Spain has taken a decisive step in climate policy with Royal Decree 214/2025, which makes carbon reporting mandatory for a broad set of businesses. The move not only strengthens Spain’s national climate commitments but also ties closely to the European Union’s Corporate Sustainability Reporting Directive (CSRD). For executives navigating ESG and compliance, this development is both a regulatory milestone and a strategic signal: emissions reporting is no longer optional, and alignment with EU frameworks is accelerating.

What Royal Decree 214/2025 Means for Companies

The Decree, effective June 2025, converts Spain’s previously voluntary carbon footprint registry into a legal requirement. It applies to:

• Large private enterprises – companies with more than 250 employees, assets above €20 million, or turnover above €40 million (for two consecutive years).

• Public entities – government bodies, state-owned enterprises, and local administrations, regardless of size.

• Event organisers – any organisation hosting events with more than 1,500 attendees.

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Smaller companies are not directly required to report, but pressure from procurement, investors, and supply chains means many will feel indirect effects.

What Must Be Reported

The Decree phases in carbon disclosure obligations:

• 2026 (based on 2025 data): Scope 1 (direct) and Scope 2 (indirect from energy) emissions become mandatory.

• 2028: Scope 3 (value chain) emissions reporting is required for large companies.

• Reduction Plan: All in-scope entities must publish a five-year greenhouse gas reduction plan with measurable targets.

• Verification: Larger entities will need third-party assurance of reported emissions and reduction plans.

Reports must follow methodologies approved by Spain’s Ministry for Ecological Transition (MITECO) and be made public either in the national registry or through company channels like ESG reports.

How CSRD Fits Into the Picture

Spain’s new carbon reporting law doesn’t stand alone. It has been deliberately designed to align with the European Union’s Corporate Sustainability Reporting Directive (CSRD), which standardises sustainability disclosures across Europe through the European Sustainability Reporting Standards (ESRS).

At its core, CSRD requires companies to adopt a double materiality perspective—reporting not only on how environmental and social issues may affect financial performance, but also on how their own operations impact people and the planet. Beyond carbon, the ESRS framework extends into areas such as biodiversity, workforce conditions, circular economy, and governance, making sustainability reporting far broader in scope than emissions alone. Importantly, these disclosures will no longer sit in isolation; under CSRD, they must be integrated with annual financial reports, raising both the accountability and comparability of ESG information across the EU.

Together, Royal Decree 214/2025 and CSRD form a comprehensive framework. Spanish businesses will need to invest in stronger data systems, improved governance, and more strategic alignment to meet the dual demands of accurate carbon reporting and broader sustainability disclosures.

Why This Matters for Executives

For business leaders, these changes go far beyond a compliance exercise—they represent material business risks and opportunities. Non-compliance can now mean exclusion from public tenders, a particularly significant threat in Spain where government contracts represent a sizeable share of many companies’ revenues. At the same time, the biggest challenge ahead is preparing for Scope 3 emissions reporting. Building readiness requires years of supplier engagement and data collection, meaning that waiting until the 2028 deadline could leave companies scrambling.

On the opportunity side, transparent and verified carbon reporting increasingly acts as a gateway to capital. Financial institutions and investors are raising expectations for credible climate data, making robust reporting a prerequisite for access to ESG-linked finance. Beyond compliance and capital, companies that take a leadership role in emissions disclosure and set credible reduction plans will stand out in the marketplace. Strong performance here not only reduces regulatory risk but also strengthens reputation, competitiveness, and stakeholder trust.

Steps to Prepare Now

1. Run a Gap Assessment: Identify whether your organisation meets thresholds and map current data coverage for Scope 1 and 2.

2. Invest in Data Systems: Build or upgrade systems for emissions tracking, ensuring audit-readiness and data quality.

3. Engage the Value Chain: Start working with suppliers now to prepare for Scope 3 disclosures.

4. Develop a Reduction Plan: Create a credible, measurable five-year strategy aligned with national and EU climate goals.

5. Plan for Assurance: Prepare processes for third-party verification to ensure credibility and compliance.

Looking Ahead

The message from Madrid and Brussels is clear: carbon accountability is entering a new era. For Spanish businesses, Royal Decree 214/2025 and CSRD together mark the shift from voluntary sustainability commitments to mandatory, verified reporting. Companies that act early will not only stay ahead of compliance deadlines but also position themselves as leaders in the low-carbon transition.