The Saeima1 has adopted and
the President has proclaimed the following law:
Law on Sustainability
Disclosures
Chapter I
General Provisions
Section 1. Terms Used in this
Law
(1) The following terms are used in this Law:
1) sustainability matters - environmental rights,
social rights and human rights, and governance factors, including
sustainability factors within the meaning of Article 2(24) of
Regulation (EU) 2019/2088 of the European Parliament and of the
Council of 27 November 2019 on sustainability‐related disclosures
in the financial services sector (hereinafter - Regulation (EU)
No 2019/2088);
2) small and non-complex institutions - institutions
within the meaning of Article 4(1)(145) of Regulation (EU) No
575/2013 of the European Parliament and of the Council of 26 June
2013 on prudential requirements for credit institutions and
investment firms and amending Regulation (EU) No 648/2012
(hereinafter - Regulation (EU) No 575/2013);
3) third country - any country, except for a European
Union Member State, a country of the European Economic Area, and
the Swiss Confederation.
(2) The term "public-interest entity" corresponds to the term
used in the Law on Audit Services, the terms "undertaking" and
"group of companies" correspond to the terms used in the Law on
Annual Statements and Consolidated Annual Statements, the term
"credit institution" corresponds to the term used in the Credit
Institution Law, the terms "insurance and reinsurance
undertakings" and "captive insurance and captive reinsurance
undertakings" correspond to the terms used in the Insurance and
Reinsurance Law, the concept "transferable securities are
admitted to trading on a regulated market" correspond to the
concept used in the Financial Instrument Market Law.
(3) In this Law, a sustainability report means information
related to sustainability matters in accordance with Sections 4,
7, and 12 of this Law.
Section 2. Purpose of this Law
The purpose of the Law is to provide publicly available and
comparable information to understand the impact of the activities
of the subject of the Law on sustainability matters, and
information on how sustainability matters affect the development,
performance results, and position of the subject.
Section 3. Subjects of the Law
(1) The Law applies to the following undertakings registered
in the Republic of Latvia:
1) commercial companies that are large undertakings and parent
undertakings of a large group of companies;
2) medium-sized and small undertakings, except for
micro-undertakings, if the transferable securities of these
undertakings are admitted to trading on a regulated market;
3) large subsidiaries or small and medium-sized subsidiaries
if the transferable securities of these undertakings are admitted
to trading on a regulated market and the main parent undertaking
of the abovementioned undertakings is governed by the legal acts
of a third country (hereinafter - the subsidiaries of a
third-country undertaking);
4) branches that are branches of an undertaking governed by
the legal acts of a third country if the net turnover of these
branches in the previous reporting year on the balance sheet date
exceeds EUR 40 000 000 and if the net turnover of this third
country undertaking at a group level in the European Union for
two consecutive reporting years on the balance sheet date exceeds
EUR 150 000 000 (hereinafter - the branch of a third-country
undertaking).
(2) This Law shall not apply to credit unions, collective
investment funds in transferable securities, as well as
alternative investment funds.
(3) When applying this Law for the determination of its
subjects, i.e. large undertakings, medium-sized undertakings and
small undertakings, and also a large group of companies, the
threshold values of the criteria set out in the Law on Annual
Statements and Consolidated Annual Statements shall be used.
(4) The net turnover referred to in Paragraph one, Clause 4 of
this Section and in Section 13, Paragraph one of this Law shall
be revenues as defined in the system for drawing up financial
statements or its meaning on the basis of which the financial
statements of a third-country undertaking are prepared.
Chapter II
Contents of the Sustainability Report and Consolidated
Sustainability Report, Exemptions from the Provision of These
Reports
Section 4. Sustainability Report
(1) The subject of the Law referred to in Section 3, Paragraph
one, Clauses 1, 2, and 3 of this Law has the obligation to
include in the management report sustainability information which
provides an understanding of the impact of the activities of the
subject of the Law on sustainability matters and information on
how sustainability matters affect the development, performance
results, and position of the subject of the Law. The
abovementioned sustainability information shall be clearly
identifiable and included in a separate section in the management
report.
(2) The information referred to in Paragraph one of this
Section is as follows:
1) a brief description of the business model and strategy of
the subject of the Law, including:
a) the resilience of the business model and strategy against
risks related to sustainability matters;
b) the opportunities related to sustainability matters;
c) plans, including implementation actions and related
financial and investment plans aimed at ensuring that the
business model and strategy of the subject of the Law are
directed towards the transition to sustainable economy and
limiting of global warming to 1.5°C in accordance with the Paris
Agreement adopted on 12 December 2015 within the scope of the
United Nations Framework Convention on Climate Change and the
objective to achieve climate neutrality by 2050 as laid down in
Regulation (EU) 2021/1119 of the European Parliament and of the
Council of 30 June 2021 establishing the framework for achieving
climate neutrality and amending Regulations (EC) No 401/2009 and
(EU) 2018/1999 ("European Climate Law") (hereinafter - Regulation
(EU) No 2021/1119) and, where applicable, the extent to which the
subject of the Law is affected by activities with coal, oil, and
gas;
d) the information on how the business model and strategy of
the subject of the Law take into account the interests of the
stakeholders of the subject of the Law (persons who can affect
the subject of the Law or who can be affected by the subject of
the Law) and the impact of the subject of the Law on
sustainability matters;
e) the information on the implementation of the strategy of
the subject of the Law with regard to sustainability matters;
2) the description of the sustainability objectives,
indicators, and planned deadlines set by the subject of the Law
and, if applicable, the absolute greenhouse gas emission
reduction objectives and indicators for at least 2030 and 2050,
the description of the measures implemented by the subject of the
Law, and a statement on the linking of the objectives and
indicators of environmental factors to scientifically based
data;
3) the description of the functions of the executive board,
supervisory board, and another similar administrative body of the
subject of the Law in addressing sustainability matters and the
conformity of their expertise and skills with the performance of
the functions or the resources available for acquiring such
expertise or skills;
4) the description of the policy of the subject of the Law in
relation to sustainability matters;
5) the information on incentives available to the executive
board, supervisory board, and another similar administrative body
in respect of addressing sustainability matters;
6) the description of:
a) the due diligence process implemented by the subject of the
Law with regard to sustainability matters, if applicable, in
accordance with the requirements of due diligence process laid
down in the legal acts of the European Union;
b) the main actual or potential adverse impacts related to the
activities and value chain of the subject of the Law and also its
products and services, including business relationships and
supply chain, the actions taken to identify and monitor the
abovementioned impact, and other adverse impacts that the subject
of the Law has the obligation to identify in accordance with
other requirements of the due diligence process laid down in the
legal acts of the European Union;
c) any action taken by the subject of the Law to prevent,
mitigate, remedy, or terminate the actual or potential adverse
impact and the results of such activities;
7) a description of the most significant risks related to
sustainability matters of the subject of the Law, including a
characterisation of the most significant impact factors and
information on the relevant risk management process implemented
by the subject of the Law;
8) the indicators relating to the disclosure of the
information referred to in Clauses 1, 2, 3, 4, 5, 6, and 7 of
this Paragraph.
