Wir nutzen Cookies, um zu verstehen, welche Inhalte für Sie hilfreich sind, und die Seite entsprechend weiterzuentwickeln. Sie geben Einwilligung zu unseren Cookies, wenn Sie unsere Webseite weiterhin nutzen.

consust blog: ESMA 2026 Exam Focus Areas

Summarize the article using:

ChatGPTPerplexityClaude
Back to the overview
Table of Contents
  1. ESMA Audit Priorities for 2026: What Enforcers Will Be Looking for in Sustainability Statements

Published:

Last updated:

Reading time:

8–12 minutes

ESMA Audit Priorities for 2026: What Enforcers Will Be Looking for in Sustainability Statements

On October 13, 2026, the European Securities and Markets Authority (ESMA) published its common European audit priorities for the 2026 reporting season, known as the “European Common Enforcement Priorities” (ECEP). For sustainability reports, ESMA has identified two key areas: the dual materiality analysis and the linking of impacts, risks, and opportunities to strategies, actions, targets, and metrics—with a focus on ESRS E1 (climate change) and ESRS S1 (own workforce). In addition, there is a formal requirement that tends to get overlooked during the transition year of 2026: Companies must disclose which version of the ESRS they have applied.

This article summarizes what ESMA specifically expects and explains what this means for preparing the report for the 2026 fiscal year.

Who is subject to ESMA’s audit priorities

The ECEP applies to issuers whose securities are admitted to trading on a regulated market within the European Economic Area. They apply to their annual financial reports for 2026. ESMA expressly clarifies that the annual financial report, as defined in Article 4 of the Transparency Directive, also includes the sustainability statement and the ESEF requirements.

The priorities are determined in collaboration with national enforcement agencies; in Germany, this is the Federal Financial Supervisory Authority (BaFin). National authorities may also set their own priorities. BaFin has not yet published its national priorities for 2026; audit firms expect them to be released in December.

Situation in Germany: To the best of our knowledge (October 2026), the CSRD Implementation Act has not yet been enacted. Until then, the requirements for non-financial reporting under Sections 289b through 289e of the German Commercial Code (HGB) will continue to apply to the affected companies. Those who are already following the ESRS guidelines or preparing for mandatory reporting will find a clear description in the ECEP of what the regulator expects. We describe the current status of the process and which companies the law will cover in our article on the CSRD Implementation Act.

For companies outside the capital markets, the ECEP is not mandatory. However, it highlights where regulators and auditors identify typical weaknesses in ESRS reports.

Enforcement is not the same as an audit by a certified public accountant

The ECEP pertains to enforcement—that is, the supervisory authority’s ex post review of published reports. This should be distinguished from the limited assurance audit of the sustainability statement, which is conducted by auditors prior to publication. Both address similar issues but have different consequences: If enforcement authorities identify material errors, they take action in accordance with ESMA guidelines, and ESMA subsequently reports on the results. We describe what auditors require prior to publication in our article on the audit of sustainability reporting.

Fiscal Year 2026 is a transition year: The ESRS version must be disclosed

ESMA explicitly designates the 2026 fiscal year as a transition year. This is based on Article 2(1) of Delegated Regulation (EU) 2026/1563, which introduced the revised ESRS (“ESRS Set 2”). They are mandatory for fiscal years beginning on or after January 1, 2027. For 2026, there are three options to choose from: the existing ESRS as amended by the Quick Fix (Delegated Regulation (EU) 2025/1416), the revised ESRS, or the existing ESRS with selected simplifications from Set 2. Our article on the 2026 ESRS sustainability topics outlines the changes to the list of topics in the new version.

ESMA clarifies two points in this regard:

  • The selected version should be included in the report. Companies should specify which option they have applied, ideally in the information regarding the basis for preparation.
  • These exemptions are exhaustive. The list in Article 2(1)(b) of Delegated Regulation (EU) 2026/1563 may not be expanded.

One detail concerns companies in the first wave that will transition to Set 2 for 2026: Comparative information for 2026 may be omitted only for those metrics and amounts that differ from the requirements in Set 1. Therefore, companies that reported according to Set 1 in the prior year and continue to report the same metric must still disclose the prior-year figure.

Focus Area 1: The dual materiality analysis remains a priority

According to ESMA, impacts, risks, and opportunities (IROs) and the dual materiality analysis remain a key focus for enforcers. Based on its review of the first reports, ESMA has derived specific expectations:

  • Assess positive and negative impacts with equal care. ESMA has observed that companies describe positive impacts in greater detail than negative ones. Both should be reported with comparable granularity.
  • Disclose materiality thresholds. Companies that use different materiality thresholds for positive and negative impacts should disclose this.
  • Cover the entire value chain. The presentation should include the company’s own business activities as well as the upstream and downstream value chain.
  • Describe in a company-specific and topic-based manner. The description of the process should be concise and tailored to the company. If the approach differs by topic—for example, between the company’s own workforce and climate—this should be included in the report.
  • Treatcompany-specific topics only as a last resort. An IRO is classified as company-specific only if no ESRS category applies.

