The European Securities and Markets Authority (ESMA) published on May 7, 2026 its annual Report on 2025 Corporate Reporting Enforcement and Regulatory Activities, assessing how national competent authorities enforced EU corporate reporting rules last year. The report covers the implementation of the European Single Electronic Format (ESEF), the application of the Sustainable Finance Disclosure Regulation (SFDR), and the oversight of non-financial reporting under the Corporate Sustainability Disclosure Regulation (CSRD). It identifies persistent shortcomings in the quality of sustainability disclosures, particularly regarding greenwashing risks, and calls for more consistent enforcement across member states.
ESMA, the EU's securities markets regulator, coordinates the work of national enforcers under the European Enforcers Coordination Sessions (EECS). The report is based on data from 2025 enforcement actions and examines how companies complied with International Financial Reporting Standards (IFRS) as adopted in the EU, as well as the new digital tagging requirements under ESEF. The document is a non-binding assessment that serves as a benchmark for national authorities and market participants.
Policy orientations and trade-offs The report highlights a tension between improving the quality and comparability of sustainability information and the additional compliance burden on listed companies. ESMA notes that while the CSRD expands the scope of mandatory sustainability reporting, many companies still struggle with the granularity required for double materiality assessments. The report also points to diverging enforcement practices among member states, which could undermine the single market for capital. On digital reporting, ESMA finds that while ESEF adoption is now widespread, the quality of XBRL tagging remains uneven, reducing the usability of data for investors.
Impact on stakeholders For EU listed companies, the report signals that national enforcers will intensify scrutiny of sustainability metrics and forward-looking statements, increasing the risk of restatements and reputational damage. Investors stand to benefit from more reliable and comparable data, but only if enforcement becomes more uniform. National competent authorities face pressure to harmonise their approaches, which may require additional resources and training. The report also indirectly affects auditors and assurance providers, who will need to adapt to more detailed verification requirements for sustainability information.
Expected institutional follow-up ESMA will use the findings to update its enforcement guidelines and to feed into the European Commission's review of the CSRD and SFDR frameworks. The report also supports the ongoing work of the European Lab on sustainability reporting standards. Market participants can expect more targeted inspections and thematic reviews in 2026, particularly on climate-related disclosures and the use of alternative performance measures.
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