ESRS Should Become Simpler for Ukrainian Companies: Green Transition Office
Experts from the Green Transition Office of Ukraine have presented comprehensive proposals for improving the European Sustainability Reporting Standards (ESRS) as part of a public consultation organized by the European Financial Reporting Advisory Group (EFRAG). The recommendations aim to adapt the standards to the realities of transition economies and make them more accessible for Ukrainian companies.
The proposals collected by EFRAG will be used to develop technical recommendations for the European Commission on the revision and simplification of ESRS by October 31, 2025. This provides a unique opportunity to adapt European standards to the needs of diverse economies, including the Ukrainian market, which is on the path to European integration.
Research by the Green Transition Office in 2024 revealed that despite more than 70% of Ukrainian companies positioning themselves as "sustainable," only 15% understand this concept in practice, and less than 10% are familiar with ESRS. This highlights the urgent need for simplification and adaptation of the standards.
"ESRS standards offer a structured path to sustainable development and European integration, but their current complexity creates significant barriers to implementation, especially for SMEs and companies in transition economies. Without proper adaptation, ESRS risks turning from a transformation tool into a formal compliance burden," noted Oleksii Yatsiuk, leading ESG expert at the Green Transition Office.
Among the key recommendations is simplifying the double materiality assessment process by introducing industry thresholds and practical examples, especially relevant for transition economies. The Green Transition Office experts also proposed a phased approach to materiality assessment, allowing companies to gradually build their reporting capacity.
Regarding the reporting structure, the Office recommended reducing the number of mandatory narrative data points, especially those with limited informational value or that duplicate information across different sections. It was proposed to combine similar disclosure requirements under thematic clusters, for example, combining governance structure and risk oversight.
Special attention was paid to the problems of calculating greenhouse gas emissions. For many Ukrainian companies, calculating indirect emissions (Scope 3) presents an insurmountable technical obstacle due to lack of access to data and methodological tools. A phased implementation of these indicators was proposed based on the "comply or explain" principle, starting with basic direct emissions (Scope 1 and 2).
"Interchangeability between ESRS and international standards is critical for Ukrainian companies that simultaneously work with EU requirements and global markets. The lack of coherence between these systems creates a double burden, particularly noticeable in conditions of limited resources and post-conflict recovery," emphasized Oleksii Yatsiuk.
The Office also recommended greater flexibility in the format and structure of sustainability reports, considering that many Ukrainian companies are only developing internal ESG systems. It was recommended to provide clearer instructions on how sustainability reporting interacts with financial reporting and to promote the implementation of digital reporting formats that are more accessible to non-financial stakeholders.
The Green Transition Office will continue to monitor the ESRS review process and provide support to Ukrainian companies in preparing for the implementation of European reporting standards.
Published on