Clarity needed to support compliance with CSRD in Irish law

Daniel O’Donovan considers the urgent need to resolve interpretative questions that have emerged following the transposition of the Corporate Sustainability Reporting Directive into Irish law

The European Union (Corporate Sustainability Reporting) Regulations 2024 (the Regulations), also known as S.I. No. 336 of 2024, transposes the Corporate Sustainability Reporting Directive (CSRD) into Irish law. 

This legislation marks a significant step in aligning Ireland’s corporate reporting framework with the EU’s broader sustainability goals, as outlined in the European Green Deal and the EU Action Plan for Financing Sustainable Growth.

The Regulations were signed into law during the summer and came into effect on 6 July 2024. Their principal objective is to integrate the new corporate sustainability reporting obligations with Ireland’s existing financial reporting framework. 

It is estimated that about 1,000 Irish companies will fall into the scope of these Regulations. The Regulations will be phased in over the next few years and will generally apply to public interest entities and companies qualifying as large under section 280H of Companies Act 2014. 

Companies regulated by the Central Bank of Ireland qualify as large under this section, for example.

It is welcome to see the implementing legislation. Ireland is among the first countries in the European Union to have implemented the CSRD, thus giving businesses in Ireland as much time as possible in the circumstances to assess its impact.  

The impacted entities have been assessing the obligations in the legislation since it came into effect. 

As with any implementation of such a complex European directive, some interpretative questions in relation to the implementing legislation have emerged. What follows are some of the key interpretative questions that have emerged to date.

The definition of “Applicable Company”

Several questions arise from the definition of “applicable company” in Section 1586 of the Regulations. 

The definition refers to a provision contained in Part 6 of Companies Act 2014 to define its boundaries and, in particular, draws on the definition of a large company in section 280H of the Companies Act 2014. 

This appears to have unintended consequences because an ineligible entity is a large company. 

For example, certain small and medium entities and micro-entities that fall within the definition of an ineligible entity may be included in year two of reporting pursuant to section 1587(1)(b), reporting on 2025 sustainability information, rather than being in year three of reporting pursuant to section 1587(1)(c), reporting on 2026 sustainability information. 

Exemptions for certain subsidiaries

Section 1594 of the Regulations provides an exemption for certain subsidiaries. However, the exemption appears to be more restrictive than the equivalent in the CSRD, because it appears to be limited to Irish subsidiaries of Irish holding companies and excludes Irish subsidiaries of EU holding companies. See first table below. 



In addition, it appears that all subsidiaries that are themselves large public-interest entities (listed and non-listed entities) are precluded from taking the exemption – whereas the CSRD only excludes large subsidiaries listed on an EU-regulated market.

Exemptions for certain holding companies that are subsidiaries

Section 1598 of the Regulations provides an exemption for holding companies that are themselves subsidiaries, where:

• a higher parent undertaking prepares a directors’ report under Part 6; or 
• a non-EU higher parent provides a group report either in accordance with the sustainability standards or in a manner recognised as equivalent to them. 

However, as “third country” in the Regulations is defined to exclude Member States, it appears that there is no exemption for holding companies that are subsidiaries of an EU parent. See second table below. 



Further, this exemption appears to be restricted further than the CSRD, because all large public-interest entities are prohibited from availing of the exemption, whereas the CSRD only excludes large public-interest entities that are listed on an EU-regulated market.

Transitional provisions for consolidated reporting

The Regulations permits, in section 1607, a subsidiarity of a third country undertaking to report on a consolidated basis on behalf of a group until 2030 (artificial consolidation). 
However, it appears that this provision only applies to financial years commencing on or after 1 January 2028 by virtue of its placement in Chapter 3 of the Regulations. 
As such, companies that wish to avail of this provision may be unable to do so during a significant portion of the transitional period.

Supporting sustainability ambitions

The EU and Ireland’s shared ambition to lead in sustainability reporting, transitioning to a sustainable economy and economic model, it comes with an ambitious timeline. 

For example, the period between the effective date of the Regulations and the end of the first period on which year one companies will report on sustainability, in accordance with the European Sustainability Reporting Standards, is just six months. 

We believe that a stable and clear legal framework is essential for businesses to thrive in Ireland. 

Ensuring that outstanding CSRD transposition matters are resolved promptly will help maintain Ireland’s strong reputation as an excellent place to do business. 

It is in the public interest to provide companies with the clarity they need to comply with new laws effectively.

We welcome The European Union (Corporate Sustainability Reporting)(No.2) Regulations 2024 (S.I. No. 498 of 2024) signed into law on 1 October. S.I. 498 of 2024 resolves some of the interpretative questions set out above, aligning:

• The exemption for subsidiaries that are themselves large public-interest entities with the CSRD, which only excludes large subsidiaries listed on an EU-regulated market from the exemption;
• The exemption for holding companies that are subsidiaries, with the CSRD, which only excludes large public-interest entities listed on an EU-regulated market from the exemption; and
• The commencement of the transitional provision regarding artificial consolidation with the CSRD, now available immediately.

Significant questions remain to be resolved, however. 

Accountants are committed to meeting the new sustainability reporting requirements, but we recognise that implementing the CSRD into Irish law is complex and that the necessary resources and expertise to prepare detailed and complex reports, and to obtain assurance on those reports, are still developing in the Irish market.

By working together, we can ensure businesses have the support they need to meet these sustainability ambitions, aligning with the CSRD’s goals for 2024 and beyond.

Time is running short. As the clock strikes the 11th hour, companies need to have clarity on the interpretative questions discussed in this article as a matter of urgency.

Continued imminent engagement between the legislators and the legislates is critical to resolving these matters and ensuring our sustainability reporting ambitions are successfully achieved.