The Georgian Foundation of Sustainability Reporting
The Georgian foundation of sustainability reporting lies in the Law on Accounting, Reporting and Audit: through it, non-financial reporting enters the composition of the management report, the transparency of extractive-sector payments is written down, and the publication regime is defined. At the same time, the European sustainability-reporting directive, its system of standards and the global international guidance frameworks are non-Georgian — their reporting matrix cannot be transferred to a Georgian page. The page is carried by the Georgian regime of management and non-financial reporting, constructed with regard to the requirements of European Union directives.
Non-Financial Reporting within the Management Report
The management report, submitted by PIEs and first- and second-category enterprises, comprises an activity review, a corporate governance report and non-financial reporting. Non-financial reporting covers, at a minimum, the information necessary to determine the influence of the subject's activity, its development, results and position on environmental, social, employment, human-rights and anti-corruption matters. It minimally contains a brief review of the subject's business model, a description of the policy applied to these matters — including the procedures carried out and their results; where the subject applies no such policy, a clear and substantiated explanation is included. Then comes the analysis of the subject's activity risks — including business relationships, the possible negative influence of products or services, and risk-management methods — and the principal non-financial indicators of the particular activity.
The non-financial reporting duty does not, however, extend to every subject: it is prepared by a PIE corresponding to the first-category size criteria and having on average more than 500 employees in the reporting period. A subsidiary is not obliged to present it where the corresponding information is given in the group's consolidated reporting — sustainability data at group level are written once.
Transparency of Extractive Payments
A PIE and a first-category enterprise that use subsoil resources — including the extraction of oil, gas and natural hydrogen — or process timber in a forest of natural origin must annually prepare and submit a report on payments made to the state. The report reflects the amounts paid to the state in monetary or in-kind form as profit tax, licence fee, fee for the use of natural resources, regulation fee, royalty, dividend, bonus defined by the oil and gas law, rent and concession tax, which in the reporting period exceed 100 000 lari for each type of payment, once or in aggregate. Payments to the state include any amount paid into the state budget and payments to an enterprise in which the state's equity participation exceeds 50 percent. This is the most stringent, quantitatively numerical layer of sustainability reporting.
The extractive payments report is precisely defined: an SOE and a first-category enterprise whose activity includes subsoil use or timber harvesting must annually prepare a payments-to-government report reflecting profit tax, license fees, natural-resources use and regulation fees, royalties, dividends, the bonus defined by the oil and gas law, rent and the concession fee — in money or in kind, where the amount of each type exceeds GEL 100 000 once or cumulatively.
The Publication Regime
The service creates and maintains a website for the placement of reports. A subject must submit to the service, together, no later than 1 October of the year following the reporting period, the financial statements, the management report — including the non-financial layer — and the report on payments to the state. The service publishes the submitted reports within 1 month of filing and also conducts risk-based selective verification. A regulator may set restrictions only where disclosure of the information threatens the financial stability of the PIE or the relevant sector — that is the exception; the rule is transparency.
The publication procedure is equally concrete: the subject submits the financial report, the governance report, the payments report and the audit conclusion together, no later than 1 October of the following year, to the service, which publishes the reports on a joint website within 1 month of submission. The service ensures selective risk-based verification of the reports and may require the subject to remedy identified deficiencies.
Frequently Asked Questions
Below we summarise the questions that arise most often in practice on this topic.
Who prepares non-financial reporting?
A PIE corresponding to the first-category size criteria with on average more than 500 employees; subsidiaries are exempt where the information is in the group's reporting.
Which matters does non-financial reporting cover?
Environmental protection, social matters, employment, human-rights protection and the fight against corruption — to the extent necessary to determine the subject's influence.
Which payments are disclosed in extractive reporting?
Profit tax, licence and resource fees, royalty, dividend, bonus, rent and concession tax — in amounts exceeding 100 000 lari per each type.
Where is sustainability reporting published?
On the service's website, within 1 month of filing; the filing deadline is 1 October of the following year.
How We Help on Legal.ge
Our team will help you diagnose the reporting duties, plan the structure of non-financial reporting, prepare the extractive-payments report and run the publication process. Contact us on Legal.ge — we will build your company's sustainability reporting on the exact requirements of Georgian law.