Sustainability reporting is a comprehensive report by an enterprise on its environmental, social and governance (ESG) impacts and risks. It provides “the information necessary to understand the impact of the enterprise on sustainability issues and how these issues affect the development, performance and position of the enterprise”.
In the context of its rapprochement with the EU, Ukraine has committed itself to harmonising its national legislation with European standards, in particular in accounting and reporting. Given its status as an EU candidate, the adaptation of Ukrainian law to EU Directive 2022/2464 (CSRD) and the implementation of the European Sustainability Reporting Standards (ESRS) have become a priority of the state policy.
Currently, there are no direct requirements for sustainability reporting in Ukraine, but the relevant regulatory framework is already being developed. By the Decree of the President of Ukraine No. 722 dated 30 September 2019 “On the Sustainable Development Goals of Ukraine until 2030” set out the sustainable development goals of Ukraine until 2030. In October 2024, the Cabinet of Ministers of Ukraine approved the Strategy for the Implementation of Sustainability Reporting by Enterprises (further — the Strategy). In pursuance of the Strategy, the Ministry of Finance of Ukraine published on 7 February 2025 the Draft Law “On Amendments to the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” on the Introduction of Sustainable Development Reporting” (the “Draft Law”).
The Strategy provides the development of a regulatory framework and the first stage of implementation of Sustainability reporting (ESRS) in Ukraine by 2026, namely the start of the preparation, submission and disclosure of sustainability reporting by enterprises. The second stage of the Strategy implementation provides further implementation of ESRS in Ukraine in 2026-2030 with the audit of companies’ sustainability reports.
According to the Draft Law, the Law “On Accounting and Financial Reporting” proposes to introduce a definition of sustainability reporting and a requirement for companies to prepare and disclose it. In particular, the Draft Law stipulates that such reports should be prepared in accordance with the EU-approved harmonised Sustainability Reporting Standards (ESRS).
It is also provided to update the criteria for classifying enterprises (large, medium, etc.) in line with EU standards. Thus, the Draft Law proposes to define that:
Micro-enterprises are enterprises whose indicators as of the date of preparation of the annual financial statements for the year preceding the reporting year, meet at least two of the following criteria:
Large enterprises are those that do not meet the criteria for medium-sized enterprises and whose indicators as of the date of preparation of the annual financial statements for the year preceding the reporting year, meet at least two of the following criteria:
Under the Draft Law, the following entities will be required to prepare sustainability reports:
Such reporting should be included in the management report and the consolidated management report as a separate section.
It is provided to introduce reporting in stages, namely, the first reporting period for which companies submit sustainability reports in accordance with the sustainability reporting standards is:
In addition, in April 2025, the National Bank of Ukraine published for discussion a draft White Paper on the management of environmental, social, and governance (ESG) risks in the financial sector (further — the White Paper).
Thus, a comprehensive approach is being developed in Ukraine: the Strategy defines the general direction and operational plan for its implementation, while the Draft Law regulates the direct requirements for ESRS reporting.
At the EU level, corporate sustainability reporting is regulated by Directive (EU) 2022/2464 (CSRD), which entered into force on 05 January 2023.
The CSRD amended Regulation (EU) No 537/2014/EC, Directive 2004/109/EC, the Directive 2006/43/EC and the Directive 2013/34/EU to introduce new requirements for the disclosure of ESG information.
According to the CSRD, the companies are required to report not only on financial performance, but also on the environmental, social and governance aspects of their operations. The key concept is dual materiality: companies are required to provide information on both environmental and social impact and how sustainability factors affect the company itself and are part of its strategic plans.
To detail the content of such reports, the EU Commission approved the European Sustainability Reporting Standards (ESRS) in Delegated Regulation (EU) 2023/2772. In practice, the implementation of the CSRD means that from 2024-2026, more than 50,000 companies in the EU will have to start publishing mandatory sustainability reports.
Most EU member states have already aligned their laws with CSRD standards. For example, France, Italy, Ireland, Belgium, Denmark, Norway, Finland, Sweden, and the Netherlands require companies to report in accordance with CSRD.
It should be noted that the CSRD, the Strategy and the Draft Law provide for the mandatory engagement of an independent auditor to confirm the reporting data. Therefore, Ukrainian companies should follow a systematic, step-by-step approach in preparing for the new reporting format.