(3) The subject of the Law shall include information on the
sources and methods of obtaining sustainability information in
the sustainability report. The sustainability report should
provide information in the short-term, medium-term, and long-term
perspectives, if applicable.
(4) The information provided in accordance with Paragraphs one
and two of this Section shall, where necessary, include
information on the activities of the subject of the Law itself,
on its value chain and also its products and services, business
relationships, and supply chains.
(5) If all the information necessary in accordance with
Paragraph four of this Section on the value chain of the subject
of the Law is not available, in the first three reporting years
(after the obligation to prepare a sustainability report imposed
on the relevant subject of the Law by this Law), the subject of
the Law shall describe the efforts (measures) taken to obtain
information on its value chain, the reasons why it was not
possible to obtain all the necessary information, and its plans
for obtaining the necessary information in the future.
(6) Where appropriate, if necessary, the information referred
to in Paragraphs one and two of this Section shall be indicated
in relation to the amounts indicated in the financial statement
and shall include additional explanations in relation to other
information included in the management report as regards
sustainability matters.
(7) As an exception, the subject of the Law need not provide
information on the events which are expected to take place within
the nearest year or matters under negotiations if both of the
following conditions are met:
1) the executive board of the subject of the Law or the
members of a partnership who have the right of representation
provide, in a written report to the meeting of shareholders
(stockholders) of the subject of the Law, an explanation of the
circumstances due to which the disclosure of the abovementioned
information would seriously harm the commercial activities of the
subject;
2) failure to provide the abovementioned information does not
constitute an obstacle for getting a clear and true understanding
of the development, performance results, financial position of
the subject of the Law and the impact of its commercial
activity.
(8) The subject of the Law shall provide the information
referred to in Paragraphs one, two, three, four, five, six, and
seven of this Section in accordance with the sustainability
reporting standards referred to in Section 10 of this Law and
approved by the implementing acts of the European Commission.
(9) The executive board of the subject of the Law shall, when
preparing the information referred to in Paragraph two of this
Section, including Clause 6 thereof, inform the representatives
of its employees in a timely manner and to an appropriate extent
or, if there are none, its employees and shall discuss the
relevant information and the means of obtaining and verifying
sustainability information with them. The opinion of employees
shall, to the extent applicable, be communicated to the
appropriate executive board, supervisory board, and other similar
administrative bodies.
(10) The subject of the Law which is a small and medium-sized
undertaking, if the transferable securities of this undertaking
are admitted to trading on a regulated market, a small and
non-complex institution, a captive insurance undertaking, or a
captive reinsurance undertaking may, regardless of the
applicability of Sections 5 and 6 of this Law and the
requirements of Paragraphs two, three, four, five, six, seven,
and eight of this Section, limit the provision of its
sustainability information by indicating only the following
information:
1) a brief description of the business model and strategy of
the subject of the Law;
2) the description of the policy of the subject of the Law in
relation to sustainability matters;
3) the main actual or potential adverse impact of the subject
of the Law on sustainability matters and any action taken by the
subject of the Law to prevent, mitigate, remedy, or terminate the
actual or potential adverse impact;
4) a description of the most significant risks of the subject
of the Law related to sustainability matters and information on
the relevant risk management process implemented by the subject
of the Law;
5) the main indicators necessary for the disclosure of the
information referred to in Paragraph ten, Clauses 1, 2, 3, and 4
of this Section.
(11) The subject of the Law to which the conditions of
Paragraph ten of this Section apply shall prepare a
sustainability report in accordance with the sustainability
reporting standards for small and medium-sized undertakings
referred to in Section 11 of this Law.
(12) If the subject of the Law has fulfilled the requirements
laid down in Paragraphs one, two, three, four, five, six, seven,
eight, nine, and ten of this Section, it shall be deemed that it
has fulfilled the obligation set out in the laws and regulations
governing the preparation of the annual statement and
consolidated annual statement for the provision of certain
non-financial indicators.
