Are you familiar with ESG & CSRD?
Ignorance or indifference could be catastrophic for you and your business.
On 31/10/2025, the following article by our firm’s managing partner, Dimitrios Piperakis, was published in E-economy
The new era of corporate transparency: Law 5164/2024 transforms ESG from an option into a legal obligation with stringent penalties
The era when ESG (Environment, Society, Governance) factors were merely a corporate social responsibility initiative has definitively passed. With the enactment of Law 5164/2024, which transposes the European Corporate Sustainability Reporting Directive (CSRD), Greece is entering a new, stringent regime of corporate transparency. Sustainability reporting is being transformed from a voluntary public relations exercise into a legally mandated, audited, and sanction-backed obligation.
For the management of every Greek enterprise, understanding this new framework is not merely a matter of compliance, but of strategic survival. Business leaders must have clear answers to the questions below and an awareness of the lurking risks.
1. The Scope of Application: Which entities bear the direct obligation?
The direct obligation primarily concerns “large entities.” Law 5164/2024, through Article 47, revised the size criteria of Law 4308/2014. An enterprise falls into this category if, for two consecutive financial years, it exceeds the thresholds in at least two of the following three criteria:
Total Assets: €25,000,000
Net Turnover: €50,000,000
Average number of employees: 250
The above is clear, but how does it affect my own enterprise, which does not meet any of the above criteria? Could a large retail chain (an obligated entity) require its suppliers (e.g., a medium-sized food company) to provide certified data on their water usage and carbon emissions in their production?
Even enterprises that do not meet the above criteria will be indirectly affected. Large companies, in their effort to comply, will demand equivalent sustainability data from their suppliers and partners, thus creating a cascading obligation across the entire market. Thus, in our example, the food company, even if not directly liable, risks losing a critical contract if it cannot provide this data.
2. The Roadmap: What is the compliance timeline?
Article 14 of Law 5164/2024 sets a clear, phased implementation timeline:
Reporting in 2025 (for the 2024 financial year): Applies to large public-interest entities (>500 employees) already subject to the previous Directive (NFRD).
Reporting in 2026 (for the 2025 financial year): This is the most critical milestone. It includes all other “large entities” that meet the new criteria. The reporting period begins on 1/1/2025, making preparation an immediate priority.
Later Phases (2027-2029): The gradual inclusion of listed SMEs and specific companies with parent undertakings outside the EU follows.
Do Greek enterprises have the agility required to meet these obligations in a timely manner?
In my estimation, it is extremely doubtful, as one need only consider that for the 2026 report, data must be collected starting from January 1, 2025. This means the mechanisms within the obligated company must be operational by that date. To achieve this, the enterprise itself must have established, internally or externally, a dedicated team of legal and other experts with a clear mandate and defined responsibilities. Is this happening in practice? The answer is overwhelmingly no. Furthermore, the great majority of legal and other experts are not yet ready to act.
3. The Essence of Compliance: What are the key procedural actions?
Compliance transcends the mere drafting of a report and constitutes a structured process comprising three pillars:
A. Double Materiality Assessment This is the cornerstone of the process. The enterprise is required to assess and report on issues that are material from two perspectives:
Financial Materiality (Outside-In): How external sustainability factors (e.g., climate risks, regulatory changes) create financial risks and opportunities for the enterprise.
Impact Materiality (Inside-Out): How the enterprise’s activities and its value chain bring about positive or negative impacts on the environment and society.
The proper conduct of this analysis determines the content of the report and requires a methodology that is legally and auditably sound.
We are living in an era where the use of clean energy sources is a key policy pillar in much of the Western world. In this context, the risk of measures aimed at deterring the use of environmentally burdensome energy sources is lurking. Thus, the imposition of, for example, a carbon tax burdening air and sea transport cannot be ruled out. Has an enterprise active in tourism on a Greek island accounted for such a risk? Will it indirectly absorb the additional transport costs or the decline in tourist activity and visitor expenditure? Is such an option sustainable for the enterprise itself?
It is also abundantly clear that the primary manufacturing sector for industrial and consumer goods (e.g., clothing, footwear) is located in Asian countries. Working conditions in these countries and the consumption of energy and natural resources during production differ materially from those in the European or Western world in general. Given the more lax or non-existent regulatory framework of these countries, how can a European enterprise—for example, one dealing in clothing retail—source and integrate into its sustainability report information regarding the aforementioned?
B. Preparation of the Report in Accordance with Standards (ESRS) The report must compulsorily be drafted in accordance with the European Sustainability Reporting Standards (ESRS), as stipulated by Article 7 of Law 5164/2024. These standards act as a stringent framework that specifies particular indicators and disclosures for each material topic.
C. Mandatory Assurance (Audit) Article 12 of Law 5164/2024 introduces a critical innovation: the sustainability report must be subject to an assurance audit by a statutory auditor. This means that ESG data acquires the same requirement for accuracy and verifiability as financial statements.
Therefore, the establishment and adoption of policies and internal controls analogous to those existing for financial reporting is required. This is not an ‘add-on’, but a necessity and a given.
4. The Legal Consequences: What risks stem from non-compliance?
Law 5164/2024 establishes a stringent framework of penalties targeting the personal liability of management:
Criminal Liability: A sentence of imprisonment of up to 3 years is stipulated for the responsible members of governing bodies in the event of a false or incomplete filing.
Administrative Fines: Articles 54 and 55 provide for fines up to €100,000 (for natural persons) and €500,000 (for legal entities), with the potential for these to be doubled in the event of recidivism (a repeat offense).
Professional Sanctions: Article 38 provides for the temporary disqualification from performing duties for members of management and auditors.
The legal penalties are clear. They implicate the company itself as well as the individuals in management who bear this specific duty. Who would risk involvement in a potential criminal prosecution, risking not only punishment but also the public disgrace of both themselves (as an executive or entrepreneur) and the enterprise?
However, beyond the direct legal penalties, the consequences extend to the marketplace. Access to banking finance and investment capital is now inextricably linked to ESG performance, as confirmed by the initiatives of the Hellenic Bank Association. Non-compliance is tantamount to increased business risk and potential exclusion from critical sources of capital as a “high-risk investment.”
Conclusion: The Strategic Dimension of Legal Compliance
The transition to the CSRD regime is not merely a regulatory burden, but a catalyst for strategic transformation. It provides enterprises with the framework to recognize risks, identify opportunities, and build a more resilient and competitive operating model.
However, the complexity of the standards, the criticality of the double materiality analysis, and the severity of the legal consequences make ongoing and specialized legal support indispensable.
Ensuring the legal soundness of the process (the preventive stage) and protecting management from personal liability (in the event a violation is certified) are not secondary details, but the core of a successful adjustment strategy. The question for every board of directors is no longer if they will deal with ESG, but how they will manage its legal framework to secure the future of the enterprise. Hiring a specialized legal team for ongoing legal support constitutes a strategic investment for every company.