Spain: The Draft of the Corporate Sustainability Reporting Law arrives to the Parliament

The Draft of the Corporate Sustainability Reporting Law, amending the Commercial Code, Capital Companies Law and Audit Law and the size criteria for undertakings or groups for corporate information purposes, was published in the Official Parliamentary Gazette on November 15, 2024. In its meeting on Tuesday, November 5, 2024, the Council of Ministers authorized its urgent processing, which, among other aspects, halves the deadlines of the processing periods.

The approval of the Draft of the Corporate Sustainability Reporting Law is a fundamental step forward for the transposition of Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 as regards corporate sustainability reporting and Commission Delegated Directive (EU) 2023/2775, of 17 October 2023 as regards size criteria for undertakings.

The Draft of the Corporate Sustainability Reporting Law includes the transposition of the corporate sustainability reporting obligations and their verification, which were already contained in the preliminary draft of the law, and which we spoke about here, with the following main developments:

• The size thresholds of parent companies in a large group and large undertakings increases by 25%. The changes refer to the total assets (which increase from €20 million to €25 million) and to the net turnover (which increases from €40 million to €50 million), with employee thresholds remaining unchanged (in accordance with Commission Delegated Directive (EU) 2023/2775 of October 17, 2023).
• In the case of listed companies, the sustainability information must also include information on the number of members of the under-represented sex on the company’s board and also information on measures that have been taken to achieve the objectives, or in the case of infringements, the reasons, and an extensive description of the measures adopted or planned in order to comply with requirements.
• The designation of sustainability information verifiers at public-interest entities is subject to the provisions of Article 16(2), (3), (4), (5), and (6) of Regulation (EU) no. 37/2014, of April 16, 2014.
• Sustainability information should include the evaluation of the risks associated with climate change, envisaged in article 32 of Law 7/2021 of May 20, 2021 on climate change and energy transition, which refers to the double materiality principle.
• Two new transitional provisions are included:
  • Transitional provision six, pursuant to which companies that have already appointed an auditor and which are obliged to appoint a verifier, are allowed to do so for a period of less than the three years established in the draft, provided that the person appointed is the same as the auditor and is designated for the remaining period for which the auditor has been appointed.
  • Transitional provision seven, pursuant to which, in the year that the law comes into force, it is the managing body rather than the shareholders’ meeting that appoints the verifier (with the obligation to ratify the person in question at the next shareholders’ meeting), with article 16(2), (3), (4), (5), and (6), of Regulation (EU) no. 537/2014, of April 16, 2014 regarding the appointment procedure not being applicable and including the possibility of appointing the auditor for less than three years.

Once the Draft of the Corporate Sustainability Reporting Law has been approved and published, members of parliament and the parliamentary groups may make amendments to the text.