Time to rip off the band-aid? The EU must go digital
Brussels is deep in a complex “omnibus” policy discussion around the shape, scope and size of sustainability reporting requirements. Regardless of the outcome, here at XBRL International, it is our view that for EU markets to remain relevant and competitive, the EU needs to fully embrace digital reporting.
XBRL International has developed a Briefing Paper on the European Securities and Markets Authority (ESMA) consultation on its plans for the digitisation of sustainability reporting and the expansion of financial reporting. We encourage stakeholders to provide input before the 31 March deadline.
In our view, it is vital, in a digital age, that regulators:
- Think digital first: Inline XBRL should be the single, authoritative version of reports—usable by both humans and machines. This requires a clear vision.
- Simplify the timeline: Digital reporting should go live as soon as the law mandates reporting—no unnecessary delays. A short voluntary period could help ease the transition, but ESMA’s proposed phased approach is far too complex.
- Prioritise data quality. Regulators should support quality through effective feedback loops: smart enforcement, transparency, and guidance—not excessive bureaucracy. Companies need to shift from a paper mindset to a digital one.
- Reframe the burden: The real reporting burden isn’t tagging—it’s sourcing, consolidating, and approving vast amounts of data. In comparison, digital tagging adds only small amounts of additional work but makes reports discoverable and useful. The EU is years behind the US and Japan (and many other countries) on this – and it needs to catch up!
Our Briefing Note provides further analysis and a number of other prescriptions, including early thoughts on our formal response to ESMA. We know some readers have technical concerns, and we are preparing a Technical Note to address them.
This isn’t just about Europe. This kind of approach to digital reporting is important worldwide. We call for simpler, clearer policies—not an overly technical, convoluted system.
And let’s not forget: the European Commission is already moving forward with digital reporting, as seen with last week’s Competitiveness Compass. The upcoming Omnibus Amendments could adjust the Corporate Sustainability Reporting Directive’s (CSRD) scope and may well ease reporting for smaller entities. ESMA should align digital disclosures with disclosure law—nothing more, nothing less.
We’re in a digital age. Hoping someone finds your PDF and reads your expansive report is outdated. It’s time for change.
Read our Briefing Note here, respond to the consultation, and help drive the modernisation of reporting.
