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

In 2024, the Corporate Sustainability Reporting Directive (CSRD) was transposed in Slovak law, primarily to Act No. 431/2002 Coll. on Accounting, as amended (the „Act on Accounting“).

In accordance with the amended Act on Accounting and the CSRD, selected undertakings (companies meeting the size conditions and companies whose securities have been admitted to an EU regulated market, except micro undertakings) are required to disclose sustainability information in the annual report. The Accounting Act also introduces requirements for:

• Reporting in line with the European Sustainability Reporting Standards (ESRS) to ensure a consistent approach across the EU.
• Use of a single electronic format for the annual report to facilitate processing and comparisons.
• External assurance of the information by an independent party, such as a statutory auditor or audit firm, to enhance the reliability of the information reported.

Prior to the implementation of the CSRD, ESG reporting in Slovakia only covered undertakings of public interest with more than 500 employees (e.g., banks and insurance companies) under the Non-Financial Reporting Directive (NFDR). This mandate remains in effect but the scope of the Slovak Act on Accounting in this area is extended to include undertakings that are not of public interest if they meet at least two of the size conditions set out in Section 20c(1)(a) of the Act on Accounting during the two immediately preceding accounting periods:

• Balance sheet total exceeds EUR 25 000 000;
• Net turnover exceeds EUR 50 000 000;
• Average number of employees during the financial year exceeds 250.

This refers to the size criteria for a large undertaking within the meaning of Directive 2013/34/EU as amended.

With regard to the obligation to report sustainability information on a consolidated basis, the Act on Accounting requires the parent undertaking that meets the relevant criteria to fulfil this obligation. This is only the case if it is a large group within the meaning of Directive 2013/34/EU as amended.

So far, the Act on Accounting regulates ESG reporting obligations to companies in the following phases:

• As of 1 January 2024, companies that were already required to disclose certain non-financial information under the earlier NFRD (banks, insurance and reinsurance companies, listed companies) are obliged to ESG reporting according to the new requirements. They shall publish a sustainability report for the 2024 accounting period in 2025;
• From 1 January 2025, all large companies (companies meeting 2 of the 3 criteria above) also have ESG reporting obligations with their first sustainability report for the 2025 financial year to be disclosed in 2026;
• From 1 January 2026, listed small and medium-sized companies have ESG reporting obligations with their first sustainability report to be disclosed in 2027. Companies may opt out their ESG obligations until 2028;
• From 1 January 2028, ESG reporting also applies to certain non-EU undertakings with disclosure in 2029.

The ESG reporting obligations outlined above may change. On 26 February 2025, the European Commission introduced the EU Omnibus Package, which proposes amendments to simplify ESG reporting and reduce administrative burdens. Key proposed changes to the Corporate Sustainability Reporting Directive (CSRD) include:

• Higher reporting thresholds, narrowing the scope of companies subject to reporting obligations (with an estimated 80% expected to be exempt);
• Extended deadlines, pushing back the reporting deadlines for 2026 and 2027 to 2028 and 2029, respectively;
• Simplified reporting requirements, among other adjustments.

These changes must be adopted through the ordinary legislative procedure yet. Once approved, EU Member States, including Slovakia, will need to amend their national laws accordingly.

As a result of the gradual introduction of ESG obligations on various companies, supply chains and more favourable financing offers from banks and investors for ESG-compliant market players and projects, an increasing number of entities from different sectors are already reporting on a voluntary basis.

From 2024 onwards, all companies subject to mandatory ESG reporting will be required to apply the European Sustainability Reporting Standards (ESRS) in accordance with the Slovak Act on Accounting, which incorporates the Corporate Sustainability Reporting Directive (CSRD). As the introduction of ESG reporting obligations is gradual, it is likely that the focus will shift from GRI to ESRS, even for companies that currently report ESRS voluntarily.

While there are no explicit ESG obligations in Slovakia, there are various statutory obligations across different domains, including environmental protection, labour rights, anti-corruption, and corporate governance.

The Slovak constitution guarantees the right of all citizens to a favourable environment. It is unlawful to endanger or damage the environment, natural resources and cultural monuments beyond the limits prescribed by law. Specific environmental legislation sets out a number of obligations, including adherence to proper waste management practices (the Act on Waste), air quality standards to prevent pollution (the Air Protection Act), protection of water resources (the Water Act), handling and disposal of hazardous chemical substances (the Chemical Act) and environmental considerations in the planning and execution of projects (Act on Environmental Impact Assessment).

Social obligations are set out in various pieces of legislation, including the Labor Code, which protects working conditions, non-discrimination, equal pay, and workplace safety; the Act on Occupational Health and Safety, which ensures a safe working environment and adherence to safety standards; the Anti-Discrimination Act prohibits discrimination based on gender, race, age, disability, religion, and other factors in the workplace. The Act on Collective Bargaining guarantees the right to collective bargaining and the right to strike. In the area of data protection compliance in the GDPR, together with the Slovak Personal Data Protection Act and Cybersecurity Act, NIS 2 directive is implemented.

In the governance domain, the Slovak Commercial Code sets forth the requirements for corporate governance, including board responsibilities, shareholder rights (e.g. the principle of loyalty of the member of the elected body of the company and the protection of the company in case of conflicts of interests involving a member of the elected body of the company). The Slovak Penal Act and Act on Criminal Liability of Legal Entities impose measures to prevent corruption, bribery and other offences. Compliance with fair trade principles is enforced by the Competition Act.

