Will Your Company Still Need an ESG or Sustainability Report?

If the Finance Ministry’s proposed amendments are adopted, mandatory sustainability reporting would apply only to companies meeting both thresholds: net turnover above €450 million and an average workforce exceeding 1,000 employees during the reporting year.

In business communication this document is often called an ESG report, while the statutory term used in Latvia is “sustainability report”.

The proposed thresholds are not yet in force. Public consultation remains open until 14 September 2026, so companies should not discontinue their existing reporting preparations before the final legislation, effective date and transitional rules are confirmed.

How can a company determine whether reporting would remain mandatory?

Under the proposed wording, a company would have to check both conditions:

whether net turnover at the balance-sheet date exceeds €450 million;
whether the average number of employees during the reporting year exceeds 1,000.

Both conditions must be met simultaneously. Exceeding only one threshold would not trigger the proposed mandatory reporting requirement.

The draft uses the word “exceeds”. Therefore, exactly €450 million in turnover or exactly 1,000 employees would not exceed the relevant threshold.

Simplified examples

€600 million in net turnover and 900 employees – both conditions are not met;
€430 million in net turnover and 1,500 employees – both conditions are not met;
€451 million in net turnover and 1,001 employees – both thresholds are exceeded;
€450 million in net turnover and 1,200 employees – the turnover threshold is not exceeded.

These are simplified examples. A parent undertaking would need to assess the group’s consolidated net turnover and average workforce. Exemptions, third-country group structures and other special cases may require a separate legal assessment.

Why is the reporting scope being reduced?

Latvia previously implemented the European Union’s Corporate Sustainability Reporting Directive using broader company categories and a phased application timetable.

The Latvian framework is now intended to be aligned with the revised EU requirements contained in Directive (EU) 2026/470. The aim is to reduce administrative costs and concentrate mandatory reporting on the largest companies and corporate groups.

According to the explanatory note and data from Latvia’s State Revenue Service for the 2024 and 2025 reporting years, approximately ten Latvian companies could meet both proposed criteria. No list of these companies has been published.

What would change for material intangible resources?

The same two thresholds would apply to the obligation to disclose material intangible resources in the management report.

A company exceeding both thresholds would have to explain how its business model depends on these resources and how they contribute to value creation.

Depending on the business model, such resources may include employee expertise, intellectual property, technology, reputation, customer relationships or other resources without physical substance. Each company would have to assess their materiality according to its circumstances.

Could companies outside the mandatory scope report voluntarily?

Yes. Companies falling outside the mandatory scope could continue providing sustainability information by using the voluntary sustainability reporting standards established by the European Commission.

A company using those standards would state in its management report that the sustainability information had been prepared voluntarily under the relevant standards.

Exemption from a statutory report would not necessarily eliminate requests for ESG information. Banks, investors, insurers, major customers, procurement organisers and supply-chain partners may continue to request relevant data.

Can a company stop preparing its report now?

No. The Finance Ministry has published a draft law, not legislation that is already in force.

The consultation must conclude and the amendments must still pass through the legislative process. It is not yet safe to state which reporting year the new thresholds will affect for every category of company.

What should finance managers, accountants and auditors do now?

Calculate both indicators using the latest completed reporting period and the company’s current forecast.
For a corporate group, assess consolidated turnover and the group’s average workforce.
Document the calculation methodology and underlying data sources.
Do not terminate data collection, report preparation or assurance work solely because the draft has been published.
Identify the ESG information that banks, customers, investors or the parent company will continue to request.
Assess whether voluntary reporting standards would remain useful.
Monitor the final wording, effective date and transitional provisions.

How can businesses participate in the consultation?

Companies, professional organisations, accountants, auditors and other interested parties can review the proposal and submit comments through the Latvian TAP portal until 14 September 2026.

Important practical issues include group-level calculations, the first reporting year affected, transitional arrangements and the use of voluntary standards.

Frequently asked questions

Would exceeding only one threshold be sufficient?

No. Under the proposed wording, the turnover and employee conditions must both be met.

Would a company with exactly 1,000 employees be covered?

Not under the workforce criterion. The draft requires the average number of employees to exceed 1,000.

Does turnover of exactly €450 million meet the threshold?

No. The proposed wording requires net turnover to exceed €450 million.

Would the same thresholds apply to corporate groups?

Yes. The same thresholds are proposed for parent undertakings, based on the group’s consolidated indicators.

Are the new thresholds already in force?

No. They are included in a draft law that remains under public consultation until 14 September 2026.

Information updated on 5 September 2026. The proposal may change during consultation and the legislative process.