CZECH REPUBLIC Law and Practice Contributed by: Martin Řanda, Jan Lexa, Vít Fišer and Adam Vopelka, act legal
6.5 ESG Requirements In the Czech legal jurisdiction, ESG requirements are primarily derived from EU regulations, particularly the Corporate Sustainability Reporting Directive (CSRD), which is implemented by Czech law. Large companies, including listed entities and those that meet certain size criteria, are required to disclose ESG information (in a sustainability report). This includes environmental performance, social and labour practices, and govern- ance information, integrated into their annual reports. The Czech Accounting Act incorporates these obli- gations, making reporting mandatory for qualifying companies based on size. Monitoring and enforcement are carried out through compliance checks. Non-compliance can result in fines of up to 3% of a company’s assets. Enforcement also leverages whistle-blowing protections under Czech law to identify breaches relating to ESG issues. ESG disclosures must be transparent and are subject to regulatory scrutiny, in line with EU and Czech laws. 6.6 Environmental Audits Some companies may be subject to environmental audit requirements. The most significant and widely implemented require- ment is the energy audit under Act No 406/2000 Coll, on Energy Management. It is a systematic review and analysis of energy consumption. An energy auditor (a qualified energy specialist with a licence from the Ministry of Industry and Trade) thoroughly maps the energy management of the entity, to be able to pro- pose measures that will lead to energy savings and be cost-effective. The obligation to conduct an energy audit applies to large enterprises (defined by number of employees or turnover) and must be carried out once every four years. Furthermore, some operators of facilities subject to integrated permits must regularly report on their com- pliance with these permits’ conditions. However, this does not constitute an environmental audit in the strict sense.
Act No 165/2012 Coll, on Supported Energy Sources, as amended, defines two forms of support for elec- tricity producers: support in the form of a feed-in tar- iff (mandatory purchase) or support in the form of a green bonus. The Act on Income Taxes (Act No 586/1992 Coll) con- tains certain tax reliefs for environmentally beneficial investments, such as energy-efficient technologies or use of renewable resources. Negative Incentives Violation of environmental regulations may result in environmental liability for the entity (see 5. Environ- mental Liability ). Exemptions and Flexibility Threshold exemption Activities that are minor and fall below the specified thresholds in the sectoral laws may be exempted from permit obligations. Temporary exemption The competent authorities may, under conditions laid down in specific statutes, grant temporary exemp- tions from emission limits where compliance is not technically feasible, subject to compensatory meas- ures. 6.4 Shareholder or Parent Company Liability Shareholder liability is theoretically possible but is highly unlikely in practice. Shareholders are involved only in strategic decision-making, while the imple- mentation of those decisions is carried out by the directors who are responsible. Under environmental legislation, a parent company cannot be liable for breaches committed by its sub- sidiary. Only liability under Act No 90/2012 Coll, on Companies and Co-Operatives, as amended, may arise if the subsidiary suffers harm due to substan- tial influence exercised by the parent company. Such damage could likely include the costs of environmen- tal remediation.
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