TerraLex Cross-Border Guide to Cross-Border Guide to ESG and Sustainable Finance

The main policy document governing ESG disclosure obligations in Poland is the Act of 29 September 1994 on Accounting (the “Accounting Act”), which was amended in 2016 to implement the provisions of the EU Non-Financial Reporting Directive (NFRD) regarding the disclosure of non-financial and diversity information by certain large undertakings and groups. It was further amended in 2024 to incorporate the provisions of the EU Corporate Sustainability Reporting Directive (CSRD), which replaced and expanded upon the NFRD. The implementation of the CSRD has been phased as follows:

• From 1 January 2024: The ESG reporting obligation applies to large companies already subject to the NFRD, primarily publicly listed companies of significant public interest, such as banks and insurance companies. These are entities with more than 500 employees, revenue exceeding EUR 50 million, or total assets over EUR 25 million. They must report ESG information for the 2024 fiscal year, to be published in 2025.
• From 1 January 2027: The ESG reporting obligation will extend to all other large companies not previously covered by the NFRD, provided they meet at least two of the following criteria: more than 250 employees, revenue exceeding EUR 40 million, or assets over EUR 20 million. These entities must submit ESG reports for the 2027 fiscal year, to be published in 2028.
• From 1 January 2028: Listed small and medium-sized enterprises (SMEs) will become subject to ESG reporting obligations, provided they meet the thresholds of more than 10 employees, revenue above EUR 700,000, and assets exceeding EUR 350,000. These SMEs will follow simplified reporting standards and their first reports will cover the 2028 fiscal year, to be published in 2029.
• From 1 January 2028: Non-EU companies generating more than EUR 150 million in annual revenue within the EU and having at least one EU-based subsidiary or branch will also fall within the scope of the ESG reporting obligation. Their first report will cover the 2028 fiscal year and must be published in 2029.

In addition to the NFRD, Poland is also bound by the Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosure in the financial service sector (the “SFRD”), which came into force on 10 March 2021 intending to regulate sustainable investments. The SFRD requires all financial market participants (the “FMPs”) such as banks, investment firms, and pension funds, to disclose their approach to sustainability, including the impact that their financial products have on the people and planet in a standardized format.

On 6 April 2022, the European Commission adopted regulatory technical standards (“RTS”), which clarify requirements for the content, methodology, and presentation of information related to sustainable development. The RTS entered into effect in the form of the SFDR Level 2 requirements, supplementing the SFDR and the 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) No. 2019/2088 (the “Taxonomy Regulation”).

In Poland, more and more companies are becoming ESG-oriented and voluntarily choose to publish data on social involvement, customer relations, ethics, anti-corruption, product liability, employees, and the environment.

This is especially true for companies from the fuel, energy, banking, and food industries, as well as the transport and logistics sectors, in their annual reports. There is also growing interest in voluntary ESG reporting in the healthcare, retail, and construction sectors.

Sixty-three percent of the largest companies in Poland prepare a separate, dedicated ESG report, and 17% of companies include ESG issues in their annual reports – according to the KPMG report in Poland entitled „Sustainable development reporting study. Reporting in the era of new regulations.”

Being transparent in these matters makes these companies more credible, not to mention respected and well-known in the community, which is demonstrated especially by such private initiatives as the “ESG Leaders” competition, and the report called “Responsible Business in Poland. Good Practices” which every year provides a compilation of different ESG activities undertaken by companies operating in Poland.

Although the disclosed reports vary in terms of scale, content, and presentation, the companies usually report the following categories of information: (1) ESG-related risks, (2) ESG-related opportunities, (3) management, (4) governance, (5) strategy, (6) targets, and (7) performance.

In Poland, the generally accepted and basic reporting standard is the Global Reporting Initiative (the “GRI”) which covers all three areas of ESG. Many companies use this standard in their reports, but a large number do not. This is because the Accounting Act gave companies freedom in applying the reporting framework, as well as the ability to set their own reporting policy. As a result, companies often did not apply global standards at the beginning of the reporting path, treating them as the next step of advancement.