Section 5. Exemption for the Subject
of the Law who is a Subsidiary from the Obligation to Prepare a
Sustainability Report
(1) The subject of the Law who is a subsidiary shall be exempt
from the obligation to prepare a sustainability report in
accordance with the procedures laid down in Section 4 of this Law
if information on the sustainability matters of this subject and
its subsidiary is included in the consolidated sustainability
report of another parent undertaking registered in the Republic
of Latvia or a Member State of the European Union which has been
prepared in accordance with the requirements of Section 7 of this
Law, provided that the following information is included in the
management report of this subject:
1) the name and legal address of the parent undertaking which
provides information at the level of the group of companies in
accordance with Section 4, Paragraph eight of this Law;
2) a website link to the consolidated management report of the
parent undertaking and to the assurance report prepared in
accordance with the procedures laid down in Section 16 of this
Law;
3) information on the applicability of the exemption laid down
in this Section to the subject of the Law.
(2) The subsidiary shall ensure that the consolidated
management report of the parent undertaking is published on its
website in Latvian.
(3) For the enforcement of Paragraph one of this Section,
credit institutions which are permanently affiliated with the
central authority which supervises them in accordance with the
conditions provided for in Article 10 of Regulation (EU) No
575/2013 (if applicable) shall be considered subsidiaries of the
abovementioned central authority.
(4) For the enforcement of Paragraph one of this Section,
insurance undertakings which are centrally coordinated by another
company in accordance with Section 1, Paragraph one, Clause 41,
Sub-clause "b" of the Insurance and Reinsurance Law shall be
considered subsidiaries of the parent undertaking of the group of
companies.
(5) The exemption laid down in Paragraph one of this Section
shall not apply to such subjects of the Law referred to in this
Section which are large undertakings the transferable securities
of which are admitted to trading on a regulated market.
Section 6. Exemption for a
Subsidiary of a Third-country Undertaking from the Obligation to
Prepare a Sustainability Report
(1) The subsidiary of a third-country undertaking shall be
exempt from the obligation to prepare a sustainability report in
accordance with the procedures laid down in Section 4 of this Law
if information on the sustainability matters of the subject of
this Law and its subsidiary (if applicable) is included in the
consolidated sustainability report of the parent undertaking
registered in the third country which has been prepared in
accordance with the sustainability reporting standards adopted in
accordance with Section 10 of this Law, or in a manner equivalent
to the abovementioned sustainability reporting standards, and all
of the following conditions are met:
1) the management report of the subject of the Law referred to
in Paragraph one of this Section includes the following
information:
a) the name and legal address of the parent undertaking
registered in a third country which provides information at the
level of group of companies in accordance with the sustainability
reporting standards or in a manner equivalent to abovementioned
sustainability reporting standards;
b) a website link to the published consolidated sustainability
report and assurance report of the parent undertaking registered
in a third country;
c) information on the applicability of the exemption laid down
in this Section to the subject of the Law;
2) if the parent undertaking is registered in a third country,
the consolidated sustainability report and the assurance report
of such parent undertaking which have been provided by one or
more persons or legal persons authorised to provide an assurance
report in accordance with the legal acts governing the
abovementioned parent undertaking shall be made public in
accordance with the conditions for the publication of the annual
statement and in accordance with the requirements for disclosure
laid down in the relevant laws and regulations governing the
subsidiary of the exempted third-country undertaking;
3) if the parent undertaking of the subject of the Law is
registered in a third country, the information to be disclosed on
the activities and sustainability matters of the relevant subject
of the Law and its subsidiaries as provided for in Article 8 of
Regulation (EU) No 2020/852 of the European Parliament and of the
Council of 18 June 2020 on the establishment of a framework to
facilitate sustainable investment, and amending Regulation (EU)
2019/2088 (hereinafter - Regulation (EU) No 2020/852) shall be
included in the management report or consolidated sustainability
report of the subject of the Law drawn up by the parent
undertaking registered in the third country.
(2) The subsidiary of a third-country undertaking shall ensure
that the consolidated sustainability report of the parent
undertaking registered in the third country is published on its
website in Latvian.
(3) For the enforcement of Paragraph one of this Section,
credit institutions which are permanently affiliated with the
central authority which supervises them in accordance with the
conditions provided for in Article 10 of Regulation (EU) No
575/2013 (if applicable) shall be considered subsidiaries of the
abovementioned central authority.
(4) For the enforcement of Paragraph one of this Section,
insurance undertakings which are centrally coordinated by another
undertaking in accordance with Section 1, Paragraph one, Clause
41, Sub-clause "b" of the Insurance and Reinsurance Law are
considered subsidiaries of the parent undertaking of the group of
companies.
(5) The exemption laid down in Paragraph one of this Section
shall not apply to such subjects of the Law referred to in this
Section which are large undertakings the transferable securities
of which are admitted to trading on a regulated market.
Section 7. Consolidated
Sustainability Report
(1) The parent undertaking of a large group of companies has
the obligation to include sustainability information in the
consolidated management report which provides an understanding of
the impact of the activities of the group of companies on
sustainability matters and information on the impact of
sustainability matters on the development, performance results,
and position of the group of companies - the consolidated
sustainability report. The abovementioned sustainability
information shall be clearly identifiable and included in a
separate section in the consolidated management report.
