The main objective of the analysis is to estimate the costs of reporting environmental, social, governance (ESG) issues under the Corporate Sustainability Reporting Directive (CSRD), that Polish companies will incur, with a focus on small and medium-sized enterprises. The analysis includes a scenario based on the adopted CSRD regulation, as well as an alternative scenario that assumes the extension of the CSRD to all small and medium-sized enterprises, excluding sole proprietors with up to 9 employees.
The added value of this analysis is to fill the gap in the available studies on the cost of ESG reporting in Poland, as well as to present further implications of the adopted CSRD, which fits into the concept of so-called stakeholder capitalism. The study also includes a critical assessment of the impact analysis methodology commissioned by the European Financial Reporting Advisory Group (EFRAG), as the approach used results in seriously questionable results depicting the impact of CSRD regulations on SMEs in value chains. The study also includes recommendations that are based on the obtained cost estimates for SMEs and available publications.
The public debate in Poland on ESG reporting ignores the issue of the amount of the cost of these regulations, focusing instead on rather general theses about the great challenge as well as the opportunities for companies associated with these disclosures. In particular, the public discourse lacks arguments based on economic analysis and data, and lacks the perspective and opinions of companies that will bear the costs of this regulation, especially SMEs. In this regard, the analysis can provide relevant information to policy makers, public administration bodies, employer organizations, industry organizations and any entity aiming to improve the regulatory environment in which Polish companies, especially SMEs, operate. The indicated entities should take an interest in the issue of costs and benefits of ESG reporting, as EFRAG is still working on the European Sustainability Reporting Standards (ESRS) and there are many opinions about the need to extend CSRD regulation to all SMEs.
The analysis is based on unit cost estimates performed on behalf of EFRAG, in the form of internal and external, one-time and annual costs. For the number of companies, available public data sources were used, while estimates of indirect costs, for contractors of companies covered by the CSRD are based on the aforementioned analysis commissioned by EFRAG and the analysis commissioned by the European Commission. Other data sources were also used as an auxiliary.