ESMA takes stock of corporate reporting enforcement across the EEA
Last week the European Securities and Markets Authority (ESMA) published its annual report on corporate reporting enforcement, providing a snapshot account of how national enforcers and ESMA supervised reporting across the European Economic Area (EEA) last year.
The report covers financial reporting, sustainability reporting, and digital reporting under the European Single Electronic Format (ESEF). With the European Sustainability Reporting Standards (ESRS) coming into force for the largest listed companies last year, it’s the first ESMA enforcement report to look into ESRS compliance.
For the digital reporting community, the updates on ESEF will be of particular interest. Around 3,000 issuers had their annual financial reports (AFRs) examined for filing compliance, with 613 subject to markup examinations of their Inline XBRL tagging. The markup examination action rate was 13%, with most actions requiring corrections in future filings. Common issues spotted included incorrect or overly broad taxonomy element selection; inconsistencies between markups in primary financial statements and the related notes; and a lack of completeness, with comparative amounts, zero-value items and footnotes containing monetary figures most frequently left untagged.
On a positive note, ESMA saw clear progress on the ESEF-specific priority it had set in its 2024 European Common Enforcement Priorities (ECEP) statement, which focused on common errors in the Statement of Financial Position. Of 88 issuers examined against this priority, most had taken on board the guidance — though issues around anchoring of extension taxonomy elements, incorrect sign and scaling, and missing mandatory text-block markups persisted in a minority of cases.
One item worth flagging: ESMA noted that it has put on hold the development of digital tagging requirements for sustainability reporting, due to the Omnibus simplification process and revision of ESRS Set 1.
The report is worth a read if you want to dive into the details of how reporting is playing out in practice across Europe. The broader takeaway from the document is that enforcement is being used not just to penalise, but to drive genuine improvement in the quality, consistency and usability of structured financial data.
Read the full report here.