(2) The information referred to in Paragraph one of this
Section is as follows:
1) a brief description of the business model and strategy of
the group of companies, including:
a) the resilience of the business model and strategy against
risks related to sustainability matters;
b) the opportunities related to sustainability matters;
c) plans, including implementation actions and related
financial and investment plans aimed at ensuring that the
business model and strategy of the group of companies are
directed towards the transition to sustainable economy and
limiting global warming to 1.5°C in accordance with the Paris
Agreement adopted on 12 December 2015 within the cope of the
United Nations Framework Convention on Climate Change and the
objective to achieve climate neutrality by 2050 as laid down in
Regulation (EU) 2021/1119 and, where applicable, the extent to
which the subject of the Law is affected by activities with coal,
oil, and gas;
d) the information on how the business model and strategy of
the group of companies take into account the interests of the
stakeholders of the group of companies (persons who may affect
the subject of the Law or who may be affected by the subject of
the Law) and the impact of the group of companies on
sustainability matters;
e) the information on how the strategy of the group of
companies is implemented with regard to sustainability
matters;
2) the description of the sustainability objectives,
indicators, and planned deadlines set by the group of companies
and, if applicable, the absolute greenhouse gas emission
reduction objectives and indicators for at least 2030 and 2050,
the description of the measures implemented by the group of
companies, and a statement on the linking of the objectives and
indicators of environmental factors to scientifically based
data;
3) the description of the functions of the executive board,
supervisory board, and other similar administrative bodies of the
subjects of the Law involved in the consolidation in addressing
sustainability matters and the conformity of their expertise and
skills with the performance of the functions or the resources
available for acquiring such expertise or skills;
4) the description of the policy of the group of companies as
regards sustainability matters;
5) the information on incentives available to the executive
board, supervisory board, and other similar administrative bodies
of the subjects of the Law involved in the consolidation in
respect of addressing sustainability matters;
6) the description of:
a) the due diligence process implemented by the group of
companies with regard to sustainability matters, if applicable,
in accordance with the requirements of due diligence process laid
down in the legal acts of the European Union;
b) the main actual or potential adverse impacts related to the
activities and value chain of the group of companies and also its
products and services, including business relationships and
supply chain, the actions taken to identify and monitor the
abovementioned impact, and other adverse impacts that the parent
undertaking of the group of companies has an obligation to
identify in accordance with other requirements of the due
diligence process laid down in the legal acts of the European
Union;
c) any action taken by the group of companies to prevent,
mitigate, remedy, or terminate the actual or potential adverse
impact and the results of such activities;
7) a description of the most significant risks related to
sustainability matters of the group of companies, including a
characterisation of the most significant impact factors and
information on the relevant risk management process implemented
by the group of companies;
8) the indicators relating to the disclosure of the
information referred to in Clauses 1, 2, 3, 4, 5, 6, and 7 of
this Paragraph.
(3) The parent undertaking of a group of companies shall
include information on the sources and methods of obtaining
sustainability information in the consolidated sustainability
report. The consolidated sustainability report should provide
information in the short-term, medium-term, and long-term
perspectives, if applicable.
(4) The information provided in accordance with Paragraphs one
and two of this Section shall, where necessary, include
information on the activities of the group of companies itself,
on its value chain and also its products and services, business
relationships, and supply chains.
(5) If all the information necessary in accordance with
Paragraph four of this Section on the value chain of the group of
companies is not available, in the first three reporting years
(after the obligation to prepare a sustainability report imposed
on the relevant group of companies by this Law), the parent
undertaking shall describe the efforts (measures) taken to obtain
information on its value chain, the reasons why it was not
possible to obtain all the necessary information, and its plans
for obtaining the necessary information in the future.
(6) Where appropriate and if necessary, the information
referred to in Paragraphs one and two of this Section shall also
include references and additional explanations of other
information included in the consolidated management report and
the amounts indicated in the consolidated financial statements as
regards sustainability matters.
(7) As an exception, the parent undertaking of a group of
companies need not provide information on the events which are
expected to take place within the nearest year or matters under
negotiations if both of the following conditions are met:
1) the executive board of the parent undertaking or the
members of a partnership who have the right of representation
provide to the meeting of shareholders (stockholders) of the
parent undertaking referred to in a written report an explanation
of the circumstances due to which the disclosure of the
abovementioned information would seriously harm the commercial
activities of the group of companies;
2) failure to provide the abovementioned information does not
constitute an obstacle for getting a clear and true understanding
of the development, performance results, financial position of
the group of companies and the impact of commercial activity of
the group of companies.
(8) If significant differences are established for the subject
of the Law involved in the consolidation between the risks that
are material to the group of companies or the influence of the
group of companies and the risks that threaten one or more
subsidiaries, or the influence of a subsidiary or subsidiaries,
such subject of the Law shall ensure a proper understanding of
the material risks of one or more such subsidiaries and the
influence of one or more such subsidiaries respectively.
(9) The subject of the Law involved in the consolidation shall
indicate whether the subsidiaries included in the consolidation
are exempt from preparing a sustainability report in the
management report of the annual statement or at the consolidated
level, respectively, in accordance with Sections 5 and 8 of this
Law.
(10) The parent undertaking shall provide the information
referred to in Paragraphs one, two, three, four, five, and six of
this Section in accordance with the standards for providing
sustainability information referred to in Section 10 of this Law
and approved by the implementing acts of the European
Commission.
(11) The executive board of the parent undertaking shall, when
preparing the information referred to in Paragraph two of this
Section, including Clause 6 thereof, inform the representatives
of its employees in a timely manner and to an appropriate extent
or, if there are none, its employees and shall discuss the
relevant information and the means of obtaining and verifying
sustainability information with them. The opinion of employees
shall, to the extent applicable, be communicated to the
appropriate executive board, supervisory board, and other similar
administrative bodies.
(12) If the parent undertaking has fulfilled the requirements
laid down in Paragraphs one, two, three, four, five, six, seven,
eight, nine, and ten of this Section, it shall be deemed that it
has fulfilled the obligation set out in the laws and regulations
governing the preparation of the annual statement and
consolidated annual statement with regard to the provision of
certain non-financial indicators and the obligation laid down in
Section 4 of this Law to prepare a sustainability report.
