ESG Reporting 2026: New Obligations for Czech Companies

The CSRD (Corporate Sustainability Reporting Directive) introduces mandatory sustainability reporting. The original timeline, however, changed fundamentally in 2025 – the "stop-the-clock" directive of April 14, 2025 postponed the obligations for the second and third wave of companies by two years.

- First wave – large public-interest entities with more than 500 employees (already reporting under NFRD) report from the 2024 accounting period - Second wave – other large companies meeting 2 of 3 criteria (turnover over EUR 50 million, balance sheet over EUR 25 million, more than 250 employees) have their obligation postponed to the 2027 accounting period, with first reports due in 2028 - Third wave – listed small and medium enterprises report from the 2028 accounting period at the earliest

In February 2025, the European Commission proposed in the Omnibus package to further narrow the scope of obligated companies – only businesses with more than 1,000 employees and turnover over EUR 50 million or balance sheet over EUR 25 million would report. The proposal is still in the legislative process and the final form may change. For most Czech companies this means more time to prepare, not the end of the ESG agenda – business partners and banks increasingly request sustainability data.

1. Environmental (E) - Greenhouse gas emissions (Scope 1, 2, 3) - Energy and water consumption - Biodiversity and ecosystems - Circular economy 2. Social (S) - Working conditions and remuneration - Equal opportunities and diversity - Health and safety at work - Supply chain 3. Governance (G) - Ethical management and compliance - Anti-corruption policies - Whistleblower protection - Cybersecurity

- Gender pay gap tracking – mandatory reporting of pay differences between men and women - Emission accounting – new accounting categories for carbon footprint - Employee training – recording ESG-related educational activities - Supplier due diligence – verifying ESG standards with partners

1. Conduct a gap analysis of current state vs. ESRS requirements 2. Designate a responsible person or team for ESG 3. Implement a data collection system 4. Engage an external auditor for report verification 5. Start communicating ESG strategy to stakeholders

Failure to submit an ESG report can lead to fines under the Accounting Act and there are also reputational risks when dealing with partners who require ESG compliance.