Corporate Sustainability Reporting Regulations, 2026 (Legal Notice 39 Of 2026): A New Era Of Environmental, Social & Governance ('ESG') Transparency In Malta

In 2026 Malta introduced the Corporate Sustainability Reporting Regulations, 2026 (Legal Notice 39 of 2026) ('the Regulations'), marking a significant development in the country's corporate regulatory landscape. The Regulations transpose the European Union's Corporate Sustainability Reporting Directive ('CSRD') into Maltese law and substantially expand the obligations of certain undertakings to disclose sustainability-related information.

The new framework reflects the European Union's broader strategy to enhance transparency, accountability, and comparability of sustainability information within financial markets. By requiring certain undertakings to report on ESG matters in a structured and standardised manner, legislators sought to ensure that investors, stakeholders and regulators have access to reliable information regarding the sustainability impacts and risks associated with corporate activities.

This article provides an overview of the key features, scope, and implications of the Corporate Sustainability Reporting Regulations, 2026.

Purpose and Policy Objectives

The Regulations seek to integrate sustainability considerations into corporate reporting frameworks. Traditionally, corporate reporting focused primarily on financial performance. However, investors and stakeholders increasingly recognise that environmental and social factors can have a material impact on a company's long-term value and risk profile.

The Regulations therefore require certain undertakings to disclose information not only about their financial performance but also about how their operations affect society and the environment. In addition, they are required to report on how sustainability issues may affect the company's financial position and future prospects.

The overarching objectives of the Regulations include:

• improving the quality and consistency of sustainability reporting;
• enhancing transparency for investors and stakeholders;
• facilitating the transition towards a more sustainable economy; and
• aligning Maltese corporate reporting practices with European sustainability standards.

Scope of Application

Legal Notice 39 of 2026 which builds on the Non-Financial Reporting Directive (Directive 2014/95EU) significantly broadens the categories of undertakings required to report sustainability information.

The Regulations apply primarily to:

Large undertakings

Companies that qualify as large undertakings must prepare sustainability reports as part of their directors' report. A company is generally considered a large undertaking if it meets at least two of the following criteria:

• more than 250 employees;
• more than €40 million in net turnover; or
• more than €20 million in total assets.

Parent undertakings of large groups

Parent companies of large corporate groups are required to prepare consolidated sustainability reports covering the activities and impacts of the group as a whole.

Listed small and medium-sized enterprises (SMEs)

SMEs whose securities are admitted to trading on a regulated market are also subject to the reporting requirements, although simplified reporting standards may apply.

Certain regulated financial institutions

Credit institutions and insurance undertakings that fall within the scope of the regulations are likewise required to comply with the sustainability reporting obligations.

At the same time, certain entities remain outside the scope of the regulations. These include micro-undertakings and most non-listed SMEs, reflecting the legislator's intention to avoid imposing disproportionate administrative burdens on smaller businesses. Exemptions also apply to the Central Bank of Malta, the Malta Development Bank, Alternative Investment Funds and undertakings for collective investment in transferable securities.

Key Reporting Requirements

Companies subject to the Regulations must include a dedicated sustainability section within their directors' report. This section must provide comprehensive information relating to environmental, social and governance matters.

The required disclosures include, among other matters:

Business model and strategy

Companies must explain how sustainability considerations are integrated into their business model and long-term strategy. This includes describing how the company's operations align with sustainability objectives and how resilient its business model is to sustainability-related risks.

Sustainability policies and due diligence processes

Undertakings must disclose the policies they have adopted to address sustainability issues, as well as any due diligence processes implemented to identify, prevent or mitigate adverse environmental and human rights impacts.

Principal risks and impacts

Companies must identify the principal sustainability risks they face, including risks related to climate change, environmental degradation, social issues and governance factors. They must also explain how these risks are managed.

Targets and performance indicators

The Regulations require affected undertakings to disclose measurable sustainability targets and key performance indicators (KPIs), such as greenhouse gas emissions and global warming.

The Principle of Double Materiality

One of the most significant requirements introduced by the Regulations is the concept of double materiality.

Under this principle, companies must assess and disclose sustainability information from two distinct perspectives:

• Impact materiality, which considers how the company's activities affect the environment and society; and
• Financial materiality, which examines how sustainability issues may affect the company's financial performance, position, and future prospects.

This dual perspective ensures that sustainability reporting captures both the outward impact of corporate activities and the inward financial risks arising from environmental and social developments.

European Sustainability Reporting Standards

To ensure consistency and comparability across the European Union, companies must prepare their sustainability disclosures in accordance with the European Sustainability Reporting Standards (ESRS).

These standards establish detailed reporting requirements across a wide range of ESG topics, including:

• climate change and greenhouse gas emissions;
• pollution and resource use;
• biodiversity and ecosystems;
• workforce conditions and human rights;
• business conduct and anti-corruption.

The ESRS framework introduces structured reporting templates and standardised metrics, enabling investors and stakeholders to compare sustainability performance across companies and industries.

Assurance and Verification

Another important element brought about by the CSRD is the introduction of mandatory independent assurance of sustainability information.

Companies must ensure that their sustainability disclosures are verified by an independent assurance provider. This requirement enhances the credibility and reliability of sustainability reports and aligns them more closely with traditional financial auditing standards.

Implementation Timeline

The Regulations are being implemented progressively in line with the European framework.

Companies that were already subject to non-financial reporting requirements will be the first to report under the new regime. Subsequently, additional categories of companies will fall within scope over the following years, including large undertakings not previously covered and listed SMEs.

This phased implementation approach is intended to allow companies sufficient time to develop the systems, governance structures and data collection processes required to comply with the new reporting standards.

Implications for Maltese Companies

The introduction of the Corporate Sustainability Reporting Regulations represents a major shift in corporate reporting practices in Malta.

Companies within scope will need to establish robust internal processes for identifying, measuring and managing sustainability risks and impacts. This may require enhanced governance frameworks, cross-departmental coordination, and improved data management systems.

At the same time, the new regime presents opportunities. Companies that proactively integrate sustainability considerations into their strategy may strengthen their reputation, improve access to sustainable finance, and enhance long-term resilience.

Conclusion

The Corporate Sustainability Reporting Regulations, 2026 constitute a significant step in aligning Maltese corporate law with the European Union's sustainability agenda. By expanding and standardising sustainability reporting obligations, the Regulations aim to enhance transparency, accountability and comparability across corporate disclosures.

While compliance will require considerable effort from affected undertakings, the framework also encourages businesses to integrate sustainability considerations into their strategic decision-making. As ESG considerations continue to shape investment and regulatory landscapes, the new reporting regime is likely to play a central role in the future of corporate governance and responsible business conduct in Malta.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.