Section 8. Exemption for a Parent
Undertaking which is also a Subsidiary from the Obligation to
Prepare a Consolidated Sustainability Report
(1) A parent undertaking which is also a subsidiary is exempt
from the obligation to prepare a consolidated sustainability
report in accordance with the procedures laid down in Section 7
of this Law if information on the sustainability matters of this
subject and its subsidiary is included in the consolidated
management report prepared by another undertaking registered in
the Republic of Latvia or a Member State of the European Union
which has been prepared in accordance with the requirements of
Section 7 of this Law, provided that the following information is
included in the management report of such exempted parent
undertaking:
1) the name and legal address of the parent undertaking that
provides information at the level of the group of companies in
accordance with Section 7, Paragraph ten of this Law;
2) a website link to the consolidated management report of the
parent undertaking and to the assurance report prepared in
accordance with the procedures laid down in Section 16 of this
Law;
3) information on the applicability of the exemption laid down
in this Section to this subject of the Law.
(2) The parent undertaking which is also a subsidiary shall
ensure that the consolidated management report of the parent
undertaking is published on its website in Latvian.
(3) For the enforcement of Paragraph one of this Section,
credit institutions which are permanently affiliated with the
central authority which supervises them in accordance with the
conditions provided for in Article 10 of Regulation (EU) No
575/2013 (if applicable) shall be considered subsidiaries of the
abovementioned central authority.
(4) For the enforcement of Paragraph one of this Section,
insurance undertakings which are centrally coordinated by another
company in accordance with Section 1, Paragraph one, Clause 41,
Sub-clause "b" of the Insurance and Reinsurance Law shall be
considered subsidiaries of the parent undertaking of the group of
companies.
(5) The exemption laid down in Paragraph one of this Section
shall not apply to such subjects of the Law referred to in this
Section which are large undertakings the transferable securities
of which are admitted to trading on a regulated market.
Section 9. Exemption for a Parent
Undertaking which is also a Subsidiary of a Parent Company
Registered in a Third Country from the Obligation to Prepare a
Consolidated Sustainability Report
(1) A parent undertaking which is also a subsidiary of a
parent undertaking registered in a third country is exempt from
the obligation to prepare a consolidated sustainability report in
accordance with the procedures laid down in Section 7 of this Law
if information on the sustainability matters of the subject of
this Law and its subsidiary (if applicable) is included in the
consolidated sustainability report of the parent undertaking
registered in the third country which has been prepared in
accordance with the sustainability reporting standards adopted in
accordance with Section 10 of this Law, or in a manner equivalent
to the abovementioned sustainability reporting standards, and all
of the following conditions are met:
1) the management report of the subject of the Law referred to
in Paragraph one of this Section includes the following
information:
a) the name and legal address of the parent undertaking
registered in a third country which provides information at the
level of group of companies in accordance with the sustainability
reporting standards or in a manner equivalent to abovementioned
sustainability reporting standards;
b) a website link to the published consolidated sustainability
report and assurance report of the parent undertaking registered
in a third country;
c) information on the applicability of the exemption laid down
in this Section to this subject of the Law;
2) if the parent undertaking is registered in a third country,
the consolidated sustainability report and the assurance report
of such parent undertaking which have been provided by one or
more persons or legal persons authorised to provide an assurance
report in accordance with the legal acts governing the
abovementioned parent undertaking, shall be made public in
accordance with the conditions for the publication of the annual
statement and in accordance with the requirements for disclosure
laid down in the relevant laws and regulations governing the
subsidiary of the exempted parent undertaking;
3) if the parent undertaking is registered in a third country,
the information to be disclosed and provided for in Article 8 of
Regulation (EU) No 2020/852 on the activities and sustainability
matters of the relevant subject of the Law and its subsidiaries
shall be included in the management report of the parent
undertaking or the consolidated sustainability report drawn up by
the parent undertaking registered in the third country.
(2) A parent undertaking which is also a subsidiary of a
parent undertaking registered in a third country shall ensure
that the consolidated sustainability report of the parent
undertaking registered in the third country is published on its
website in Latvian.
(3) For the enforcement of Paragraph one of this Section,
credit institutions which are permanently affiliated with the
central authority which supervises them in accordance with the
conditions provided for in Article 10 of Regulation (EU) No
575/2013 (if applicable) shall be considered subsidiaries of the
abovementioned central authority.
(4) For the enforcement of Paragraph one of this Section,
insurance undertakings which are centrally coordinated by another
company in accordance with Section 1, Paragraph one, Clause 41,
Sub-clause "b" of the Insurance and Reinsurance Law are
considered subsidiaries of the parent undertaking of the group of
companies.
(5) The exemption laid down in Paragraph one of this Section
shall not apply to such subjects of the Law referred to in this
Section which are large undertakings the transferable securities
of which are admitted to trading on a regulated market.
Chapter III
Sustainability Reporting Standards and Single Electronic
Reporting Format
Section 10. Sustainability Reporting
Standards
(1) The sustainability report and also the consolidated
sustainability report shall be prepared in accordance with the
requirements laid down in Sections 4 and 7 of this Law in
accordance with the sustainability reporting standards adopted in
accordance with Commission Delegated Regulation (EU) 2023/2772 of
31 July 2023 supplementing Directive 2013/34/EU of the European
Parliament and of the Council as regards sustainability reporting
standards.
(2) Sustainability reporting standards shall, taking into
account the subject matter of the specific sustainability
reporting standard, specify the information which the subject of
the Law has the obligation to disclose on sustainability
matters.
