CSRD in the Czech Republic

In the Czech Republic, the basic requirements of the CSRD have been implemented through amendments to Act No. 563/1991 Coll., on Accounting, and Act No. 93/2009 Coll., on Auditors. However, additional amendments to the Accounting Act are pending to address requirements for companies outside the initial phase. A draft of these amendments, discussed in detail in our article earlier, is currently awaiting debate in the Chamber of Deputies. The European Sustainability Reporting Standards (ESRS) play a crucial role in guiding companies and auditors on the content of sustainability reports. These standards, which do not require transposition into national law, are directly applicable as published at the European level.

Similarly, transposition is not needed for reporting requirements under Regulation 2020/852 on the EU Taxonomy, as disclosure under this Regulation forms a mandatory part of the sustainability report under the CSRD.

Principal legislative changes

For companies that previously prepared sustainability reports voluntarily, using frameworks such as the Global Reporting Initiative (GRI), the CSRD introduces mandatory requirements that are often more comprehensive. Notable changes include the concept of double materiality, which considers both the company’s impact on the environment and society and the financial implications of environmental and social factors on the company itself. Mandatory disclosures are now standardised and cover a broad range of indicators, policies and measures that must be reported consistently. Additional requirements include electronic tagging of reports and mandatory audits, aiming to enhance the credibility of published data.

Ensuring compliance with these legislative requirements demands thorough preparation. Companies must identify material topics early, establish robust data collection systems and allocate sufficient resources and staff to manage the reporting process effectively.

Specifics of sustainability report audits under the CSRD

Sustainability reports prepared under the CSRD will undergo limited assurance audits in accordance with ISAE 3000, transitioning to ISSA 5000 later. Auditors verifying these reports must meet specific qualification requirements, including obtaining an ESG audit license. The requirement for independent assurance of sustainability reporting aims to ensure the credibility and accuracy of reported information. However, it also imposes stricter documentation requirements on companies, including maintaining a robust audit trail.

The Second Phase of CSRD

The second phase of CSRD implementation will extend to all large entities and groups, as well as small and medium-sized enterprises (SMEs) with securities traded on regulated markets. These companies will begin reporting according to set deadlines between 2025 and 2027.
The expansion will impact thousands of businesses across diverse industries, ensuring that not only large corporations but also smaller companies contribute to sustainability goals. These measures aim to strengthen environmental and social standards throughout the economy.

Upcoming Omnibus legislation

The European Commission’s Omnibus legislative package, expected to be released in February 2025, may simplify some reporting requirements or delay their mandatory application. The Omnibus has the potential to ease the administrative and financial burden on businesses by extending transitional periods, simplifying documentation requirements, and providing technical support for smaller companies.

Challenges and opportunities for companies

The sustainability landscape is set to undergo significant transformation in the coming years, affecting businesses of all sizes. As legislative requirements expand to include more companies, including some SMEs, the Omnibus package could play a crucial role in supporting businesses during this transition.

Nevertheless, companies must prepare for an intense adjustment period requiring strategic planning and investment to ensure compliance with new legislative requirements. This transformation presents not only challenges but also opportunities to enhance reputation, transparency and long-term sustainability in a dynamically changing economic environment.