European Regulator Unveils Measures to Bolster Corporate Sustainability Reporting

The European Securities and Markets Authority (ESMA) has taken steps to enhance and standardize sustainability reporting across the European Union. On July 5, 2024, ESMA released two key documents aimed at supporting the consistent application and supervision of sustainability reporting requirements.

The first document, a Final Report on the Guidelines on Enforcement of Sustainability Information (GLESI), provides guidance to build convergence on supervisory practices for sustainability reporting. This move is expected to create a more uniform approach to oversight across EU member states.

Complementing this, ESMA also issued a Public Statement on the first application of the European Sustainability Reporting Standards (ESRS). This statement is designed to assist large issuers in navigating the complexities of implementing these new reporting requirements.

These initiatives align with ESMA's broader strategy to promote EU capital markets as a hub for green finance and improve supervisory consistency among EU National Authorities. The regulator aims to clarify sustainability information disclosure, potentially easing compliance burdens for industry players while enhancing comprehension for investors.

ESMA's actions come at a crucial time as the financial sector grapples with increasing demands for transparent and standardized sustainability reporting. The new guidelines and statement are expected to play a pivotal role in shaping the future of corporate sustainability disclosure in the EU.

Looking ahead, ESMA plans to continue monitoring sustainability reporting practices throughout 2025 and the application of the GLESI. The regulator will also translate the GLESI into all EU languages to ensure widespread accessibility.

Furthermore, ESMA has announced its intention to release recommendations related to the sustainability statements of listed companies in its Public Statement on the 2024 European Common Enforcement Priorities, due in the fourth quarter of this year.

These developments mark a significant step forward in the EU's efforts to standardize and improve sustainability reporting, potentially setting a benchmark for other regions to follow.

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