Sustainability Reporting

ESMA coordinates national enforcers’ supervision of sustainability reporting, contributes to the EU’s process of developing European Sustainability Reporting Standards (ESRS), monitors the development of the ISSB’s IFRS Sustainability Disclosure Standards and provides feedback to the European Commission on sustainability reporting legislation.

ESMA and sustainability reporting

Supervision of sustainability reporting

ESMA’s mandate on sustainability reporting relates to companies with securities listed on a regulated market (listed issuers). It covers their disclosure under the Corporate Sustainability Reporting Directive (CSRD) and the accompanying European Sustainability Reporting Standards (ESRS) [the Non-Financial Reporting Directive (NFRD) in those Member States that have yet to transpose the CSRD] as well as the disclosures required by the Taxonomy Regulation Article 8.

primary_grey_background

First application of ESRS

In 2025, undertakings previously subject to the Non-Financial Reporting Directive (NFRD) published their first sustainability statements in accordance with the European Sustainability Reporting Standards (ESRS). ESMA has provided the following guidance in relation to the first years of application of the ESRS:

main_blue_background

Supervisory convergence

Listed issuers’ sustainability reporting is subject to supervision by national enforcers in the European Economic Area (EEA). National enforcers examine whether sustainability information complies with the applicable reporting requirements and take appropriate measures when they identify infringements against these requirements. 

ESMA coordinates supervision across the EEA countries by bringing together representatives of their national enforcers in its Sustainability Reporting Working Group (SRWG). In the SRWG, national enforcers discuss and share their experiences with the application and supervision of sustainability reporting requirements.

In the summer of 2024, ESMA published Guidelines on Enforcement of Sustainability Information (GLESI). The Guidelines help enforcers carry out their supervision of listed issuers’ sustainability information under the European Sustainability Reporting Standards (ESRS) and Taxonomy Regulation Article 8 in a converged way and ensure that this supervision closely resembles the supervision of listed issuers’ financial information.

primary_grey_background

Our annual publications

European Common Enforcement Priorities

Every year, national enforcers together with ESMA identify and publish European Common Enforcement Priorities (ECEP). To ensure European supervisory convergence, enforcers take account of the ECEP when they select and examine listed issuers’ sustainability information. Publishing the ECEP ensures that listed issuers subject to the Corporate Sustainability Reporting Directive (CSRD) are aware of the topics which ESMA and national enforcers deem particularly important to address in the sustainability information for a given year.

ESMA included the first reference to the requirements of the Non-Financial Reporting Directive in its ECEP for 2017, and since then, the ECEP for each year have presented recommendations in this area. In addition to the ECEP, national enforcers may decide to set further disclosure priorities which are relevant from a national perspective.

grey_3_background
grey_3_background

Report on corporate reporting enforcement and regulatory activities

Each year, ESMA publishes a report on enforcement and regulatory activities related to corporate reporting, including sustainability reporting. Among other aspects, the report follows up on listed issuers’ application of the European Common Enforcement Priorities (ECEP).

For the ECEP covering year N, enforcers assess listed issuers’ application in year N+1 and the report summarising this application is published in year N+2 (for example, the report in which ESMA described listed issuers’ application of the 2023 ECEP, assessed by national enforcers during 2024, was published in 2025). For the reports covering 2017 to 2024, the ECEP referenced the Non-Financial Reporting Directive.

grey_3_background
grey_3_background

Our input to European standard-setting

The Corporate Sustainability Reporting Directive (CSRD) among other measures introduces detailed disclosure requirements and establishes mandatory European Sustainability Reporting Standards (ESRS). 