It can be expected that a milestone in this regard will be the introduction of the EU Corporate Sustainability Reporting Directive (the “CSRD”) which EU member states will have until 5 July 2024 to implement in their national legal systems. The CSRD is a new EU law (amending the NFRD) imposing ESG reporting obligations on all large companies and all companies listed on EU-regulated markets (i.e., SMEs, except for listed micro-companies with fewer than ten employees or a turnover of less than EUR 20 million). The scope of the directive is considerably extended compared to NFRD and applies to both European and non-European companies listed and operating in the EU-regulated markets. Non-European companies with substantial activity in the EU market (net turnover of more than EUR 150 million in the EU at consolidated level) and which have at least one subsidiary (large or listed) or branch (net turnover of more than EUR 40 million) in the EU are required to draft a sustainability report at the consolidated level of the ultimate third-country undertaking.

The CSRD is based on the concept of a “double materiality assessment,” meaning that companies must consider how their actions impact both people and the planet, but also how sustainability issues can affect their financial well-being. It is basically about looking at the big picture from two different angles.

Under the ESG regulations applicable in Poland, there are no obligations besides disclosure requirements. However, some ESG-related obligations can be found in other statutory regulations, including:

1. the Act of 1 March 2018 on Counteracting Money Laundering and Terrorist Financing;
2. the Act of 20 February 2015 on Renewable Energy Sources;
3. the Act of 20 May 2016 on Investments in Wind Power Stations;
4. the Energy Law of 10 April 1997;
5. the Water Law of 20 July 2017;
6. the Environment Protection Law of 27 April 2001;
7. the Waste Law of 14 December 2012;
8. the Labour Code Act of 26 June 1974;
9. the Act of 23 May 1991 on Trade Unions;
10. the Act of 21 August 1997 on Animal Protection;
11. the Act of 30 May 2014 on Consumer Rights;
12. the Act of 16 February 2007 on Protection of Competition and Consumers (the “Consumer Protection Act”);
13. the Act of 15 October 2000 (the “Commercial Companies Code”); and
14. the Act of 3 October 2008 on Providing Information on the Environment and Environmental Protection, Public Participation in Environmental Protection and on Environmental Impact Assessment.

The above-listed regulations provide for several EDG-related obligations, such as:

• environmental obligations, including those related to waste management, reduction of emissions, and protection of cultural heritage, historical monuments, and the environment (particularly water resources, agricultural land, and forests);
• obligations related to personal data protection;
• health and safety obligations, including those related to the welfare of workers, consumers and animals;
• obligations related to non-discrimination and equal opportunities in the work environment;
• obligations related to human rights protection;
• corporate governance obligations;
• anti-corruption obligations, including the promotion of ethical business practices;
• obligations aimed at preventing unfair competition.

As a rule, Polish ESG regulations apply only to companies based (registered) in Poland. However, certain aspects of the ESG-related legal framework may have extraterritorial effects, particularly when a foreign company conducts significant operations in Poland or intends to develop business relationships with a Polish company. In addition, foreign subsidiaries of Polish companies may expect that their ESG compliance will have to be harmonized on a group-wide basis.

As for now, in Poland, there are no specific regulations regarding advertising with ESG claims. This matter is governed by general laws, including:

1. the Consumer Protection Act, prohibiting acts contrary to collective consumer interests;
2. the Act of 16 April 1993 on Prevention of Unfair Competition, prohibiting advertising in a misleading manner that may induce a customer to purchase a product;
3. the Act of 23 August 2007 on the Prevention of Unfair Market Practices, prohibiting "misleading market practices", including disseminating false information, misleadingly disseminating truthful information, introducing a product to the market in a way that may be misleading, not complying with a code of good practice contrary to public declarations;
4. the Act of 23 June 2022 on the production and certification of organic products, prohibiting improper use of “bio” or “eco” labels, misleading consumers and falsely portraying their products as organic;
5. the financial market regulations, in particular the SFDR and Act of 29 July 2005 on Trading in Financial Instruments (implementing MiFID in Poland), requiring, in particular, that investment firms act honestly, fairly, and professionally in accordance with the best interests of their clients, and that all information, including marketing communications, addressed by the investment firm to clients or potential clients shall be fair, clear and not misleading.

