ESMA Unveils 2024 Enforcement Priorities for EU Corporate Reporting

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator, has released its European Common Enforcement Priorities (ECEP) for 2024 corporate reporting. This annual guidance aims to harmonize supervision across the EU and outlines areas that ESMA, alongside European national enforcers, will focus on as they review corporate reports in 2025.

The 2024 ECEP Statement highlights key reporting priorities, especially as the landscape of regulatory and sustainability standards continues to evolve. The priorities fall into three main areas:

1. International Financial Reporting Standards (IFRS): ESMA and European enforcers will place particular emphasis on liquidity considerations, accounting policies, as well as judgments and significant estimates made within IFRS financial statements. These areas are crucial as companies navigate uncertain market conditions, and the focus on liquidity and transparency remains paramount for investor confidence.
2. Sustainability Statements: With the European Sustainability Reporting Standards (ESRS) becoming more deeply integrated, ESMA will scrutinize materiality considerations in sustainability reporting, the structure and scope of sustainability statements, and the disclosures mandated by Article 8 of the EU’s Taxonomy Regulation. This attention on materiality aims to ensure that companies provide clear and relevant information that genuinely reflects their environmental and social impact.
3. European Single Electronic Format (ESEF): As digital reporting gains momentum, ESMA has underscored common filing errors found in the Statement of Financial Position under the ESEF, the mandatory format for listed companies. ESMA’s objective here is to streamline digital reporting across Europe, emphasizing accuracy and uniformity in companies’ electronic submissions.

Additionally, ESMA’s ECEP Statement connects these enforcement priorities to its recent publications, such as the reflections on IFRS 17 for insurance contracts, guidelines on carbon allowances in financial statements, and early insights from large issuers’ first application of ESRS. These publications illustrate ESMA’s ongoing commitment to transparency, encouraging the transition from opaque, “black box” reporting to a more open, accessible approach to financial and non-financial disclosures.

Expectations for Issuers, Auditors, & Supervisory Bodies

As the EU’s regulatory landscape advances, ESMA’s ECEP offers a blueprint for issuers, auditors, and supervisory bodies, urging them to integrate these recommendations in their financial reporting processes for 2024. Companies preparing their annual financial reports are expected to consider these priorities in light of materiality and relevance, ensuring that their disclosures provide investors with a transparent, interconnected view of financial performance and sustainability efforts.

This continued focus on enforcing transparency within the financial and sustainability reporting frameworks reflects ESMA’s dedication to fostering investor trust and facilitating comparability across the European markets. With the ECEP’s guidance, ESMA aims to support a cohesive supervisory environment across the EU, reinforcing both financial stability and sustainable growth.

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