Section 11. Sustainability Reporting
Standards for a Small and Medium-sized Undertaking
The subject of the Law that is a small and medium-sized
undertaking, if the transferable securities of this undertaking
are admitted to trading on a regulated market, a small and
non-complex institution, a captive insurance undertaking or a
captive reinsurance undertaking shall, in accordance with Section
4, Paragraph ten of this Law, prepare the sustainability report
in conformity with the sustainability reporting standards for
small and medium-sized undertakings approved by the implementing
acts of the European Commission.
Section 12. Single Electronic
Reporting Format
(1) Undertakings to which the requirements of Section 4 of
this Law apply shall prepare a management report in the
electronic reporting format in accordance with Article 3 of
Commission Delegated Regulation (EU) 2019/815 of 17 December 2018
supplementing Directive 2004/109/EC of the European Parliament
and of the Council with regard to regulatory technical standards
on the specification of a single electronic reporting format
(hereinafter - Regulation (EU) No 2019/815) and mark up the
sustainability information provided in the sustainability report,
including the disclosures laid down in Article 8 of Regulation
(EU) 2020/852, in accordance with the electronic reporting format
set out in the abovementioned Delegated Regulation.
(2) The subject of the Law that is a parent undertaking to
which Section 7 of this Law applies shall prepare the
consolidated management report in an electronic reporting format
in accordance with Article 3 of Regulation (EU) No 2019/815 and
mark up the sustainability information provided in the
sustainability report, including the disclosures laid down in
Article 8 of Regulation (EU) 2020/852, in accordance with the
electronic reporting format set out in the abovementioned
Delegated Regulation.
Chapter IV
Sustainability Reports in Relation to Subsidiaries of
Third-country Undertakings and Branches of Third-country
Undertakings
Section 13. Requirements for the
Preparation and Publication of a Sustainability Report of a
Subsidiary of a Third-country Undertaking
(1) A subsidiary of a third-country undertaking referred to in
Section 3, Paragraph one, Clause 3 of this Law, if the net
turnover of the parent undertaking registered in a third country
at the level of a group of companies in the European Union
exceeds EUR 150 000 000 at the balance sheet date for two
consecutive reporting years, shall publish a sustainability
report that includes the information specified in Section 7,
Paragraph two, Clause 1, Sub-clauses "c", "d", "e", Clauses 2, 3,
4, 5, 6 and, if applicable, Clause 8 of this Law by publishing a
sustainability report at the level of the group of companies of
the parent undertaking registered in a third country.
(2) The sustainability report referred to in Paragraph one of
this Section shall be prepared in accordance with the
sustainability reporting standards for third-country undertakings
approved by the implementing acts of the European Commission.
(3) Notwithstanding Paragraph two of this Section, the
sustainability report referred to Paragraph one of this Section
may be prepared in accordance with the sustainability reporting
standards specified in Section 10 of this Law or in a manner
equivalent to the abovementioned sustainability reporting
standards.
(4) If the information referred to in Paragraph one of this
Section which is necessary for the preparation of the
sustainability report is not available, a subsidiary of a
third-country undertaking shall request that its parent
undertaking registered in the third country provides all the
information that it requires for the preparation and publication
of the sustainability report.
(5) If all the required information is not provided, a
subsidiary of a third-country undertaking shall prepare and
publish the sustainability report referred to in Paragraph one of
this Section which shall include all the information at its
disposal, obtained or received, and shall issue (prepare) a
statement indicating that its parent undertaking registered in
the third country has not provided the required information.
(6) The sustainability report referred to in Paragraph one of
this Section shall be made public together with an assurance
report provided by one or more persons or undertakings authorised
to do so in accordance with the legal acts of the parent
undertaking registered in a third country or a Member State.
(7) If the parent undertaking registered in a third country
does not provide an assurance report in accordance with Paragraph
six of this Section, a subsidiary of the third-country
undertaking shall issue (prepare) a statement indicating that its
parent undertaking registered in a third country has not provided
an assurance report.
(8) The sustainability report, together with the assurance
report and, where applicable, the statement referred to in
Paragraph five of this Section, shall be submitted to the
Electronic Declaration System of the State Revenue Service,
taking into account the time limits for submitting the annual
statement specified in the relevant laws and regulations.
(9) The sustainability report submitted in accordance with the
procedures laid down in Paragraph eight of this Section shall be
prepared in Latvian or translated into Latvian if a subsidiary of
a third-country undertaking has received the sustainability
report of the parent undertaking registered in a third country
and it is not in Latvian.
(10) A subsidiary of a third-country undertaking shall publish
the sustainability report, together with the assurance report
and, where applicable, the statement referred to in Paragraph
five of this Section free of charge on the website of the
subsidiary of the third-country undertaking, taking into account
the time limits for submitting the annual statement laid down in
the relevant laws and regulations.
Section 14. Requirements for the
Preparation and Publication of a Sustainability Report by the
Branch of a Third-country Undertaking
(1) The branch of a third-country undertaking referred to in
Section 3, Paragraph one, Clause 4 of this Law shall publish a
sustainability report containing the information specified in
Section 7, Paragraph two, Clause 1, Sub-clauses "c", "d", "e",
Clauses 2, 3, 4, 5, 6 and, if applicable, the information
specified in Clause 8 of this Law by publishing the
sustainability report at the level of the group of companies
registered in the third country or, if not applicable, at the
individual level.
(2) The branch of a third-country undertaking shall apply that
referred to in Paragraph one of this Section only if its
undertaking registered in the third country does not have a
subsidiary of the third-country undertaking referred to in
Section 13 of this Law.
