Government Approves Draft Law on Introducing Sustainability Reporting in Ukraine

The Cabinet of Ministers of Ukraine approved the draft Law of Ukraine "On Amendments to the Law of Ukraine 'On Accounting and Financial Reporting in Ukraine' regarding the introduction of sustainability reporting."

The Ministry of Finance developed the document to fulfil Ukraine's obligations under the EU Association Agreement and bring Ukrainian legislation closer to EU Directive 2013/34/EU on financial reporting, taking into account amendments introduced by Directives (EU) 2022/2464, 2023/2775, and (EU) 2026/470.

What will change

1. Companies will disclose management information, as well as how their operations impact the environment and society. 

The most significant innovation of the draft law is the introduction of mandatory sustainability reporting. This means that enterprises will separately disclose information on their environmental impact, compliance with labour and human rights standards, and anti-corruption measures.

Such reporting will be prepared in accordance with the unified European standards (ESRS) as a separate section of the management report and submitted in electronic format using a taxonomy that will facilitate analysis by investors, partners, and government agencies.

The obligation will apply to large enterprises with a net turnover exceeding 450 million euros and an average number of employees exceeding 1,000. The first year in which companies will report under the new rules is 2028, giving businesses time to prepare.

For the state, this is a step toward fulfilling obligations under the EU Association Agreement. For businesses, it means playing by the same rules as European companies: more transparent reporting increases investor confidence and makes it easier to raise financing in international markets.

2. Criteria for classifying companies into micro, small, medium, and large have been updated 

The threshold asset and turnover indicators used to categorise an enterprise have been brought into line with updated EU standards. Specifically:

(The third criterion for all categories – average number of employees – remains unchanged).

Updating the criteria will make it possible to more accurately determine an enterprise's category and avoid situations in which a company falls under excessive reporting requirements solely due to inflationary growth rather than actual business growth.

3. State-owned enterprises will transition to international financial reporting standards 

To implement the State Property Policy, the draft law provides for the transition of state-owned unitary enterprises and business entities in which the state owns more than 50% of shares (stakes) to maintain accounting records and compile financial statements in accordance with International Financial Reporting Standards (IFRS), as well as the requirement to prepare a management report. This will bring state-owned enterprise reporting closer to standards that are understandable to foreign investors and increase transparency in the state economic sector.

Why this matters

The introduction of sustainability reporting is not an additional burden for the sake of reporting, but a tool that benefits the economy: it establishes equal rules for Ukrainian and European companies, facilitates their access to international capital markets, and increases Ukraine's investment attractiveness. At the same time, the transition period until 2028 gives businesses time to prepare, while the updated enterprise category criteria reduce the administrative burden on companies that need it most.

Background information 

The draft law was developed in fulfilment of the Association Agreement between Ukraine and the EU, the Strategy for the Introduction of Sustainability Reporting by Enterprises (approved by CMU Order No. 1015-r dated October 18, 2024), and the National Program for the Adaptation of Ukrainian Legislation to EU Law (approved by CMU Resolution No. 438 dated April 1, 2026).

*In accordance with the law, due to the formation of a new Cabinet composition, the draft law was re-approved at a CMU meeting and submitted to Parliament for consideration.