Furthermore, specific obligations arise from various areas, including anti-money laundering, consumer protection, whistleblower protection, securities and investment services, and other specific sectors.

In general, the answer is no. However, in certain cases, some of the rules that may fall under the ESG area may have extraterritorial effect. For instance, in the case of criminal liability of legal entities for environmental or corruption offences, a Slovak legal entity may be sanctioned for offences committed outside Slovakia.

There is no specific regulation in place, but if a company is found to have misled the public about its ESG performance, it could be deemed to have engaged in unfair commercial practices under the Slovak Consumer Protection Act, as well as unfair competition practices such as misleading advertising under the Slovak Commercial Code.

No. However, it is standard practice to include contractual provisions prohibiting illegal employment in contracts. This is because not only the illegal employers themselves, but also their contractual partners – the recipients of their services – can be fined by law.

There are no specific regulations in place regarding ESG liability for a company or its representatives. In such cases, liability would be determined in accordance with general principles of corporate and civil law.

In general, members of corporate bodies have a fiduciary duty to act in the best interest of the company and its shareholders. In such a case, the member of the body would be expected to act in the best interests of the company and its shareholders, while also ensuring that ESG goals are achieved. The fundamental principle governing such liability is whether the member in question has acted with due care. This encompasses both professional diligence (e.g., acting in accordance with valid legislation) and loyalty (i.e., acting in the best interests of the company and its shareholders). In the event that it is determined that a member acted contrary to the interests of the company, regardless of compliance with ESG goals, the company (shareholders) may seek compensation from that individual.

In the case of investors, the liability of the company (or member of the body) to the investor is dependent on the terms of the contract between them and the company (or member of the body) and whether such liability is explicitly stated. Furthermore, in the event that investors were to be in the position of creditors, they may pursue the company's claims for damages against the directors in their own name and on their own account if they are unable to satisfy their claim out of the company's assets.

There are no specific regulations related to ESG liability for a company or its bodies/representatives. In such cases, liability would be determined in accordance with general corporate and civil law principles.

Members of corporate bodies have a fiduciary duty to act in the best interest of the company and its shareholders. Should they fail to ensure compliance with the relevant regulations and this result in harm, they may be held personally liable to the company (not to the shareholders or investors) under Slovak corporate law.

The fundamental principle governing such liability is whether the member in question has acted with due care. This encompasses both professional diligence (e.g., acting in accordance with valid legislation) and loyalty (i.e., acting in the best interests of the company and its shareholders). If, in a specific instance, it is determined that the member acted contrary to the interests of the company, regardless of compliance with ESG goals, the company (shareholders) may generally request compensation from that individual.

In the case of investors, the liability of the company (or member of the body) to the investor is dependent on the existence of a contract between them and the company (or member of the body) and whether such liability is enumerated.

There are no specific regulations related to ESG liability for a company or its bodies/representatives. However, in the event of harm or loss, it is not ruled out that general general claims for damages before civil courts may be successful if the respective conditions are met and proved.

Contractual Obligations In the event that a company has contractual agreements that include ESG commitments and fails to uphold these commitments, affected parties may claim damages for breach of contract or pursue other legal remedies.

Consumer protection and unfair competition Greenwashing or providing misleading information about a company´s ESG practices may constitute an unfair commercial practice under Slovak consumer protection law. Affected consumers may seek redress and compensation for losses incurred due to misleading ESG claims. Similarly, misleading advertising regarding ESG aspects can give rise to unfair competition legal claims from consumers and competitors.

General tort In accordance with Slovak civil law, if a company fails to comply with a legal obligation and this results in harm to a third party, the latter may have a claim for damages based on general tort principles. To establish liability, it must be demonstrated that the company's actions or omissions caused the harm and that a duty of care was breached.

Slovakia adheres to EU ESG rules.

We don’t have any such information.

The EU's regulations and directives drive the statutory sustainable finance and investment frameworks that govern ESG indicators and impact indicators.

The transposition of the Corporate Sustainability Reporting Directive (CSRD) into Slovak law, particularly within the Slovak Act on Accounting, requires companies to report on non-financial information, including ESG factors.

We don’t have any such information.

Slovakia adheres to EU legislation, including the Sustainable Finance Disclosure Regulation (SFDR) and Taxonomy Regulation, which ensure that ESG considerations are integrated into the financial decision-making processes and recommendations.

The transposition of the Corporate Sustainability Reporting Directive (CSRD) into Slovak law, particularly within the Slovak Act on Accounting, requires companies to report on non-financial information, including ESG factors.

No.

In addition to the obligations set out in the Sustainable Finance Disclosure Regulation (SFDR), no special measures have been taken. However, greenwashing may also constitute unfair commercial practices under Slovak consumer protection law as well as misleading advertising, which is a prohibited unfair competition practice. Non-compliance may result in fines and penalties, as well as corrective actions. It may also lead to legal consequences from lawsuits by competitors and consumers, including monetary compensation and reputational damage.

No.

The Corporate Sustainability Reporting Directive (CSRD) has already been transposed into Slovak law, specifically into the Slovak Accounting Act. Further developments in respect of ESG obligations will likely depend on forthcoming European legislation.

We are currently unaware of any planned legislative or regulatory developments relating to M&A transactions.