EFRAG, in its role as technical advisor to the European Commission, is responsible for developing draft versions of the ESRS. ESMA follows EFRAG’s work closely and contributes to it as an observer at both the level of the Technical Expert Group (TEG) and the Board.

primary_grey_background
Omnibus proposals

On 26 February 2025, the European Commission published the Omnibus 1 package consisting of three legislative proposals:

white_background
‘stop-the-clock’ directive

A ‘stop-the-clock’ directive putting on hold the requirements for undertakings that would otherwise have to publish sustainability information under the Corporate Sustainability Reporting Directive (CSRD) and accompanying European Sustainability Reporting Standards (ESRS) in 2026 and 2027 (so-called wave 2 and wave 3 companies). The ‘stop-the-clock’ directive was published in the Official Journal of the European Union on 16 April 2025 and entered into force on the following day and the directive is now being transposed across Member States.

white_background
directive with ‘content’ amendments

A directive with ‘content’ amendments, notably a reduction to the scope of companies required to report under the CSRD, the abolition of sector-specific standards and the standard for listed small and medium-sized entities (SMEs) and the removal of the European Commission’s mandate to adopt reasonable assurance standards. The legislative process is now underway, with the Council having agreed on its negotiating mandate in June 2025, and the European Parliament being in the process of determining its position. This will be followed by negotiations among the co-legislators to determine the final outcome of the ‘content’ directive.

white_background
delegated act amending the Taxonomy Delegated Acts

A delegated act amending the Taxonomy Delegated Acts, including by reducing the scope of companies required to report, permitting reporting on activities that are partially Taxonomy-aligned and introducing a financial materiality threshold for reporting. The European Commission adopted the delegated act on 4 July 2025 which triggered a four-month scrutiny period for the European Parliament and Council.

white_background

As the ‘stop-the-clock’ directive does not apply to companies who have already started reporting in 2025 (so-called wave 1 companies), the European Commission adopted a ‘quick fix’ delegated act on 11 July 2025 which relieves wave 1 companies from reporting additional information for financial years 2025 and 2026 compared to what they reported for financial year 2024. It furthermore extends to all wave 1 companies the phase-in provisions that previously only applied to companies with less than 750 employees. The scrutiny period of the European Parliament and the Council expired on 11 September 2025, and the delegated act will next be published in the Official Journal of the European Union which is foreseen for mid-November 2025.

In addition, the Omnibus 1 package announced the European Commission’s intention to revise ESRS Set 1. The European Commission has mandated EFRAG to deliver a draft version of a simplified ESRS by 30 November 2025. EFRAG publicly consulted on an exposure draft of the simplified ESRS between 31 July and 29 September 2025, and ESMA submitted a response to this consultation. The European Commission has stated its intention to adopt the delegated act with the simplified ESRS by summer 2026.

ESMA is monitoring the Omnibus legislative process and how it may affect sustainability reporting and the enforcement thereof. ESMA published a statement in June 2025 explaining how national enforcers will approach supervision of sustainability reporting in the Omnibus environment.

white_background

▸ Current implementation timeline for the CSRD, ESRS and other sustainable finance disclosure legislation

ESRS for large undertakings (“ESRS Set 1”)

In April 2022, EFRAG launched a public consultation on exposure drafts of draft European Sustainability Reporting Standards (ESRS) Set 1, directed at large undertakings. ESMA submitted a response to this consultation. EFRAG delivered the final version of ESRS Set 1 to the European Commission in November 2022.

As required by the Corporate Sustainability Reporting Directive (CSRD), the European Commission sought the opinion of EBA, EIOPA and ESMA on the draft ESRS Set 1 and in response, in January 2023 ESMA submitted its opinion based on ESMA’s assessment framework.

The final delegated act was adopted by the European Commission in July 2023 and published in the Official Journal of the European Union on 22 December 2023, entering into force on the following day and applying to financial years beginning on or after 1 January 2024.

For information about the digital reporting of sustainability information under ESRS Set 1, please see here.

To support large undertakings in preparing their sustainability information in accordance with ESRS Set 1, EFRAG issues implementation guidance and publishes answers to technical questions submitted by stakeholders. ESMA provides input to this implementation support as an observer in EFRAG’s Sustainability Reporting Technical Expert Group (TEG) and Board.

