ESMA launches consultation to enhance digital sustainability disclosures

The European Securities and Markets Authority (ESMA) has initiated a consultation aimed at advancing the digitalisation of sustainability and financial disclosures, employing a systematic approach through the European Single Electronic Format (ESEF). This initiative is designed to enhance the accessibility, comparability, and usability of information for investors as they increasingly depend on data-driven strategies, particularly in the context of sustainability-focused investment decisions.

As highlighted in ESMA’s announcement, “It is a priority for ESMA that investors are able to effectively access relevant and comparable information.” This emphasis on improved investor access aligns with ongoing trends in financial markets, where stakeholders seek comprehensive insights that facilitate informed investment strategies.

The proposal outlines a series of key elements aimed at streamlining the reporting process. Central to these proposals is the introduction of mark-up rules specifically for sustainability reporting. This will involve a phased implementation of the European Sustainability Reporting Standards (ESRS), which is scheduled to unfold over a six-year period. The final phase will see the complete integration of Article 8 disclosures, which focus on sustainability claims related to financial products.

Furthermore, updates to the annotation approach within IFRS (International Financial Reporting Standards) consolidated financial statements are proposed, aiming to reduce the complexity associated with financial reporting. These regulatory adjustments are intended to support the effective adoption of the European Single Access Point (ESAP), an integrated data repository for financial and sustainability information.

Stakeholders, which consist of listed companies, auditors, investors, and data analysts, are invited to provide their feedback through to 31 March 2025. Following this feedback period, ESMA intends to assess the responses and prepare a final report along with associated technical standards, slated for submission to the European Commission for endorsement by the third quarter of 2025.

This initiative represents a significant step towards establishing a more transparent and efficient reporting system, which is expected to enhance access to crucial data for sustainable investment practices. The emphasis on digitalisation and streamlined reporting is poised to align with future trends in business practices as they increasingly incorporate automation and data analytics.

Source: Noah Wire Services