ESMA consults on digitalising sustainability and financial disclosures
On 13 December, the European Securities and Markets Authority (ESMA) published a consultation outlining its proposals to extend the European Single Electronic Format (ESEF) to sustainability reporting. These proposals align with the requirements introduced by the Corporate Sustainability Reporting Directive (CSRD) and aim to integrate sustainability disclosures into ESEF while simplifying financial reporting processes. It also sets out plans to expand financial reporting in digital form. ESMA’s initiative seeks feedback from stakeholders by 31 March, focusing on marking up sustainability reports with XBRL tagging and improving the usability of existing financial digital disclosures.
The consultation includes a phased implementation plan for European Sustainability Reporting Standards (ESRS), ensuring alignment with existing financial reporting standards. It also proposes refinements to how notes to IFRS consolidated financial statements are marked up and includes technical amendments to the Regulatory Technical Standards on the European Electronic Access Point (EEAP). At its core, the initiative focuses on incorporating sustainability disclosures into machine-readable iXBRL, enhancing both accessibility and comparability of financial and ESG data. The resulting data will, in due course, be accessible via the European Single Access Point (ESAP), centralising information for investors and analysts.
By requiring structured, machine-readable formats, ESMA aims to streamline reporting while unlocking significant value for stakeholders. High-quality, accessible – and above all, digital — disclosure ensures compliance, supports informed decision-making, and facilitates advanced analytics.
The EU has been working towards it’s CMU or “Capital Markets Unions”, (now, we gather, to be rebranded as “Savings and Investment Union”) for a decade. These proposals, while containing a number of extremely welcome additions and improvements, are far too slow to help ensure the CMU reaches its objectives. At Data Amplified we heard from experts involved in the preparation of corporate reports, and their digitisation. A large company will expend thousands of person-days in pulling together everything required for their annual report. That’s today – before the introduction of sustainability disclosures into corporate reporting. Tagging, or marking up the disclosure for today’s ESEF reporting requirements adds another five days effort for a very large company.
In other words, the preparation (or even better, deep embedding) of tagging – to ensure that these reports can be used by modern investors, by regulators, policy makers and other stakeholders – represents an additional piece of work by management approximately equivalent to 0.5% of the effort associated with the preparation of the report itself. Slowing down the digital aspects of disclosure is not in the public interest, or in the interests of healthy, growing or competitive markets in Europe. We are still working through the consultation draft but are looking forward to the ensuing discussion.
We encourage our readers to review the proposals and provide their input by the March deadline. ESMA will consider this feedback in Q2 2025, with a final report and technical standards expected by Q3 2025.
Read the full consultation document here. Watch Shaun Curran’s presentation on digital disclosures here.
