Sustainability Reporting and Auditing introduced by Legislative Decree 125/2024

Legislative Decree no. 125 of 6 September 2024, implementing EU Directive 2464/2022 (Corporate Sustainability Reporting Directive), definitively introduces into the Italian legal system for a large class of companies the obligation to include sustainability reporting in the financial statements and specifically in a specific section of the management report.

Both individual and consolidated sustainability reporting require disclosure on a wide range of elements, indicators and corporate policies that must be appropriately formalized by companies: the description of the corporate strategy with its resilience and the opportunities associated with sustainability; the company's plans with the related investments aimed at ensuring the compatibility of the strategy with the limitation of global warming; the temporally defined objectives associated with sustainability issues; the role and skills acquired or to be acquired by directors and auditors in terms of sustainability; the description of the impacts of the company's activities on sustainability, including impacts at the level of the supply chain and distribution structure; the procedures adopted by the company to ensure "due diligence" to prevent or mitigate negative impacts throughout its value chain.

This reporting will be submitted to Assurance and the auditor will be required to express in his report his conclusions regarding the compliance of the aforementioned reporting with the rules governing its preparation.

This is a historic change to the rules governing the preparation and auditing of financial statements, with important implications in terms of compliance and liability for directors, auditors and auditors.