In particular, experts recommend:
All of these measures should be implemented proactively, at least 1-2 years before the introduction of reporting. This means that each company should clearly plan its resource and information preparation. Implementation of harmonised methodological principles (or transition to international ones, such as GRI/IFRS-IFRS S1/S2) will also increase the company’s competitiveness and transparency in international markets.
Audit and consulting firms play a key role in preparing companies for sustainability reporting. For example, our experts can provide the following services:
Thus, auditors provide both technical and advisory solutions: from creating an ESG internal control system, through the implementation of financial and control procedures and the development of reporting templates, to independent verification of published indicators. This comprehensive support ensures that the implementation of sustainability reporting is systematic and that public reports are reliable and meet the expectations of European standards.
In summary, Ukrainian companies are on the verge of reporting transformation: the implementation of CSRD and ESRS is creating a new level of transparency. Compliance with the new requirements opens up the possibility of attracting European investment by demonstrating compliance with global sustainability practices. At the same time, it increases public confidence.
Timely preparation and professional support (including audit support) can ensure the smooth integration of Ukrainian companies into the European sustainable reporting space.
BDO in Ukraine is your reliable partner on the path to sustainable development. We assist to ensure transparency and compliance with ESG standards through professional support in the audit of sustainability reporting — from initial strategic analysis to independent verification.
When you are ready to start your journey towards a more sustainable and successful business, feel free to contact us. We will have a pleasure to answer your questions, provide detailed information and arrange a meeting with our experts.
In the context of its rapprochement with the EU, Ukraine has committed itself to harmonising its national legislation with European standards, in particular in accounting and reporting. Given its status as an EU candidate, the adaptation of Ukrainian law to EU Directive 2022/2464 (CSRD) and the implementation of the European Sustainability Reporting Standards (ESRS) have become a priority of the state policy.
Currently, there are no direct requirements for sustainability reporting in Ukraine, but the relevant regulatory framework is already being developed. By the Decree of the President of Ukraine No. 722 dated 30 September 2019 “On the Sustainable Development Goals of Ukraine until 2030” set out the sustainable development goals of Ukraine until 2030. In October 2024, the Cabinet of Ministers of Ukraine approved the Strategy for the Implementation of Sustainability Reporting by Enterprises (further — the Strategy). In pursuance of the Strategy, the Ministry of Finance of Ukraine published on 7 February 2025 the Draft Law “On Amendments to the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” on the Introduction of Sustainable Development Reporting” (the “Draft Law”).
The Strategy provides the development of a regulatory framework and the first stage of implementation of Sustainability reporting (ESRS) in Ukraine by 2026, namely the start of the preparation, submission and disclosure of sustainability reporting by enterprises. The second stage of the Strategy implementation provides further implementation of ESRS in Ukraine in 2026-2030 with the audit of companies’ sustainability reports.
According to the Draft Law, the Law “On Accounting and Financial Reporting” proposes to introduce a definition of sustainability reporting and a requirement for companies to prepare and disclose it. In particular, the Draft Law stipulates that such reports should be prepared in accordance with the EU-approved harmonised Sustainability Reporting Standards (ESRS).
It is also provided to update the criteria for classifying enterprises (large, medium, etc.) in line with EU standards. Thus, the Draft Law proposes to define that:
Micro-enterprises are enterprises whose indicators as of the date of preparation of the annual financial statements for the year preceding the reporting year, meet at least two of the following criteria:
- carrying value of assets — up to EUR 450 thousand included;
- net turnover — up to EUR 900 thousand included;
- average number of employees — up to 10 people included.
- carrying value of assets — up to EUR 5 million included;
- net turnover — up to EUR 10 million included;
- average number of employees — up to 50 people included.
- carrying value of assets — up to EUR 25 million included;
- net turnover — up to EUR 50 million included;
- average number of employees — up to 250 people included.
Large enterprises are those that do not meet the criteria for medium-sized enterprises and whose indicators as of the date of preparation of the annual financial statements for the year preceding the reporting year, meet at least two of the following criteria:
- carrying value of assets — over EUR 25 million;
- net turnover — over EUR 50 million;
- average number of employees — over 250.
