Significant changes are imminent in the Ukrainian banking system’s reporting sphere. The government’s adoption of the Strategy for the Implementation of Sustainability Reporting in accordance with the EU Corporate Sustainability Reporting Directive (CSRD) and the European Standards (ESRS) introduces new challenges for financial institutions.
Here’s a look at what Ukrainian banks can expect over the next three years, and what they need to do to adapt successfully to the new requirements.
The introduction of sustainability reporting is contingent upon the implementation of European standards, which are designed to harmonize Ukraine’s legal framework with EU directives. The government anticipates that this initiative will establish three fundamental pillars for future development:
According to the Strategy, changes are already underway and will be worked on in three dimensions simultaneously. The primary challenge will be aligning Ukrainian legislation with European standards. The key dates are as follows:
By the end of 2025, a unified electronic reporting format is to be developed; by December 2025, unified reporting rules are to be developed; and by March 2026, an approved unified platform for reporting is to be developed. What will the platform look like, and what functionality it will have, remains unknown. However, at the time of its approval and testing, Ukrainian companies should take the necessary steps to collect information for reporting, analyze it, and set targets for future years.
The final and most significant challenge for entrepreneurs will be the format of sustainability reporting as part of a company’s non-financial reporting. In this regard, the Strategy offers no clear guidance on the form of reporting, merely stating that an official translation of ESRS standards will be available for Ukrainian companies in the summer of 2025. The Strategy does not address how to adhere to this standard or prepare reports.
The National Bank of Ukraine was the first to attempt to ascertain the implications of this change. At the beginning of the year, it sent a letter to banks about preparations for the preparation of financial statements for 2024, which called for preparations for the development of non-financial reports as well.
The banking sector will be subject to new transparency requirements in their reporting. In the notes to their financial statements, they will be required to disclose in detail the risks, uncertainties, and impact of the war. This will be a key step towards increasing confidence in the financial system.
In addition, the company has a plan to gradually implement the new international financial reporting standards (IFRS) from 2024 to 2027. Specifically, these include IAS 1 (Classification of Liabilities), IFRS 16 (Leases), and updates to IFRS 7 and IFRS 9 standards on the classification and measurement of financial instruments.
Training professionals will be an equally important task. By the end of 2026, it is planned to train external independent auditors capable of working with sustainability reporting and to hold regular training events to improve their skills. Throughout the preparation period, there will also be a need to focus on preparing and training staff who will be responsible for preparing the non-financial report and analyzing information to determine future goals and build long-term strategies.
To prepare for the upcoming reporting changes, bank CFOs should focus on a few key steps.
The introduction of sustainability reporting will be an important step for Ukraine’s integration into the European economic space. For the banking sector, this represents both a challenge and an opportunity. It will contribute to the development of the country’s financial system on the basis of transparency, responsibility, and sustainable development. It is time to look for partners on this difficult path.
Make sustainability part of your business strategy with BDO in Ukraine! Our team of experts will assist you in implementing effective sustainability strategies that align with international standards, enhancing your competitive edge. Contact us today to take a significant step towards a sustainable future!
What will change in the reporting sphere?
The introduction of sustainability reporting is contingent upon the implementation of European standards, which are designed to harmonize Ukraine’s legal framework with EU directives. The government anticipates that this initiative will establish three fundamental pillars for future development:
- Achieving transparency in reporting,
- Developing a unified platform for submitting non-financial reports,
- Attracting foreign investment by enhancing investor confidence.
According to the Strategy, changes are already underway and will be worked on in three dimensions simultaneously. The primary challenge will be aligning Ukrainian legislation with European standards. The key dates are as follows:
- By November 2024, the translation of Directive (EU) 2022/2464 was to be completed.
- Starting from December 2024, tables of compliance with Ukrainian legislation are already being prepared.
- In March 2025, a draft law amending the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” is expected to be submitted.
By the end of 2025, a unified electronic reporting format is to be developed; by December 2025, unified reporting rules are to be developed; and by March 2026, an approved unified platform for reporting is to be developed. What will the platform look like, and what functionality it will have, remains unknown. However, at the time of its approval and testing, Ukrainian companies should take the necessary steps to collect information for reporting, analyze it, and set targets for future years.
The final and most significant challenge for entrepreneurs will be the format of sustainability reporting as part of a company’s non-financial reporting. In this regard, the Strategy offers no clear guidance on the form of reporting, merely stating that an official translation of ESRS standards will be available for Ukrainian companies in the summer of 2025. The Strategy does not address how to adhere to this standard or prepare reports.
The National Bank of Ukraine was the first to attempt to ascertain the implications of this change. At the beginning of the year, it sent a letter to banks about preparations for the preparation of financial statements for 2024, which called for preparations for the development of non-financial reports as well.
What challenges are waiting for our banking sector?
The banking sector will be subject to new transparency requirements in their reporting. In the notes to their financial statements, they will be required to disclose in detail the risks, uncertainties, and impact of the war. This will be a key step towards increasing confidence in the financial system.In addition, the company has a plan to gradually implement the new international financial reporting standards (IFRS) from 2024 to 2027. Specifically, these include IAS 1 (Classification of Liabilities), IFRS 16 (Leases), and updates to IFRS 7 and IFRS 9 standards on the classification and measurement of financial instruments.
Training professionals will be an equally important task. By the end of 2026, it is planned to train external independent auditors capable of working with sustainability reporting and to hold regular training events to improve their skills. Throughout the preparation period, there will also be a need to focus on preparing and training staff who will be responsible for preparing the non-financial report and analyzing information to determine future goals and build long-term strategies.
What measures should be taken now?
To prepare for the upcoming reporting changes, bank CFOs should focus on a few key steps.
- The first step is to assess your organization’s readiness. This includes analyzing the impact of the new standards on existing business processes and identifying the risks and opportunities associated with implementing sustainability reporting.
- The next step is to prepare the reports. Responsible departments should familiarize themselves with the requirements for disclosing information on sustainable development and the impact of the war, and adapt their accounting systems to meet IFRS and ESRS standards.
- It is equally important to organize training and effective communication. Regular training for accounting and reporting specialists will help to improve their professional skills, and establishing cooperation with an interagency working group will ensure coherence in the implementation of changes.
- The final key element to be addressed is the implementation of an electronic reporting format, which is expected to be the most challenging aspect of the project. This necessitates the establishment of a technical framework for integrating the unified electronic format and ensuring effective interaction with the reporting platform, which is to be developed in the near future.
The introduction of sustainability reporting will be an important step for Ukraine’s integration into the European economic space. For the banking sector, this represents both a challenge and an opportunity. It will contribute to the development of the country’s financial system on the basis of transparency, responsibility, and sustainable development. It is time to look for partners on this difficult path.
Make sustainability part of your business strategy with BDO in Ukraine! Our team of experts will assist you in implementing effective sustainability strategies that align with international standards, enhancing your competitive edge. Contact us today to take a significant step towards a sustainable future!