Under the above-mentioned regulations:

• ESG claims should not be misleading;
• ESG claims must be based on true, pertinent, and scientifically verifiable evidence;
• ESG‐related disclosures in the financial services sector must be transparent, accurate, fair, clear, not misleading, simple, and concise;

Violation of the above rules may give rise to cease-and-desist actions, claims for damages and/or recovery of unjustly gained benefits, and administrative sanctions, including high fines.

Given the lack of regulations related to advertising with ESG claims, the Advertising Council, a Polish self-regulating organisation with numerous international companies as members, has amended the Advertising Code of Ethics to include provisions prohibiting greenwashing (i.e., misleading advertising related to sustainability / environmental protection). According to these provisions:

• advertisements containing general phrases such as “environmentally friendly” or “ecologically safe” should indicate the precise effect of the product and the information should be available at the point of sale, enclosed to the product, or should be presented to the beneficiary in a publicly accessible way;
• when advertisements refer to the reduction in the quantity (number) of components or elements having an environmental impact, the information indicating the precise positive effect of the product must be true and available at the point of sale or enclosed to the product and should be presented to the beneficiary.

Documents issued by the Advertising Council, are not legally binding but may serve as a code of good practice in advertising activities in Poland.

Unlike some other countries, Poland has not taken any steps to make ESG standards mandatory in supply chains.

In Poland, as in many EU jurisdictions, shareholders or investors generally cannot hold a company’s corporate bodies or representatives liable solely for losses resulting from positive ESG efforts—such as net-zero initiatives—provided such efforts are undertaken in good faith, in compliance with corporate law, and in alignment with directors’ fiduciary duties.

Under the Commercial Companies Code of 15 September 2000 (the “Commercial Companies Code”), members of management and supervisory boards are required to exercise due diligence, act loyally, and act in the best interests of the company. As a result, ESG-related actions that are strategically grounded, properly documented, and aimed at serving the long-term sustainability and value of the company are generally protected under the business judgment rule. This rule shields decision-makers from liability if their decisions were made diligently, in good faith, and without a conflict of interest, even where the outcome involves short-term financial loss.

However, liability may arise under specific provisions of the Commercial Companies Code or under the general tort law principle set out in Article 415 of the Civil Code of 23 April 1964 (the “Civil Code”), in situations such as:

• breach of the duty of care or loyalty – where ESG initiatives are implemented recklessly, without proper financial assessment, or are motivated by personal interests rather than the company’s benefit;
• misrepresentation – where the company makes false or misleading ESG-related statements (e.g., greenwashing), shareholders may pursue claims for damages resulting from misstatements or omissions;
• violation of the Articles of Association or internal governance rules – where ESG initiatives contradict corporate bylaws or have not been properly authorized, for example, by the general meeting of shareholders;
• neglect of shareholder interests – although directors are not obligated to maximize short-term shareholder value, a total disregard for shareholder rights or financial sustainability may, in exceptional cases, lead to liability.

In summary, under Polish law, shareholders or investors may hold corporate representatives liable for ESG-related losses only if those actions involve a breach of legal or fiduciary obligations. Legitimate, well-founded ESG initiatives—even if they result in financial loss—are typically protected under existing corporate governance frameworks.

Yes, under Polish law, shareholders or investors may potentially hold a company’s corporate bodies or representatives liable if non-compliance with ESG obligations results in harm to the company or to them personally, provided that certain legal conditions are met.

