ESMA Sets 2025 Priorities: Geopolitical Risks, Sustainability Reporting, and Digital Transparency

ESMA has released the 2025 European Common Enforcement Priorities (ECEP), outlining the main focus areas for national enforcers and listed companies during the upcoming reporting season. The three central priorities are IFRS financial statements, sustainability reporting under the CSRD/ESRS, and ESEF digital reporting. The overall goal is to improve the quality, transparency, and consistency of corporate disclosures, encouraging a stronger connection between financial performance and sustainability information.

Regarding IFRS financial statements, ESMA calls on companies to provide clearer and more detailed disclosures on geopolitical risks and their potential impact on financial performance, cash flows, and assumptions. ESMA warns against vague references to “geopolitical uncertainties,” urging issuers to specify the nature of the events; such as the conflict in Ukraine, the humanitarian crisis in Gaza and commodity volatility, as well as  explain how these influence accounting estimates, valuations, and on going concern assessments. ESMA also encourages companies to consider whether additional disclosures beyond IFRS requirements are needed to give investors a comprehensive understanding of resilience and exposure to global disruptions.

The second priority concerns sustainability reporting, with 2025 marking the first year of CSRD application for large undertakings (Wave 1). ESMA recognizes the challenges companies face in adopting the European Sustainability Reporting Standards (ESRS) but reiterates two fundamental principles: a robust double materiality assessment and a coherent, accessible report structure. Companies are expected to explain their materiality methodology, thresholds, and stakeholder engagement, avoiding standardized or generic disclosures. The mapping of impacts, risks, and opportunities (IROs) must be explicit and well-structured to enhance comparability among issuers. The Authority underscores that sustainability information should not stand apart from financial data but form part of a global corporate narrative on risks, strategy, and long-term value creation.

The third focus area is digital reporting under ESEF (European Single Electronic Format). The Authority highlights the importance of technical accuracy and reminds issuers to properly manage extensions and anchoring, avoiding duplications or incorrect linkages.

Finally, ESMA’s report includes cross-cutting observations on the alignment of financial and sustainability information. It stresses that climate-related impacts and sustainability metrics disclosed in management reports must be consistent with the assumptions used in financial statements. ESMA also reminds companies of the upcoming amendments to IFRS 9 and IFRS 7, effective January 1, 2026, which address issues such as nature-dependent electricity contracts, electronic settlement of financial liabilities and ESG-linked features in financial assets. Companies are advised to assess and disclose potential impacts early, within their 2025 reports.

Overall, the 2025 ECEP marks another step toward the effective integration of financial and sustainability reporting. ESMA’s guidance pushes European companies to combine technical compliance, strategic transparency, and meaningful communication, ensuring that financial reports not only meet regulatory standards but also reflect the company’s resilience, accountability and long-term value for investors and stakeholders.