From our work with clients, we are particularly familiar with the first point: Positive impacts are often well documented because they stem from existing communications. Negative impacts, on the other hand, are summarized or described in abstract terms. It is precisely this asymmetry that ESMA is now targeting. Our article on CSRD reporting— from analysis to report—shows how a materiality analysis is structured within the reporting process and the scales at which other companies operate.

Focus Area 2: IROs, Concepts, Measures, Targets, and Key Metrics Must Align

The second focus area is the interconnection of reporting elements. ESMA is concentrating on ESRS E1 and ESRS S1 because these topics are the most developed in reporting. Essentially, it examines whether a reader can find a clear, coherent thread running from the material IRO to the key metric. Our analysis of CSRD reports in practice also shows that this coherent thread is missing from many initial reports.

Identify gaps instead of concealing them

If there is no strategy, measure, or target for a material IRO, the company must disclose this. The same applies to partial gaps: If a strategy covers only transition risk but the IRO also includes physical risks, or if it covers only the company’s own business operations rather than the entire value chain, this must be clearly indicated. If a greenhouse gas emissions reduction target does not cover the entire GHG inventory, this must be explained.

Allocate Resources to Measures

Companies should explain how the key measures contribute to the strategies’ goals and provide transparency regarding the current and planned CapEx and OpEx associated with them. If no significant resources are allocated, the company must justify why this is not considered material.

Formulate goals in a measurable, time-bound, and results-oriented manner

Targets should be measurable, time-bound, and results-oriented, using clear terminology and target-specific methodology. Progress should be included in the report—even if a target is missed or abandoned. Methodological changes, such as a new base year, must be disclosed.

ESRS E1: Provide evidence for “science-based” and “1.5 degrees”

ESMA is particularly clear regarding climate targets. Companies are expected to state whether a GHG reduction target is science-based and consistent with the 1.5-degree goal. ESMA warns against using these terms without explaining whether and how the target meets these criteria. Furthermore, it expects absolute values, not just intensity targets, unless the ESRS stipulate otherwise. Gross reduction targets must be clearly distinguished from net targets. For companies with emissions from agriculture and forestry, separate rules apply when setting targets in accordance with the Science Based Targets initiative (SBTi), which we describe in our article on the FLAG Standard 2026.

ESRS S1: Distinguish Between Target Commitments

For its own workforce, ESMA requires a clear distinction between general voluntary commitments and actual targets.

Consistency with the rest of the annual financial report

The material IROs as defined by ESRS 2 SBM-3 should align with the risks identified elsewhere in the annual financial report, such as in the risk report. In addition, the current financial effects of material IROs must be disclosed. Summaries must meet the qualitative characteristics of the ESRS, in particular a neutral presentation.

EU Taxonomy: No recommendations, but still subject to audit

The ECEP 2026 contains no specific recommendations regarding the EU Taxonomy. ESMA justifies this by noting that the delegated acts on climate, the environment, and disclosure are currently being revised. At the same time, it clarifies that enforcers will continue to review the taxonomy disclosures in the 2026 sustainability statements.

The simplified disclosure rules set forth in Delegated Regulation (EU) 2026/73 already apply to the 2026 report, including a materiality threshold of 10% for revenue, CapEx, and OpEx. You can find methodological principles in our EU Taxonomy FAQ, and the requirements for minimum protection in the article on minimum protection under the EU Taxonomy.

What Will Be Important Beyond 2026

ESMA offers two insights that go beyond the current report:

  • Realistically assess 2030 targets. The closer 2030 gets, the clearer it may become that previously set targets are unachievable. ESMA expects companies to disclose this in a timely manner.
  • Prepare for ESRS Set 2. The revised ESRS will be mandatory starting with the 2027 fiscal year. One key change: Non-material information should generally no longer be reported (ESRS 1, para. 24, as amended in Set 2).

At the same time, the Omnibus Directive (EU) 2026/470 narrows the scope of application, effective as of the 2027 fiscal year, to companies with more than 1,000 employees and net revenue exceeding €450 million. Details can be found in the article on the CSRD Implementation Act.

What Companies Should Review Now for the 2026 Report

A brief checklist for ongoing report preparation can be derived from the key audit areas:

  1. Specify and document the ESRS version. Which of the three options is used, and is this stated in the information regarding the basis for preparation?
  2. Check the materiality analysis for balance. Are negative impacts described as specifically as positive ones, and are the thresholds disclosed?
  3. Trace the common thread for E1 and S1. Does each material IRO lead to a concept, a measure, a target, and a metric—or is the gap identified?
  4. Review the language used for climate targets. Is every use of “science-based” or “1.5 degrees” substantiated, and are gross and net targets distinguished?
  5. Cross-check with the risk report. Do the material risks in the sustainability statement align with the rest of the annual financial report?
  6. Clarify comparative information. Which prior-year figures must still be disclosed following the change in the ESRS version?

Tracking these links in spreadsheets and documents requires a significant amount of coordination. It’s easier with a database in which IROs, concepts, measures, goals, and key metrics are linked together, as in our CSRD module in FramesCube. You can find the complete roadmap for preparing your report in our white paper , “Implementing CSRD with Confidence: Four Phases to Your First Report for 2027.”

Sources

As of October 2026. This document presents a technical assessment based on the cited sources as of the date indicated and does not constitute a legal review of a specific case.

More Articles

Book a demo
Book a demo
Scroll to Top