What is sustainability reporting?
The new reporting will involve the disclosure of information not only about the financial results of the company, but also about its impact on the environment, employees and society.
In particular, enterprises must disclose information about:
- the impact of activities on the environment;
- use of resources and environmental risks;
- observance of the rights of workers and human rights;
- corporate management;
- measures against corruption;
- risks and opportunities related to sustainable development.
Reports will be prepared according to European standards ESRS. They will be included in the management report and submitted in electronic format.
Who will have to report
The new requirement will not apply to all Ukrainian businesses.
The obligation is proposed to be established for enterprises that simultaneously have more than 1,000 employees and a net turnover of more than €450 million.
The first reporting year under the new rules should be 2028 year.
This means that large companies will have time to prepare internal information collection systems, identify responsible employees and adapt corporate reporting.
Enterprise size criteria will change
Separately, the draft law provides for updating the criteria by which Ukrainian companies are divided into micro, small, medium and large.
Microenterprises companies with assets up to €450,000 and turnover up to €900,000 will be considered.
Small businesses — companies with assets up to €5 million and turnover up to €10 million.
Medium enterprises — with assets up to €25 million and turnover up to €50 million.
Large enterprises companies with assets over €25 million or turnover over €50 million will be considered.
At the same time, the criterion regarding the number of employees remains unchanged.
What will change for public companies
Separate requirements are provided for the public sector.
State unitary enterprises and companies in which the state owns more than 50% of shares or stakes must switch to international financial reporting standards.
They will also prepare a separate management report.
This should make the activities of state-owned companies more transparent and allow easier comparison of their performance with enterprises in other countries.
Why businesses should collect more information
For large companies, innovation will mean more than just another document.
Businesses will have to create a system that allows regularly collect, verify and confirm information on environmental, social and management indicators.
That is, companies will need to determine who is responsible for data collection, how it is verified and how it gets to the final reporting.
For part of the business, this may mean additional costs for IT systems, audits, specialists and internal control procedures.
Why does Ukraine need this?
The main goal of the reform is bring Ukrainian business closer to the rules of the European Union.
European investors and banks are increasingly evaluating companies not only on profit, but also on environmental, social and management indicators.
Therefore, the European reporting format should simplify the evaluation of Ukrainian companies for foreign investors and creditors.
For Ukraine, this is especially important on the eve of large-scale post-war recovery, when Ukrainian business will require significant amounts of private and international capital.
The new requirements may also affect small businesses
Although the largest companies will have to formally report under the new rules, the impact of the reform may also extend to their suppliers.
For example, a large company that is itself required to report under ESRS may request information from partners on product origin, resource use, labor conditions or environmental performance.
Therefore, even enterprises that will not be subject to a direct requirement may gradually receive more requests from large customers, banks and international partners.
When it all works
Now the bill is not yet a valid law. Its provisions may change during further review and approval.
If the document is adopted in the proposed version, it will be the first reporting year under the new rules 2028 year.
This gives the business time to prepare internal processes and data collection systems.
For large companies, this will mean more transparency and disclosure requirements. At the same time, for the Ukrainian economy, the reform should become one more step towards European rules for conducting business and attracting foreign investments.
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