ESMA Pins 2026 Enforcement on Materiality, Targets and Consistency

The European Securities and Markets Authority (ESMA) has released its annual European Common Enforcement Priorities (ECEP) Statement for corporate reporting, and sustainability disclosures remain on the enforcement list for another year.

The statement sets out the issues ESMA's enforcers will scrutinise in the current year of disclosures. For sustainability reporting, two areas dominate: the materiality of impacts, risks and opportunities (IROs) and the double materiality assessment (DMA) process, together with issuer disclosures on IROs, policies, actions and targets (PATs) and metrics.

The priorities matter far beyond the compliance department. Every company reporting under the European Sustainability Reporting Standards (ESRS) now knows exactly where the examination lamp will point. Materiality was a priority area last year. It remains one. That repetition is itself a signal.

Where will enforcers look first?

Within the double materiality assessment, ESMA flagged one failure in particular: asymmetric granularity. The regulator stated that it "has observed that some issuers provide more extensive disclosure on positive impacts than on negative impacts which may not give users a sufficiently balanced view of the issuer."

The verdict is plain. A sustainability statement that reads like a press release will not survive contact with an enforcer.

ESMA also stressed the quality of disclosure on the identification, assessment and determination of IROs, and specified that these disclosures must cover both the issuer's own operations and its upstream and downstream value chain. Scope stops at no factory gate.

Which standards draw the closest reading?

In its priority on connected information, ESMA said it "expects consistency across issuers' disclosures on IROs, policies, actions and targets (PATs) and metrics." For the current year, enforcers will focus in particular on disclosures under ESRS E1 – Climate Change and S1 – Own Workforce, citing the advanced maturity of these two topics.

The specific guidance points include:

• clarity on how policies and targets address identified IROs
• comparable granularity when describing policies and IROs
• disclosure when no PATs exist for a material IRO
• explanation of how key actions advance the corresponding policy objectives

ESMA also named a cross-document problem: mismatches between the sustainability statement and other parts of the annual financial report in issuers' disclosure of IROs. The two halves of the annual report, in the regulator's view, must tell the same story.

What must targets now contain?

On targets, the regulator asked for measures that are measurable, time-bound and outcome-oriented, defined with clear terminology and supported by methodology specific to the target at hand. Issuers must state whether they have met a previously disclosed target, whether a new target has been set, and — less comfortably — whether they have missed, abandoned or will not achieve a target.

The awkward disclosures are precisely the ones ESMA wants written down.

For greenhouse gas reduction targets, ESMA noted that "some issuers mention 'science-based' or '1.5 degrees' without explicitly stating whether and how their targets meet these characteristics, and this should be improved to avoid misleading users." The regulator also reminded issuers to disclose absolute values for targets, not merely intensity figures. An intensity target can fall while absolute emissions rise. ESMA has noticed that trick.

On 'own workforce' targets under S1, ESMA reported that it "observed instances where issuers do not make a clear distinction between broad commitments and actual targets," and reminded issuers to link their real targets to material IROs, policies and key actions. Ambition is not a number.

What happens next?

The ECEP Statement functions as advance notice. Companies filing sustainability statements in the current cycle now know that climate and workforce disclosures, balanced impact reporting, value-chain coverage and target arithmetic sit at the top of the examination pile.

The milestone to watch is the enforcement cycle itself: how many issuers ESMA's national enforcers correct on E1 and S1 disclosures, and whether the asymmetry between positive and negative impact reporting narrows in the next filing round. The statement is published. The reading begins.