Spain mandates companies to report and reduce carbon emissions

Spain, which has been struck by devastating climate-related floods and fires in recent years, has introduced a legal requirement for companies, public entities and event organisers to report carbon emissions and produce five-year decarbonisation plans.

The decree which came into force in June transposes the EU’s corporate sustainability reporting (CSRD) into Spanish law, even as the EU has proposed watering down the CSRD and due diligence directives.

The EU has launched an omnibus package aimed at simplifying climate reporting requirements for companies, reducing the scope for 80% of firms. But some financial regulators and experts are concerned the proposed changes would increase economic risk and make it more difficult to invest in green projects.

Around 4,000 organisations in Spain must now report on their emissions and carbon reduction plans or face exclusion from public procurement processes, according to sustainability consultants Plan A.

“This represents a substantial increase from previous voluntary frameworks, bringing thousands of organisations into mandatory compliance for the first time,” Plan A says.

Private companies must comply if they have more than 250 employees, more than €20mn in assets, or more than €40mn in annual turnover for two consecutive years. All public entities have to comply regardless of size, as well as organisers of events with more than 1,500 attendees.

The EU’s CSRD has been in force since July 2024 and requires companies to disclose detailed information on their impact on the environment and human rights issues, including their greenhouse gas emissions. Like many EU member states, Spain did not transpose the CSRD on time, although it had introduced similar measures in a climate change act in 2021.

“Common measures across the EU would be preferable, but in light of the current situation national measures at least provide some legal certainty to build from,” said David Ramos Muñoz, professor of commercial law at Madrid’s Carlos III university

Earlier this month, Spanish prime minister Pedro Sanchez announced a package of measures to tackle the climate emergency. “If we don’t want to bequeath our children a Spain that’s grey from fire and flames, or a Spain that’s brown from floods, then we need a greener Spain,” he said.

Sanchez said extreme weather events had caused €32bn in damage throughout Spain in the last five years. The country has been hit by record wild fires this summer after devastating floods last year.

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