Under the Draft Law, the following entities will be required to prepare sustainability reports:
- large enterprises;
- medium-sized enterprises, whose securities are listed on a regulated capital market;
- small enterprises, whose securities are listed on a regulated capital market;
- parent companies of a large group.
Such reporting should be included in the management report and the consolidated management report as a separate section.
It is provided to introduce reporting in stages, namely, the first reporting period for which companies submit sustainability reports in accordance with the sustainability reporting standards is:
- for large enterprises with an average number of employees in the year preceding the reporting year exceeding 500 persons — 2026;
- for parent companies of a large group with an average number of employees exceeding 500 persons in the year preceding the reporting year on a consolidated basis — 2026;
- for large enterprises and parent enterprises of a large group, other than those specified in paragraphs two and three of this clause — 2027;
- for small and medium-sized enterprises, whose securities are admitted to trading on a regulated capital market — 2028.
In addition, in April 2025, the National Bank of Ukraine published for discussion a draft White Paper on the management of environmental, social, and governance (ESG) risks in the financial sector (further — the White Paper).
The White Paper defines:
- the prerequisites for managing ESG risks in the financial sector of Ukraine, including the level of relevant risks, the state of regulation in this area and the mandate of the National Bank;
- the vector of regulatory development, in particular, future requirements for products and activities, building a corporate governance and risk management system, and information disclosure;
- a forward-looking vision of ESG risk management specifically in the financial sector of Ukraine, including the implementation of ESG risk management in the corporate governance and internal control system, proper assessment, implementation of optimal processes for collecting and processing customer information, disclosure, etc.
Thus, a comprehensive approach is being developed in Ukraine: the Strategy defines the general direction and operational plan for its implementation, while the Draft Law regulates the direct requirements for ESRS reporting.
At the EU level, corporate sustainability reporting is regulated by Directive (EU) 2022/2464 (CSRD), which entered into force on 05 January 2023.
The CSRD amended Regulation (EU) No 537/2014/EC, Directive 2004/109/EC, the Directive 2006/43/EC and the Directive 2013/34/EU to introduce new requirements for the disclosure of ESG information.
Implementation of CSRD requirements in the EU is taking place in stages:
| Phase | Commencement date (for financial years beginning after) | Companies subject to the regulation |
| 1 | 1 January 2024 | Companies covered by Directive 2014/95/EU (NFRD) |
| 2 | 1 January 2025 | All other large EU enterprises that meet at least two of the three criteria: total assets of more than EUR 20 million, net turnover of more than EUR 40 million, and an average number of employees of more than 250 |
| 3 | 1 January 2026 | Small and medium-sized enterprises (SMEs) registered in EU regulated markets, as well as non-complex credit institutions and captive insurance (reinsurance) companies |
| 4 | 1 January 2028 | Non-EU companies that have branches or subsidiaries in the EU and meet certain criteria for net turnover in the EU (over EUR 150 million) |
According to the CSRD, the companies are required to report not only on financial performance, but also on the environmental, social and governance aspects of their operations. The key concept is dual materiality: companies are required to provide information on both environmental and social impact and how sustainability factors affect the company itself and are part of its strategic plans.
To detail the content of such reports, the EU Commission approved the European Sustainability Reporting Standards (ESRS) in Delegated Regulation (EU) 2023/2772. In practice, the implementation of the CSRD means that from 2024-2026, more than 50,000 companies in the EU will have to start publishing mandatory sustainability reports.
Most EU member states have already aligned their laws with CSRD standards. For example, France, Italy, Ireland, Belgium, Denmark, Norway, Finland, Sweden, and the Netherlands require companies to report in accordance with CSRD.
It should be noted that the CSRD, the Strategy and the Draft Law provide for the mandatory engagement of an independent auditor to confirm the reporting data. Therefore, Ukrainian companies should follow a systematic, step-by-step approach in preparing for the new reporting format.
In particular, experts recommend:
- Assess readiness and strategy. The first step is to analyse the company’s existing sustainability programmes and compare them with the CSRD/ESRS requirements. This includes reviewing environmental, social responsibility and corporate governance documents. It is recommended to audit the compliance of existing information (e.g., GRI reports) with future standards.
