ESMA warns preparers by flagging common tagging pitfalls
The European Securities and Markets Authority (ESMA) recently issued its annual European Common Enforcement Priorities (ECEP), highlighting what it’s going to be looking out for in 2025 annual financial reports. The three core focus areas include IFRS financial statements, sustainability statements, and digital reporting under the European Single Electronic Format (ESEF).
In digital reporting, ESMA has flagged persistent issues in the tagging of the Statement of Cash Flows. These include the misapplication of IFRS taxonomy concepts, insufficient granularity in tag selection, and inconsistencies in tagging comparative periods or items in footnotes. ESMA also underlined the importance of proper calculation linkbases, correct signs and scaling of numerical items, and the accurate anchoring of extension elements to base taxonomy concepts.
Meanwhile, in the area of sustainability disclosures, ESMA reiterates the importance of materiality assessments and the structure and scope of the sustainability statement under the European Sustainability Reporting Standards (ESRS). ESMA also shares a reminder that it would be wise to prepare sustainability reports in a way that supports digital tagging, enhancing usability and preparing for a machine-readable future.
ESMA’s 2024 priorities also addressed markup challenges under ESEF. However, the 2025 guidance reflects a deeper expectation that preparers, auditors, and vendors step up on data quality, ensuring that filings are not just technically valid but also meaningful for users. As structured reporting becomes more embedded in regulatory practice, tagging errors that might once have been overlooked are increasingly being scrutinised.
For financial and ESG data alike, tagging choices matter. In the context of sustainability reporting, proper mapping of material impacts, risks and opportunities to ESRS concepts can enable a far more connected useful corporate report. With XBRL enabling this structured detail, quality implementation is critical to ensure investors, regulators and other stakeholders can extract and compare meaningful information.
Read ESMAs enforcement priorities document here.
