Following the example of the European Union, sustainability reporting may also become mandatory for Ukrainian businesses. A draft bill introducing the relevant amendments to the legislation on financial reporting has already been approved by the government.
This was reported by the Cabinet of Ministers of Ukraine.
This refers to the European integration draft law No. 15538 “On Amendments to the Law of Ukraine ‘On Accounting and Financial Reporting in Ukraine’ regarding the introduction of sustainability reporting”. It has already been registered on the website of the Verkhovna Rada of Ukraine. Since 24 August, it has had the status of “forwarded for review”. The parliamentary committee on finance, tax and customs policy remains the lead committee for the bill.
Transparency of influence
The key change is the introduction of mandatory sustainability reporting. This covers not only environmental impact, but also respect for workers’ rights and human rights, as well as anti-corruption measures.
This applies only to large enterprises with a workforce of more than 1,000 employees and an annual net turnover of more than €450 million.
The government is giving businesses time to prepare. Under the new rules, reports will have to be submitted for financial years starting from 2028.
"For the state, this is a step towards fulfilling its obligations under the Association Agreement with the EU. For businesses, it means aligning with the same rules as European companies: more transparent reporting boosts investor confidence and makes it easier to raise funds on international markets," the Cabinet of Ministers emphasised.
Technical details
When preparing a sustainability report, Ukrainian businesses should follow the single European standard, the ESRS. New information should be included in a separate section of the management report.
To avoid red tape, the government is proposing that reports be submitted electronically in accordance with the taxonomy. This should make it easier for government bodies and investors to analyse the documents.
Other changes
In addition to the reforms relating to sustainable development, Bill No. 15538 provides for the transition of state-owned enterprises to international financial reporting standards.
In addition, the document introduced updated criteria for classifying enterprises into categories, bringing them more into line with current European Union standards:
- micro-enterprises: book value of assets — up to €450,000; net turnover — up to €900,000;
- small enterprises: book value of assets — up to €5 million; net turnover — up to €10 million;
- medium-sized enterprises: book value of assets — up to €25 million; net turnover — up to €50 million;
- Large enterprises: book value of assets — over €25 million; net turnover — over €50 million.
As a reminder, work is still ongoing in Ukraine to establish the National Emissions Trading System (NETS). An analysis of all available versions of the draft legislation on the emissions trading market can be found in this article by EcoPolitika.
