Sustainability Disclosures under the Swedish Annual Accounts Act

Many companies are still subject to sustainability disclosure requirements under the Swedish Annual Accounts Act (ÅRL, Chapter 6). These requirements apply to both large companies and companies listed on a regulated market, requiring businesses to disclose information on sustainability-related issues, risks, and practices in areas such as the environment, social conditions, personnel, human rights, and anti-corruption.

A company is normally classified as large if it meets at least two of the following criteria in each of the past two financial years:

• More than 50 employees
• More than SEK 40 million in net turnover
• More than SEK 80 million in balance sheet total

The purpose of these sustainability disclosures is to give investors, customers, financiers, and other stakeholders a better understanding of how a business impacts, and is impacted by, sustainability-related issues.

While many companies today are focused on developments around the CSRD and ESRS, sustainability disclosures under the ÅRL remain relevant for many businesses, particularly those not subject to full CSRD reporting.

What do the Sustainability Disclosures cover?

Sustainability disclosures under the ÅRL may include information on:

• The company's business model
• Policies and processes related to sustainability issues
• Material sustainability risks
• How the company approaches environmental and climate issues
• Social and personnel-related issues
• Human rights
• Anti-corruption and business ethics
• Relevant performance indicators and metrics

The specific information required varies depending on the size and nature of the business, as well as which sustainability issues are relevant to the company.

 Common challenges in Sustainability Disclosure work

• Determining which disclosures are relevant
  Many companies find it challenging to determine which sustainability issues, risks, and disclosures are most relevant to include in their reporting.
• Structure and quality of reporting 
  Sustainability information is often scattered across the organisation and sometimes lacks clear processes for data collection, quality assurance, and follow-up.
• Balancing transparency and proportionality 
  For many businesses, the challenge lies in achieving sufficient transparency without making the reporting unnecessarily extensive or complex.
• Adapting to changing requirements and expectations 
  Requirements and expectations from customers, investors, banks, and other stakeholders are continuously evolving, meaning many companies need to develop and structure their sustainability work over time.