of sustainability reporting under the national law of the third-country undertaking or the law of a Member State, or by a statutory auditor approved under this Part to carry out the assurance of sustainability reporting.

• (6) In the event that the third-country undertaking does not provide the assurance opinion referred to in subsection (5), the applicable subsidiary or applicable branch, as the case may be, shall issue a statement indicating that the third-country undertaking did not make the necessary assurance opinion available.

Documents to be annexed to annual return: applicable subsidiaries

1604. Without prejudice to the requirements of Chapter 13 of Part 6, an applicable subsidiary shall, in addition to the documents referred to in section 347, annex the following documents to its annual return:

• (a) the sustainability report referred to in section 1603(1); and

• (b) either –

• (i) the assurance opinion referred to in section 1603(5), or

• (ii) the statement referred to in section 1603(6).

Documents to be delivered to Registrar: applicable branches

1605. Without prejudice to the requirements of section 1305, an applicable branch shall in each financial year deliver to the Registrar, in the prescribed manner, the following documents:

• (a) the sustainability report referred to in section 1603(2); and

• (b) either –

• (i) the assurance opinion referred to in section 1603(5), or

• (ii) the statement referred to in section 1603(6).

Responsibility for drawing-up, publishing and making accessible sustainability reports concerning third-country undertakings

1606. (1) The directors of an applicable subsidiary shall ensure that, to the best of their knowledge and ability, the sustainability report referred to section 1603(1) is drawn-up, published and made accessible in accordance with section 1601 and 1604.

• (2) In the case of an applicable branch, the persons responsible for ensuring compliance by the branch with this Chapter shall ensure that, to the best of their knowledge and ability, the sustainability report referred to in section 1603(2) is drawn-up, published and made accessible in accordance with section 1603 and 1605.

Transitional provisions

1607. (1) Until 6 January 2030, a subsidiary of a third-country undertaking that –

• (a) is subject to the requirements of section 1590 or 1596, and

• (b) is one of the subsidiary undertakings of the group that generated the greatest turnover in the European Union in at least one of the preceding 5 financial years,

may prepare consolidated sustainability reporting in accordance with the requirements of section 1596 that includes all subsidiaries of the third-country undertaking that are subject to the requirements of Article 19a or Article 29a of the Accounting Directive.

• (2) Until 6 January 2030, the consolidated sustainability reporting referred to in subsection (1) may include the disclosures laid down in Article 8 of Regulation (EU) 2020/852, covering the activities carried out by all subsidiaries of the holding undertaking referred to in subsection (1) that are subject to Article 19a or 29a of the Accounting Directive.

• (3) For the purpose of the exemptions in sections 1594 and 1598, reporting in accordance with subsection (1) shall be considered to be reporting by a holding company at group level with respect to the undertakings included in the consolidation.

• (4) Reporting in accordance with subsection (2) shall be considered to fulfil the conditions referred to in paragraph (c) of section 1595(1) and paragraph (c) of the section 1599(1), respectively.

Chapter 4 Assurance of Sustainability Reporting

Interpretation (Chapter 4)

1608. (1) In this Chapter, ‘group auditor’ means the statutory auditor appointed for the purposes of carrying out the assurance of consolidated sustainability reporting of an applicable holding company.

• (2) A reference in this Chapter to a statutory auditor or statutory audit firm is a reference to a statutory auditor or statutory audit firm that is –

• (a) approved in accordance with Chapter 5 to carry out the assurance of sustainability reporting, or

• (b) registered in accordance with section 1633 to carry out the assurance of sustainability reporting.

Appointment of statutory auditor for purposes of carrying out assurance of sustainability reporting

1609. (1) An applicable company that is subject to the requirements of section 1590 or 1596 shall appoint one or more statutory auditors for each financial year of the company for the purpose of carrying out the assurance of sustainability reporting of the company.

• (2) A statutory auditor appointed pursuant to subsection (1) may be a statutory auditor other than the statutory auditors appointed to carry out a statutory audit of the company.

• (3) Chapter 18 of Part 6 shall apply to the appointment of statutory auditors for the purpose of carrying out the assurance of sustainability reporting in the same manner as it applies to the appointment of statutory auditors for the purpose of carrying out a statutory audit subject to the following modifications:

• (a) references (howsoever expressed) to carrying out a statutory audit shall be construed as a reference to carrying out the assurance of sustainability reporting;

• (b) any other necessary modifications.

Assurance standards to be applied

1610. (1) Statutory auditors and statutory audit firms shall carry out the assurance of sustainability reporting in accordance with the assurance standards adopted by the Commission in accordance with paragraph (3) of Article 26a of the Audit Directive.

• (2) Subject to subsection (3), the Supervisory Authority may adopt assurance standards, procedures or requirements to be applied to the assurance of sustainability reporting, as long as the Commission has not adopted an assurance standard covering the same subject matter, and where assurance standards, procedures or requirements are so prescribed, statutory auditors and statutory audit firms shall carry out the assurance of sustainability reporting in accordance with those standards.

• (3) The Supervisory Authority shall communicate the assurance standards, procedures or requirements referred to in subsection (2) to the Commission at least 3 months before their entry into force.

• (4) In this section, ‘standards’ include standards on professional ethics and internal quality control in addition to standards on the assurance of sustainability reporting.

Organisation of work of statutory auditors and audit firms when carrying out assurance of sustainability reporting

1611. (1) A statutory audit firm, when carrying out the assurance of sustainability reporting of an applicable company, shall designate at least one key sustainability partner, who may be one of the key audit partners designated under section 1542, who shall be actively involved in the carrying out of the assurance of sustainability reporting.

• (2) A statutory audit firm shall –

• (a) provide the key sustainability partner with sufficient resources and with personnel that have the necessary competence and capabilities to discharge his or her duties appropriately, and

• (b) ensure that the main criteria in selecting the key sustainability partner are securing assurance quality, independence and competence.

• (3) A statutory auditor, when carrying out the assurance of sustainability reporting of an applicable company, shall devote sufficient time to the assurance engagement and shall assign sufficient resources to enable him or her to carry out his or her duties appropriately.

• (4) Without prejudice to section 1542(4), a statutory auditor or audit firm shall keep records of any contraventions by him or her of the relevant provisions in relation to the assurance of sustainability reporting.

• (5) A statutory auditor or audit firm shall keep records of any consequences of any contravention referred to in subsection (4), including the measures taken to address such contravention and to modify his or her internal quality control system.

• (6) A statutory auditor or audit firm shall prepare an annual report containing an overview of any measures taken pursuant to subsection (5) and, in the case of an audit firm, shall communicate that report internally to the partners or directors, as may be appropriate, of the audit firm.

Organisation of work of statutory auditors and audit firms - assurance files