[ECEP ] 2023 ECEP Package

ESMA has issued its annual ECEP Statement for 2023. The ECEP outlines key areas of focus for the enforcement of annual financial reports of issuers on EEA regulated markets. The main areas of focus in the 2023 ECEP include climate and environmental matters, macroeconomic factors, sustainability reporting APMs and ESEF. ESMA emphasizes the importance of aligning financial and non-financial information and highlights the need for transparency in these areas.
Specific priorities for IFRS financial statements entail examining climate-related matters and their impact on financial reports, consistent treatment of climate-related data, disclosure of accounting policies for ETS and renewable energy certificates, impairment assessments related to climate risks, and information on power purchase agreements. Additionally, financial institutions are expected to disclose information about green financing and climate risk’s impact on expected credit losses.
For non-financial statements, the emphasis is on disclosures relating to Article 8 TR, especially regarding taxonomy eligibility and alignment of economic activities with climate change goals. ESMA advises issuers to use the latest reporting templates as required by the Article 8 Delegated Act and aims to ensure the quality and consistency of such disclosures.
ESMA highlights the importance of understanding the broader economic context and its impact on financial reporting; they underline that ensuring proper identification and consistency of APMs is essential for transparent reporting and ensuring compliance with ESEF block tagging is crucial for electronic reporting.
Additionally, ESMA has conducted a fact-finding exercise on corporate reporting practices under TR and a report on disclosures of climate-related matters in IFRS financial statements. The findings of the fact-finding exercise indicate that issuers need to improve the quality and completeness of their disclosures, particularly regarding alignment with sustainability criteria and qualitative information. ESMA recommends that issuers use guidance and tools provided by the EC to improve their Taxonomy-related disclosures.
ESMA’s report on climate-related matters in financial statements aims to help issuers provide more robust and consistent disclosures in financial reports. It provides practical illustrations of how climate-related matters can be presented in financial statements and highlights areas of focus. It encourages issuers and auditors to consider these examples and stay informed about developments in sustainability reporting.
ESMA emphasizes that the guidance on climate impacts is evolving, and issuers should keep up with standard setters in this area and their connection to sustainability reporting.