(3) The sustainability report referred to in Paragraph one of
this Section shall be prepared in accordance with the
sustainability reporting standards for third-country undertakings
approved by the implementing acts of the European Commission.
(4) Notwithstanding Paragraph three of this Section, the
sustainability report referred to in Paragraph one of this
Section may be prepared in accordance with the sustainability
reporting standards specified in Section 10 of this Law or in a
manner equivalent to the abovementioned sustainability reporting
standards.
(5) If the information referred to in Paragraph one of this
Section which is necessary for the preparation of the
sustainability report is not available, the branch of a
third-country undertaking shall request that its undertaking
registered in the third country provides all the information that
it requires for the preparation and publication of the
sustainability report.
(6) If all the required information is not provided, the
branch of a third-country undertaking shall prepare and publish
the sustainability report referred to in Paragraph one of this
Section which shall include all the information at its disposal,
obtained or received, and shall issue (prepare) a statement
indicating that its undertaking registered in the third country
has not provided the required information.
(7) The sustainability report referred to in Paragraph one of
this Section shall be made public together with an assurance
report provided by one or more persons or undertakings authorised
to do so in accordance with the legislation of the undertaking
registered in the third country or the Member State.
(8) If an undertaking registered in a third country does not
provide an assurance report in accordance with Paragraph seven of
this Section, the branch of a third-country undertaking shall
issue (prepare) a statement indicating that its undertaking
registered in the third country has not provided an assurance
report.
(9) The sustainability report, together with the assurance
report and, where applicable, the statement referred to in
Paragraph six of this Section, shall be submitted electronically
in the Electronic Declaration System of the State Revenue Service
not later than 12 months after the balance sheet date of the
reporting year.
(10) The State Revenue Service shall, not later than within
five working days after receipt of the documents referred to in
Paragraph nine of this Section, electronically transfer them to
the Enterprise Register of the Republic of Latvia (hereinafter -
the Enterprise Register). The documents shall be transferred to
the Enterprise Register under the online data transmission
mode.
(11) After receipt of the documents referred to in Paragraph
nine of this Section, the Enterprise Register shall publish them
on its website and they shall be available to the public free of
charge.
(12) The sustainability report submitted in accordance with
the procedures laid down in Paragraph nine of this Section shall
be prepared in Latvian or translated into Latvian if the branch
of a third-country undertaking has received the sustainability
report of the undertaking registered in a third country and it is
not in Latvian.
(13) The sustainability report, together with the assurance
report and, where applicable, the statement referred to in
Paragraph six of this Section, shall indicate information on the
publication of the statement on the sustainability report
specified in this Section on the website.
(14) The branch of a third-country undertaking shall publish
the sustainability report together with the assurance report and,
where applicable, the statement referred to in Paragraph six of
this Section free of charge on the website of the branch of the
third-country undertaking not later than 12 months after the
balance sheet date of the reporting year.
Section 15. Persons Responsible for
the Preparation and Publication of the Sustainability Report on
the Website
(1) The executive board of a subsidiary (joint-stock company,
limited liability company) of a third-country undertaking shall,
within the limits of its knowledge and competence, be responsible
for the preparation and publication of the sustainability report
on the website in accordance with the procedures laid down
Section 13 of this Law.
(2) The person or persons authorised to represent the branch
of a third-country undertaking shall, within the limits of their
knowledge and competence, be responsible for the preparation and
publication of the sustainability report on the website in
accordance with the procedures laid down in Section 14 of this
Law.
Chapter V
Assurance of the Sustainability Report and Consolidated
Sustainability Report
Section 16. Assurance of a Sworn
Auditor or a Commercial Company of Sworn Auditors
(1) The subject of the Law referred to in Section 3, Paragraph
one of this Law shall ensure that a sworn auditor or a commercial
company of sworn auditors (hereinafter - the sworn auditor) once
a year, during the audit of the annual statement and consolidated
annual statement, provides assurance on the following:
1) the conformity of the sustainability report and the
consolidated sustainability report (if there is an obligation to
prepare one) with the requirements of this Law and the
sustainability reporting standards;
2) the conformity of the format of the sustainability report
and the consolidated sustainability report (if there is an
obligation to prepare one) and the requirements for the marking
(labelling) of the information contained therein with Section 12
of this Law as well as Article 8 of Regulation (EU) No
2020/852.
(2) The assurance of the sustainability report and
consolidated sustainability report (if there is an obligation to
prepare one) referred to in Paragraph one of this Section may be
provided by a sworn auditor who also performs the audit of the
annual statement or consolidated annual statement (if there is an
obligation to prepare one) for the subject of the Law referred to
in Section 3, Paragraph one of this Law. In such case, the sworn
auditor shall comply with the requirements for a sustainability
report assurance service provider laid down in the Law on Audit
Services.
(3) A sworn auditor shall provide the assurance of the
sustainability report and consolidated sustainability report (if
there is an obligation to prepare one) and prepare the assurance
report in accordance with the Law on Audit Services and the
assurance standards for sustainability reporting.
Section 17. Rights and Obligations
of the Subject of the Law
(1) The subject of the Law referred to in Section 3, Paragraph
one of this Law shall provide the sworn auditor with all
necessary information so that the sworn auditor could provide the
assurance specified in Section 16, Paragraph one of this Law.
(2) The executive board of the subject of the Law shall be
responsible for ensuring the assurance referred to in Section 16,
Paragraph one of this Law.
