Green Transition Office presents analysis of ESRS-40a and a review of the first CSRD reports
On 24 September the Green Transition Office held a practical webinar, "Sustainability Reporting: Practice and New Requirements in the EU and Ukraine", and presented its study "Analysis of European Sustainability Reporting Standards for Non-EU Companies (ESRS-40a)", which is available on the Office's website.
Andrii Kitura, Head of the Green Transition Office and Development Director at DiXi Group, reminded participants that the government has approved draft laws amending the laws on accounting and financial reporting and on audit activity, that these sit with the relevant committee of the Verkhovna Rada and implement CSRD and ESRS together with the assurance of reporting under European standards, and that a draft law on the taxonomy of sustainable activities and a number of secondary acts are being prepared alongside them.
"It is hard to predict when the Verkhovna Rada will adopt these documents, but there are no objections in the professional community, because this is an inevitable process of bringing Ukrainian legislation closer to European law," the Head of the Office said.
The financial sector forms a separate track, where the National Securities and Stock Market Commission is preparing a package of regulation on green, sustainable and social bonds, the National Bank is developing requirements for corporate governance and risk management in banks, and since 1 September 2026 all loans under the 5-7-9 programme must include an assessment of environmental and social factors, apart from certain frontline regions and projects in the field of energy security.
"Banks' requirements at the point of considering financing have become more demanding, and the next challenge is to make them uniform and to find a sensible balance between the level of detail required and the capacity of a business of a given size to meet it, so that this does not turn into a box-ticking exercise and does not hold up lending," Andrii Kitura explained.
He also noted that the European Union remains a moving target for Ukraine, because while we implement a package adopted there several years ago, the EU takes its next steps, one of which is a separate standard for companies based outside the Union.
That standard, ESRS-40a, is being developed by EFRAG pursuant to Article 40a of the CSRD for large international groups with a significant presence on the European market, and its analysis was presented by Oleksiy Yatsiuk, ESG Expert at the Green Transition Office. The architecture matches the full ESRS, with the same twelve standards covering all topics and the value chain, but the approach to materiality has changed, since only impact materiality is retained and financial risks and opportunities are left out, and to that is added the Mixed Approach, under which climate change disclosure stays global while other topics may be covered to the extent connected with the company's activities and its market in the EU.
In the study the Office worked through specific scenarios showing when these rules reach Ukrainian companies, and exports to the EU alone are not enough for that, even at significant volumes, because where the goods are bought by a European company the obligation to report stays with that company, while the requirements arise where a Ukrainian group has a subsidiary or a branch in the EU through which the turnover runs. According to the ESG Expert, another mechanism will operate far more widely, since global companies preparing reports under ESRS-40a will collect data across their supply chains, so Ukrainian suppliers will receive such requests whether or not they carry any reporting obligation of their own.
He drew separate attention to the gap in timing, given that the main ESRS and the voluntary standards are already final, whereas ESRS-40a is still at the consultation stage and will be agreed only in 2027, even though reporting under it will be required for financial year 2028.
"To report properly for 2028, that work has to be under way in 2027, because collecting the data and building the procedures takes more than a month or two. And if the final standard is not there yet at that point, it is unclear how to begin," Oleksiy Yatsiuk said.
The second part of the webinar looked at how the reports themselves have changed over the past year, and according to the figures cited by the expert around 1,100 reports under CSRD have appeared, their volume has grown by roughly thirty percent, yet inside them there is less repetitive text and more tables and visualisation, while the room for window dressing keeps shrinking, because such documents undergo external assurance. Almost every company covers three topics, climate change, its own workforce and business conduct, although the depth of disclosure varies considerably, and the composition of those doing the work has changed as well, with finance and operations now in charge and marketing and communications no longer on the list of functions involved.
"For large corporations this has already gone through a stage of professionalisation, meaning the report has stopped being a communications product and has become a tool for professional dialogue with investors, banks and partners," the Office's ESG Expert explained.
As an example of a different approach to form, the expert examined Patagonia's report, built around the candid statement that not everything the company does is sustainable, which sets out the double materiality assessment methodology, presents the company's own emissions as a single large figure and describes how the company is helping one of its contract factories move away from coal. The conclusion drawn from that example is that a compelling story works only when it is backed by numbers, and without them investors will not believe it.
For those building this work in their company from scratch, the Green Transition Office together with the Kyiv School of Economics Business School is running the second cohort of the programme "ESG Leadership and Sustainable Impact: Strategy, Governance, Transformation", details of which are available on the business school's website, and questions about upcoming events can be sent to [email protected].
Webinar recording: https://youtu.be/XY4gs3gPL0s
The Green Transition Office is an independent advisory body under the Ministry of Economy, Environment and Agriculture of Ukraine that helps to implement reforms in the field of green transition, energy and climate policy of Ukraine. The Green Transition Office operates with the financial support of the UK Agency for International Development and is implemented by DiXi Group.
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