- Develop internal policies. Based on the requirements of European directives and the national Strategy, policies for collecting and reporting ESG data should be developed or updated. This may include provisions on environmental management, social programmes, codes of ethics and risk management, as well as an internal methodology for determining material factors.
- Implement data collection systems. It is necessary to install tools and IT systems that will allow you to quickly collect and process the necessary information (such as greenhouse gas emissions, resource consumption, personnel performance, etc.) Experts recommend automating processes and using special software to manage ESG data.
- Train staff and stakeholders. Training should be provided to management, accountants and those responsible for ESG reporting on the new ESRS standards, dual materiality and audit requirements. It is important to involve all departments of the company, from financial to operational, in the process to ensure that the reporting data is formulated in a consistent manner.
- Integrate reporting with financial processes. Environmental/social indicators should be aligned with traditional financial indicators. This integrated approach is in line with the trend in European markets and will facilitate audits.
- Consider future updates and directions. A revision of the criteria for “small” enterprises and a possible simplification of some of the CSRD requirements (a package of “related” directives) have already been announced. Ukrainian companies should monitor these changes and adjust their reporting plans in time.
All of these measures should be implemented proactively, at least 1-2 years before the introduction of reporting. This means that each company should clearly plan its resource and information preparation. Implementation of harmonised methodological principles (or transition to international ones, such as GRI/IFRS-IFRS S1/S2) will also increase the company’s competitiveness and transparency in international markets.
Audit and consulting firms play a key role in preparing companies for sustainability reporting. For example, our experts can provide the following services:
- Diagnostics and gap analysis. Specialists assess the company’s current reporting system, compare it with the CSRD/ESRS requirements and identify gaps. This applies to both regulatory compliance and data collection processes. Based on the results, an action plan is drawn up to eliminate the inconsistencies.
- Consultations on building ESG processes. Auditors assist to develop procedures for collecting, monitoring and reporting data under ESRS standards. They can introduce impact assessment (materiality) practices, advise on which indicators to record in the first place, and train staff. This is often accompanied by the development of internal controls and policies (in particular, on sustainable finance, climate risks, corruption, etc.).
- Preparation of methodological documents and templates. Auditors can develop standard templates for sustainability report sections, integrated scorecards, and instructions for preparing information. This helps to unify reporting across the group of companies and facilitates its analysis.
- Consulting on integration with European standards. Auditors guide the company in choosing IFRS or other international standards to supplement its corporate reporting (e.g., IFRS S1, S2) and support to synchronise them with ESRS. Audit teams also often have information on best practices in neighbouring countries and can adapt them to the Ukrainian context.
- Audit and independent confirmation of information. With the introduction of sustainable reporting, the verification of data provided is becoming increasingly important. Auditors can perform an independent review of reports, audit indicators (e.g., Scope 1/2/3 emissions) and confirm their compliance with standards. This increases investors’ confidence in the reports and ensures that the actual data is consistent with the report.
- Training programmes and workshops. Qualified consultants provide training for accountants and management on the new reporting: EU requirements, ESRS characteristics, and examples of disclosures. This supports staff to adapt to the new forms and procedures.
- Support in communications and information disclosure. Strategic consulting for effective presentation of ESG information to stakeholders. This includes the development of key messages, transparency of practices and marketing aspects of sustainable development.
Thus, auditors provide both technical and advisory solutions: from creating an ESG internal control system, through the implementation of financial and control procedures and the development of reporting templates, to independent verification of published indicators. This comprehensive support ensures that the implementation of sustainability reporting is systematic and that public reports are reliable and meet the expectations of European standards.
In summary, Ukrainian companies are on the verge of reporting transformation: the implementation of CSRD and ESRS is creating a new level of transparency. Compliance with the new requirements opens up the possibility of attracting European investment by demonstrating compliance with global sustainability practices. At the same time, it increases public confidence.
Timely preparation and professional support (including audit support) can ensure the smooth integration of Ukrainian companies into the European sustainable reporting space.
BDO in Ukraine is your reliable partner on the path to sustainable development. We assist to ensure transparency and compliance with ESG standards through professional support in the audit of sustainability reporting — from initial strategic analysis to independent verification.
When you are ready to start your journey towards a more sustainable and successful business, feel free to contact us. We will have a pleasure to answer your questions, provide detailed information and arrange a meeting with our experts.