Transitional Provisions
1. Until 6 January 2030, a subsidiary registered in the
European Union the parent undertaking of which is not governed by
the legal acts of a Member State of the European Union and which,
between the subsidiaries of the group of companies registered in
the European Union, has the largest turnover in the European
Union within one of the five previous reporting years may, where
applicable, prepare a consolidated sustainability report on a
consolidated basis in accordance with Section 7 of this Law,
including all such subsidiaries of the parent undertaking
registered in a third country which are registered in the
European Union and to which Section 4 or 7 of this Law
applies.
2. Until 6 January 2030, the sustainability report referred to
in Paragraph 1 of these Transitional Provisions may include the
information specified in Article 8 of Regulation (EU) No 2020/852
on the activities carried out by the subjects referred to in
Paragraph 1 of these Transitional Provisions.
3. The consolidated sustainability report referred to in
Paragraph 1 of these Transitional Provisions shall be published
by a subsidiary registered in the Republic of Latvia in
accordance with the conditions for the publication of the annual
statement laid down in the relevant laws and regulations.
4. When applying the exemption laid down in Sections 5 and 6
and Sections 8 and 9 of this Law to a subsidiary and a parent
undertaking accordingly, reporting in accordance with the
procedures laid down in Paragraph 1 of these Transitional
Provisions shall be considered reporting by the parent
undertaking at the level of the group of companies in relation to
the undertakings included in the consolidation. Reporting in
accordance with the procedures laid down in Paragraph 2 of these
Transitional Provisions shall be deemed to conform to the
conditions referred to in Sections 6 and 9 of this Law
accordingly.
5. A large undertaking that is a public-interest entity and
has more than 500 employees shall have the obligation to prepare
the sustainability report referred to in Section 4 of this Law
starting from the reporting year 2024 (the reporting year that
begins on 1 January 2024 or during the calendar year 2024).
6. The parent undertaking of a large group of companies which
is a public-interest entity and which has more than 500 employees
shall have the obligation to prepare the consolidated
sustainability report referred to in Section 7 of this Law,
starting from the reporting year 2024 (the reporting year that
begins on 1 January 2024 or during the calendar year 2024).
7. A large undertaking shall have the obligation to prepare
the sustainability report referred to in Section 4 of this Law
starting from the reporting year 2025 (the reporting year that
begins on 1 January 2025 or during the calendar year 2025).
8. The parent undertaking of a large group of companies shall
have the obligation to prepare the consolidated sustainability
report referred to in Section 7 of this Law starting from the
reporting year 2025 (the reporting year that begins on 1 January
2025 or during the calendar year 2025).
9. A small and medium-sized undertaking, if the transferable
securities of these undertakings are admitted to trading on a
regulated market, shall have the obligation to prepare the
sustainability report referred to in Section 4 of this Law,
starting from the reporting year 2026 (the reporting year that
begins on 1 January 2026 or during the calendar year 2026).
10. A small and medium-sized undertaking, if the transferable
securities of such undertaking are admitted to trading on a
regulated market, need not include the sustainability report
referred to in Section 4 of this Law in the management report for
the reporting years beginning before 1 January 2028. In such
cases, the subject of the Law shall provide a brief justification
in the management report as to why the information on
sustainability matters is not provided.
11. Small and non-complex institutions shall have the
obligation to prepare the sustainability report referred to in
Section 4 of this Law starting from the reporting year 2026 (the
reporting year that begins on 1 January 2026 or during the
calendar year 2026) if they correspond to one of the following
undertakings:
1) a large undertaking;
2) a small or medium-sized undertaking if the transferable
securities of these undertakings are admitted to trading on a
regulated market.
12. Captive insurance companies and captive reinsurance
companies shall have the obligation to prepare the sustainability
report referred to in Section 4 of this Law starting from the
reporting year 2026 (the reporting year that begins on 1 January
2026 or during the calendar year 2026) if they correspond to one
of the following undertakings:
1) a large undertaking;
2) a small or medium-sized undertaking if the transferable
securities of these undertakings are admitted to trading on a
regulated market.
13. Small and non-complex institutions and captive insurance
companies and captive reinsurance companies need not include the
sustainability report referred to in Section 4 of this Law in the
management report for the reporting years that begin before 1
January 2028 if they are small and medium-sized undertakings and
their transferable securities are admitted to trading on a
regulated market. In such cases, the subject of the Law shall
provide a brief justification in the management report as to why
the information on sustainability matters is not provided.
14. The requirement contained in Section 12, Paragraphs one
and two of this Law to prepare the management report and the
consolidated management report in the single electronic reporting
format in accordance with Article 3 of Regulation (EU) No
2019/815 and to mark the sustainability information provided in
the sustainability report and the consolidated sustainability
report, including the disclosures specified in Article 8 of
Regulation (EU) No 2020/852, shall apply from the day following
the entry into force of the delegated act of the European
Commission amending Regulation (EU) No 2019/815 as regards the
technical requirements for marking.
15. The obligations arising from Chapter IV of this Law shall
apply to a subsidiary of a third-country undertaking or the
branch of a third-country undertaking starting from the reporting
year 2028 (the reporting year beginning on 1 January 2028 or
during the calendar year 2028).
Informative Reference to European
Union Directive
The Law contains norms arising from Directive (EU) 2022/2464
of the European Parliament and of the Council of 14 December 2022
amending Regulation (EU) No 537/2014, Directive 2004/109/EC,
Directive 2006/43/EC and Directive 2013/34/EU, as regards
corporate sustainability reporting.
The Law has been adopted by the Saeima on 26 September
2024.
President E. Rinkēvičs
Rīga, 3 October 2024
1 The Parliament of the Republic of
Latvia
Translation © 2025 Valsts valodas centrs (State
Language Centre)
