The European Securities and Markets Authority (ESMA) has announced its 2024 European Common Enforcement Priorities (ECEP), emphasizing the critical role of sustainability and taxonomy-related disclosures in corporate reporting. This aligns […]

The European Securities and Markets Authority (ESMA) has announced its 2024 European Common Enforcement Priorities (ECEP), emphasizing the critical role of sustainability and taxonomy-related disclosures in corporate reporting. This aligns with Europe’s commitment to ambitious climate goals and the growing integration of Environmental, Social, and Governance (ESG) considerations in financial markets. 

Key highlights of ESMA’s 2024 ECEP include a strong focus on the Corporate Sustainability Reporting Directive (CSRD). Companies are required to align their sustainability reporting with the European Sustainability Reporting Standards (ESRS), ensuring detailed and standardized disclosures on ESG impacts and risks. ESMA stresses that sustainability disclosures should go beyond compliance, serving as essential tools for transparency and decision-making for investors. 

A significant aspect of the ECEP is the requirement to link sustainability and financial reporting. Organizations must ensure consistency across sustainability statements and financial reports by using the same consolidation scope. Disclosures should encompass material impacts and risks across the value chain, with a three-year transitional period provided for data collection. 

Additionally, ESMA reinforces strict adherence to EU Taxonomy-related disclosures. Issuers must use standardized templates, clearly align economic activities with environmental objectives, and cross-reference sustainability data with financial statements. These measures are designed to enhance transparency and investor confidence, while also supporting businesses in aligning operations with Europe’s environmental goals. 

As companies prepare their 2024 annual reports, compliance with ESMA’s recommendations will be critical. By integrating ESG frameworks and aligning with carbon neutral strategies, businesses can meet regulatory demands and strengthen their sustainability performance, ensuring long-term competitiveness in a rapidly evolving global market. 

This guidance underlines the importance of proactive ESG integration as a cornerstone of modern corporate strategy, supporting the transition to a sustainable economy. 

Sources:  

https://www.jdsupra.com/legalnews/esma-s-2024-enforcement-priorities-3653843/ 

https://www.lexology.com/library/detail.aspx?g=21545dbc-4a26-41c5-a518-9dd6d1dc88d9 

https://www.regulatoryandcompliance.com/2024/11/esmas-2024-enforcement-priorities-spotlight-on-sustainability-and-eu-taxonomy-compliance/ 

https://www.esma.europa.eu/press-news/esma-news/esma-announces-2024-european-common-enforcement-priorities-corporate-reporting