As mentioned in the response to question 8 above, under the Commercial Companies Code, members of management and supervisory boards are obligated to act with due diligence, in good faith, and in the best interest of the company. A failure to comply with binding ESG rules may constitute a breach of these duties, particularly where it leads to reputational damage, a decrease in market value, regulatory sanctions or fines, or a loss of stock value, potentially triggering claims by shareholders or investors.

The ESG non-compliance may also give rise to civil liability, both for the company itself and for individual decision-makers, especially when their actions (or omissions) constitute a breach of legal or fiduciary duties.

This is particularly relevant today, as increasing regulatory scrutiny, from bodies such as the Polish Financial Supervision Authority (KNF), the Office of Competition and Consumer Protection (UOKiK), and under EU frameworks like the CSRD, is equipping both shareholders and regulators with expanding tools to enforce ESG accountability.

Under Polish law, there are no specific provisions that govern the liability of a company or its corporate bodies/representatives for undertaking or failing to undertake ESG activities or initiatives. However, liability may arise under general legal principles in certain circumstances.

If a company’s non-compliance with ESG rules causes harm to customers, creditors, or other third parties, the affected party may seek compensation under Article 415 of the Civil Code, provided they can prove that the non-compliance involved fault, resulted in actual harm, and led to a direct loss.

Greenwashing and misleading ESG-related claims may also be treated as violations of collective consumer interests. In such cases, the President of UOKiK may impose administrative fines, and individuals may additionally pursue civil claims for damages.

In general, board members may be held personally liable if they act negligently or fraudulently, and their actions directly cause harm to third parties.

Creditors may also seek redress, potentially even against management board members personally, if ESG-related misstatements result in financial losses or insolvency, particularly under Article 299 of the Commercial Companies Code.

N/A

No. Necessary amendments to the statutory framework were made to comply with EU Law on ESG initiatives, but there was no identification of prohibitions or restrictions that would prevent a company/entity from pursuing ESG initiatives.

Yes, in Poland, financial institutions, investment advisors, and pension institutions are required to consider ESG factors when making investment decisions or recommendations. This obligation arises primarily from EU regulations that are directly applicable in Poland, including the Sustainable Finance Disclosure Regulation (SFDR).

SFDR requires financial market participants (FMPs) and financial advisors to disclose how they integrate sustainability risks and whether they consider principal adverse impacts (PAIs). They must publish a PAI statement on their websites and include related information in pre-contractual documents. PAIs refer to negative effects on sustainability at both the entity and product levels. To report on PAIs, firms must assess their investments using a set of adverse impact indicators, which include 14 mandatory and 31 voluntary indicators. These indicators cover areas such as environmental and employee matters, human rights, anti-corruption, and anti-bribery. FMPs must report on all 14 core indicators, plus at least two additional ones—one related to climate/environmental issues and one related to social or employee matters.

The EU Taxonomy Regulation also applies, requiring financial institutions to disclose the environmental sustainability of their investments based on defined criteria.

In addition, under the amended Markets in Financial Instruments Directive (MiFID II), investment firms and advisors must assess clients’ ESG preferences as part of the suitability assessment and offer products that match those preferences.

Pension institutions are also subject to ESG obligations under the IORP II Directive, implemented into Polish law, which requires the integration of ESG factors into risk management and investment decision-making.

Voluntary sustainable finance and investment frameworks used by entities in Poland include: - the ESG Reporting Guidelines published by the GPW;

• the Non-Financial Information Standard published by the Polish Association of Listed Companies;
• the UN Sustainable Development Goals (the “UN SDGs”);
• the Ten Principles of the UN Global Compact;
• the UN Principles of Responsible Investment; and
• the recommendations developed by the Task Force on Climate-Related Financial Disclosures.

Additionally, increasing numbers of Polish companies are deciding to audit their ESG report, or even to have their companies audited by a third-party auditor, in light of being ESG compliant. In the real estate sector, more and more companies are interested in obtaining BREEAM (Building Research Establishment Environmental Assessment Method) certificates.

