What’s next for digital reporting in Europe?
At yesterday’s XBRL Europe day, part of this week’s Digital Reporting in Europe event, Eduardo-Javier Moral Prieto provided an update on ESMA’s work on the implementation of the next stage of digital reporting in Europe.
As regular readers will know… it’s complicated. ESMA, the European securities regulator, has been analysing more than 100 responses to its recent consultation on the draft regulatory technical standards in this field.There is a clear bifurcation between the responses received from data providers, the XBRL community and some auditors on the one hand, and some other auditors, some issuers and some industry associations on the other.
- On the “Ayes” side of the aisle, there is clear support for simplification, for accelerated implementation and for the importance of XBRL in the reporting process. There is also agreement that AI cannot (today, and perhaps ever) replace the digital disclosure process.
- On the “Nayes” side, issuers in particular express concern that the RTS proposals are complex and burdensome, and they would prefer more time to get ready. Some are sceptical of digital reporting altogether and many are of the view that AI can take its place.
ESMA has to weigh up these competing perspectives in an extremely complex policy environment, while the “Omnibus” amendments are debated at a political level. It is simply not clear how this will resolve itself, although ESMA is optimistic that there may be some greater levels of clarity over the northern hemisphere summer. Overall, however, at this point, it seems that ESMA’s perspective is that:
- Digital sustainability reporting goes ahead (albeit with a smaller number of companies disclosing under the CSRD mandate than originally envisaged after the Omnibus changes are agreed).
- “AI is not yet capable of replacing ESEF {i.e., XBRL disclosures}. It is unclear whether it will ever provide the necessary accuracy and comparability. However, AI could help companies by facilitating the tagging process and reducing workload.”
- If the process continues as presently envisaged, it is likely that the first digital CSRD disclosures will be filed in 2028, and the first “Article 8” disclosures in 2027.
All of that said, nobody should be surprised if the Omnibus, or other political initiatives, alter the picture still further. We expect that the video of this presentation will be available before long and will update this story with those links on our website in due course.
