This month, we asked the team at RDJ:

What are the mandatory sustainability reporting requirements and the key employee consultation obligations that will apply to Irish companies following the introduction of the CRSD? How do I handle it?

What is CSRD?

The Corporate Sustainability Reporting Directive (“CSRD”) was signed into Irish law on 5 July 2024 by the European Union (Corporate Sustainability Reporting) Regulations 2024 (S.I. 336/2024) (“2024 Regulations”) which made a number of changes to the Companies Act 2014 (“2014 Act”).

The CSRD requires all companies in scope to disclose sustainability information on what they see as the risks and opportunities arising from social and environmental issues, and on the impact of their activities on the climate and society. In the very near future, this will encompass all large companies and all listed companies (except listed micro-enterprises).

The CSRD aims to increase transparency around companies’ impact on climate and society. Part of this transparency is ensuring a company’s own employees are provided with information and consultation opportunities as part of the reporting process.

What Companies have to report?

Reporting obligations under the CSRD are being phased in on a gradual basis, with companies coming within the scope of the CSRD as follows:

• Financial year commencing on or after 1 January 2024: Public interest entities in scope of EU non-financial reporting rules (greater than 500 employees).
• Financial year commencing on or after 1 January 2025: Large companies as defined by s.280H of the 2014 Act.
  • S.280H, 2014 Act – A company that does not qualify as a small, micro or medium company shall be deemed to be a large company.
  • S.280F, 2014 Act – A company qualifies as a medium company if it meets 2 of the following requirements:
    • Employs less than 250 employees
    • Turnover of less than €50 million
    • Balance sheet total is less than €25 million
  • S.280A, 2014 Act – A company qualifies as a small company if it meets 2 of the following requirements:
    • Employs less than 50 employees
    • Turnover of less than €15 million
    • Balance sheet total is less than €7.5 million

• Financial year commencing on or after 1 January 2026: Small companies (defined in s.280A, 2014 Act) and medium companies (defined in s.280F, 2014 Act).
• Financial year commencing on or after 1 January 2027: Listed SMEs are within scope to report on the 2026 financial year in 2027, with an ‘opt out’ possible until 2028.

Employee Consultation Obligations

Once the reporting obligations under CSRD come into effect for a company, the employee consultation obligations below will then become a legal requirement.

Section 1591 of the 2014 Act provides that the directors of companies that are obliged to report, shall provide information to, and consult with, employees’ representatives at the appropriate level in relation to the sustainability information being reported and the means of obtaining and verifying such information.

Any opinion of the employees’ representatives in relation to the above information must be communicated to the directors of the Company.

For the purposes of this section, “employees’ representatives” means –

(a) in the case of a company to whom the Employees (Provision of Information and Consultation) Act 2006 (the “2006 Act”) applies, the employees’ representative within the meaning of that Act (i.e. an employee elected or appointed for the purposes of the 2006 Act), or

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

Penalty for non-compliance with employee consultation requirements?

It is worth noting that the 2024 Regulations do not contain any penalties/consequences for failure to consult with employees on CSRD reporting.

What does this mean for employers?

Employers will have to, if they haven’t already, start thinking about whether they are in scope for the purposes of the CSRD and ensure they have systems and procedures in place before the reporting year commences. From an employment law perspective, they ought to be aware of the obligation on them to inform and consult with employees’ representatives in relation to the sustainability information being reported. Employers who already have a forum established under the 2006 Act can utilise same for this purpose. Alternatively, elected or otherwise appointed employees can act as employees’ representatives. Through effective employee consultation and engagement, companies can foster a culture of sustainability that supports alignment with Environmental, Social and Governance (ESG) goals.