ESMA publishes EU common enforcement priorities for 2026, including sustainability reporting

Context

On 13 October 2026, ESMA published its annual public statement setting out the EU common enforcement priorities (ECEP) for the 2026 annual financial reports of issuers admitted to trading on EEA regulated markets.[1]

ESMA and national enforcers (enforcers) will pay particular attention to these areas when examining 2026 annual financial reports, and will take enforcement action where material misstatements are identified. ESMA will subsequently report on their findings. ESMA urges issuers, auditors and supervisory bodies to consider its priorities and recommendations when preparing, auditing and supervising 2026 annual financial reports, in light of their materiality and relevance to the issuer.

Alongside its priorities on IFRS financial statements (geopolitical risks and uncertainties; restructuring provisions and debt restructuring) and ESEF reporting (common errors in the statement of changes in equity), ESMA sets out two priorities for sustainability statements, which are discussed below.

ESMA’s statement also includes general reminders which, although not enforcement priorities for 2026, cover upcoming reporting requirements, including the preparation of future sustainability statements.

FY 2026: a transitional year for sustainability statements

ESMA notes that, under Commission Delegated Regulation (EU) 2026/1563, issuers may prepare their FY 2026 sustainability statements under one of three approaches: (i) the existing ESRS as amended by the quick-fix delegated act, (ii) the revised ESRS or (iii) the existing ESRS as amended by the quick-fix delegated act and with the reliefs from the revised ESRS listed in Article 2(1)(b) of the Regulation.

• Version applied: issuers should be transparent about the ESRS version used, for instance in the basis for preparing the sustainability statement.
• Reliefs: where issuers apply the existing ESRS with reliefs from the revised ESRS, the list of available reliefs is exhaustive and may not be extended.
• Wave 1 issuers applying the revised ESRS: ESMA notes that the option to omit comparative information for FY 2026 only applies to quantitative metrics and amounts that differ from those required by the existing ESRS.
• EU Taxonomy: as the Climate, Environmental and Disclosures Delegated Acts are under revision, ECEP 2026 do not include any specific Taxonomy recommendations, although the considerations set out in previous years’ priorities continue to apply. Enforcers will nevertheless continue to supervise Taxonomy disclosures in FY 2026 sustainability statements.

Sustainability statements – key takeaways

Priority 1: continuing the progress along the materiality learning curve

Materiality and the double materiality assessment (DMA) remain focus points for enforcers, as they underpin the rest of the sustainability statement. ESMA refers in this respect to its previous priorities and its fact-finding on materiality disclosures under the existing ESRS.

• Balanced assessment of impacts: ESMA encourages issuers to assess positive and negative impacts with the same rigour. ESMA has observed that some issuers disclose more on positive than negative impacts, and expects clear disclosure on impact materiality thresholds, especially where different thresholds are used, and comparable granularity in disclosing positive and negative impacts.
• Value-chain coverage: disclosures on the identification and assessment of IROs should cover both own operations and the upstream and downstream value chain.
• Company-specific process disclosure: information on the DMA process should be concise, company-specific and linked to the topic assessed, explaining where the process differs significantly between topics.
• Entity-specific disclosures: while acknowledging the obligation to provide entity-specific disclosures where a material IRO is not (sufficiently) covered by the ESRS, ESMA invites issuers to use the entity-specific category only once all possibilities of relying on the ESRS categorisation have been excluded, to promote comparability.

Priority 2: providing connected information on IROs, PATs and metrics 

ESMA expects consistency across disclosures on IROs, PATs and metrics. While this applies to all topics, enforcers will focus on E1 Climate change and S1 Own workforce for FY 2026. 

• Connectivity within the sustainability statement: issuers should explain how policies and targets address the material IROs, aiming for comparable granularity between their policies and the IROs they address. Where no PATs have been adopted for a material IRO, this must be disclosed, and partial coverage of an IRO, for example transition risks only or own operations only, should be made transparent. 
• Actions and resources: issuers should explain how key actions help achieve policy objectives and be transparent about current and future significant CapEx and OpEx dedicated to them. 
• Summaries: where a summary is included in the sustainability statement, it should be neutral and give balanced coverage of positive and negative aspects. 
• Connectivity with the rest of the annual financial report: ESMA has in some cases observed mismatches between the IROs disclosed under SBM-3 and the risks reported elsewhere in the annual financial report, and reminds issuers to disclose the current financial effects of material IROs in line with applicable requirements. 
• Consistency with previous periods: issuers should apply the requirements on comparative information, changes in preparation or presentation, and prior-period errors. Where comparability is affected by use of the revised ESRS or the reliefs, this should be made clear, for instance by indicating the disclosures affected. 
• Clarity on targets: targets should be measurable, time-bound and outcome-oriented, with target-specific methodological information and transparency on progress, including whether targets have been met, missed or abandoned and any changes to baselines, target years or methodologies. Under E1, issuers should state explicitly whether and how GHG targets are science-based and compatible with limiting global warming to 1.5°C, disclose absolute values and distinguish gross from netted targets. Under S1, actual targets should be clearly distinguished from broad commitments. 

Looking ahead

Among its general reminders, ESMA highlights :

1. 2030 targets	As many targets approach their 2030 deadline, issuers should promptly disclose if a target can no longer be achieved.
2. FY 2027 reporting	Issuers that have not yet done so should prepare to report under the revised ESRS for FY 2027, under which non-material information should not be reported except in specific cases.

What does this mean for issuers?

Issuers preparing FY 2026 sustainability statements should clearly identify the ESRS version applied and indicate the disclosures where year-on-year comparability is affected.

They should also review their DMA disclosures for balance between positive and negative impacts and for transparency on thresholds, and test the link between each material IRO and the related PATs and metrics, with particular attention to E1 and S1.

Finally, issuers should review the status and methodology of their targets, including the feasibility of 2030 targets, and ensure consistency between the sustainability statement and the rest of the annual financial report, under the oversight of their management and supervisory bodies.

1.For Luxembourg issuers, the application of the ESRS remains subject to the pending implementation of the CSRD and Omnibus I Directive into Luxembourg law, including through bill of law 8370 as amended. Until the relevant Luxembourg legislation is enacted, the existing Luxembourg NFRD framework formally remains applicable.