ESMA 2024 taxonomy: apologies, we got it wrong!
Last week, we reported on the European Securities Markets Authority (ESMA)’s release of the 2024 taxonomy and conformance suite. We need to clarify the timeline for its entry into force and application. While the 2024 taxonomy is now available on the ESMA website, EU filers will need to hold off using it for a couple more weeks.
On 27 December, the European Parliament and Council completed their three-month scrutiny period for the European Single Electronic Format (ESEF) Regulatory Technical Standards (RTS). However, the ESEF RTS was only published in the Official Journal of the European Union (OJ) two days ago, on Wednesday 15 January. The taxonomy will officially enter into force 20 days from that date. This means it can be used by IFRS reporters in Europe from 4 February 2025 onwards.
We have confirmed with ESMA that issuers, from 4 February, can use the 2024 taxonomy (and we would encourage that), but they may, if they prefer, still use the 2022 taxonomy. This “latest two” approach is reasonably common, of course amongst regulators around the world, and many issuers will have developed their year-ending 2024 financial disclosures in draft already, using the 2022 taxonomy.
This clarification does highlight the broader issue we raised last week with the approval processes for digital reporting mechanisms like XBRL taxonomies. While ESMA’s efforts to maintain clarity and transparency are commendable, the continued legislative reliance on analogue procedures for endorsing digital frameworks is a challenge. We believe that ESMA recommended the use of the 2024 taxonomy as far back as May. It’s taken till now to enter into law. Modern markets need streamlined, digital-first approaches to regulatory updates, aligning processes with the 21st-century landscape. Governments the world over need to update their legislative machinery. Perhaps the EC can show the way?
You can explore the 2024 taxonomy, conformance suite, and further explanations on the ESMA website.