ESRS for listed SMEs

When the Omnibus 1 package was published in February 2025, EFRAG was in the process of preparing European Sustainability Reporting Standards (ESRS) for listed small and medium-sized entities (SMEs), small non-complex institutions and captive (re)insurance undertakings. An exposure draft was published for comment between January and May 2024 and ESMA submitted a response to the consultation. Since the publication of the Omnibus 1 package, EFRAG has suspended its work on the draft ESRS for listed SMEs since the ‘content’ proposal foresees removing listed SMEs from the scope of the CSRD.

primary_grey_background

Our other recent contributions to the sustainability reporting regime

“Materiality matters (!)” – Fact-finding on materiality (2025)

The double materiality assessment and application of materiality considerations throughout the sustainability statement are key aspects of sustainability reporting. ESMA therefore conducted a study which evaluated the quality of the disclosures on materiality considerations that issuers included in their first reports under Set 1 of the European Sustainability Reporting Standards (ESRS). The results were considered in ESMA’s 2025 European Common Enforcement Priorities (ECEP) and in its response to EFRAG’s consultation on the revised ESRS.

Reports on greenwashing (2023-2024)

In response to a request from the European Commission, ESMA – alongside EBA and EIOPA – delivered input on greenwashing risks and the supervision of sustainable finance policies through a progress report in May 2023 and a final report in June 2024. Among other aspects, the reports contained a definition of greenwashing as well as findings and recommendations in relation to issuer disclosures due to their critical role in the sustainable investment value chain.

Fact-finding on reporting practices under the Taxonomy Regulation (2023)

As part of its objective to coordinate European supervision of sustainability information, ESMA did a study to evaluate the quality of the disclosures which non-financial undertakings had to report under Article 8 of the Taxonomy Regulation for the first time in 2023 (financial year 2022).

Advice on disclosure under Article 8 of the Taxonomy Regulation (2021)

Article 8 of the Taxonomy Regulation obliges companies required to publish sustainability information under the Corporate Sustainability Reporting Directive (CSRD) to include information on how and to what extent their activities are associated with economic activities that qualify as environmentally sustainable under the Taxonomy Regulation. For this purpose, companies are required to disclose the proportion of their turnover, capital expenditure (CapEx) and operating expenditure (OpEx) associated with economic activities that qualify as environmentally sustainable.

In March 2021, ESMA delivered advice to the European Commission regarding how to specify the content, presentation and methodology of the information to be disclosed by non-financial companies and asset management companies.

A Commission Delegated Regulation related to this advice entered into force at the end of December 2021. The Commission has published a number of FAQs with guidance related to the Commission Delegated Regulation (see heading 3 “FAQs repository”).

grey_3_background

Our input to international inter-operability

Set 1 of the European Sustainability Reporting Standards (ESRS) was developed at the same time as the International Sustainability Standards Board (ISSB) prepared its two first IFRS Sustainability Disclosure Standards, relating to general requirements for disclosure of sustainability-related financial information and climate-related disclosures, respectively. Through the International Organization of Securities Commissions (IOSCO), ESMA monitored and contributed to the ISSB’s work to develop a global baseline for international sustainability reporting standards.

During the drafting process, EFRAG and the European Commission worked with the ISSB to ensure that the two sets of reporting standards are inter-operable, both to ensure helpful disclosure to investors and to limit unnecessary burden on companies, an effort which ESMA strongly supports. In May 2024, EFRAG and the IFRS Foundation published joint inter-operability guidance on the alignment between ESRS Set 1 and the IFRS Sustainability Disclosure Standards.

ESMA also contributed to IOSCO’s assessment of the ISSB’s standard-setting work which ultimately led to IOSCO’s decision to endorse the IFRS Sustainability Disclosure Standards (issued June 2023) in July 2023.

ESMA continues to monitor the standard-setting activities of the ISSB in order to support inter-operability with the ESRS.

primary_grey_background
primary_grey_background