In Poland, there are no specific local law regulations that would impose an obligation to consider ESG factors when making investment decisions or recommendations. However, the SFDR, the NFRD, and amended Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (commonly known as MiFID 2), regulations apply to Polish FMPs and financial advisers, as well as to other, non-finance, market participants. Under those acts, the obliged entities are required to report on whether they consider the sustainability risks in their investment decisions or recommendations.

All other market participants are encouraged to disclose their ESG strategies, policies, and other ways of implementing ESG factors in line with the UN SDGs in their businesses voluntarily. This, however, will change in January 2024, when the NFRD will be replaced by the CSRD, thus making the obligation to consider ESG factors applicable to many more entities.

Currently, in Poland, there are no specific tax or other benefits that would encourage financial institutions and/or pension institutions to integrate ESG factors into their investment decision-making.

There are no specific regulations or guidelines in Poland aimed specifically at identifying, addressing, or sanctioning greenwashing apart from the one embedded in the Code of Ethics in Advertising (the “Code”), which comprises a set of regulations, defining what is deemed acceptable and what is deemed unethical in advertising messages. The Code is regularly reviewed and updated.

In December 2020, the Advertising Council (the “Council”) launched a self-regulatory initiative called the "Green Project". As a result, in March 2023, the Code was supplemented by provisions dedicated exclusively to countering greenwashing. According to those provisions, environmental advertisements, among other things:

• must not violate public confidence in environmental efforts;
• should be clear and understandable to the consumer;
• should reflect verifiable environmental benefits;
• should be evaluated on a case-by-case basis, from the perspective of the so-called average consumer (i.e., a consumer who is sufficiently well-informed, attentive, and cautious and with consideration of the social, cultural, and linguistic factors of the relevant market); and
• should be justified in a way that is understandable and accessible to the consumer.

Although the Code is not legally binding, it may serve as a code of good practice in advertising activities in Poland. There is also an Ethics Committee at the Council (the “Committee”), which reviews complaints about advertisements that potentially violate the Code. In the event of a violation of the Code, the Committee has the right to request the infringer to stop or modify the advertisement or campaign in question. The rulings of the Committee are, however, not binding and cannot be enforced. In practice, however, most companies comply with the Committee’s rulings for fear of losing their good reputation.

Activities that could constitute greenwashing are also being monitored with increasing attention by the Polish Consumer Protection Agency, i.e., the President of the Office of Competition and Consumer Protection (the “President of UOKiK”). According to press reports, investigations into potential greenwashing practices are underway concerning the advertising campaigns of seven entities, including Allegro (the largest marketplace in Poland) and LPP (a major Polish fashion retailer). For misleading advertising campaigns aimed at consumers, which violate the collective consumers’ interests, the President of UOKiK may impose a fine on the company of up to 10% of its turnover. Fines can also be imposed on the company's managers – up to PLN 5 million (approx. EUR 1,1 million) for financial entities, and up to PLN 2 million (approx. EUR 440,000) for other entities.

For the FMPs and financial advisors, violations of the law (including ESG-related regulations), as well as the interests of customers, can also result in sanctions imposed by the Polish Financial Supervision Authority (the “KNF”). These sanctions include prohibition of the practice and financial penalties imposed on the entity and/or on the entity’s management board.

Apart from the investigations initiated by the President of UOKIK mentioned in the previous answer, there are no publicly known situations of procedures concerning “greenwashing” in Poland. In particular, there are no publicly known enforcement actions or case laws pertaining to greenwashing in the Polish financial market.

Most legislative and regulatory developments that are likely to emerge in connection with ESG obligations in Poland will result from the need to implement new EU regulations, including the CSRD (for details, see answer to question 1).

As for now, in Poland, there are no planned/expected legislative or regulatory developments in connection with the consideration of ESG factors in M&A. However, more and more teams responsible for M&A strategy and deal-making are starting to recognize ESG’s significance in the transactions, considering ESG criteria as both new risks to navigate and new value-creating opportunities.