If you’re working in sustainability reporting, corporate transparency, or just trying to stay ahead of the EU’s evolving ESG landscape—listen up. The European Securities and Markets Authority (ESMA) is currently running a public consultation that could reshape how companies tag and share their sustainability information digitally. And yes, it’s as important as it sounds.
Here’s the deal: ESMA wants to hear from companies, auditors, tech experts, and anyone involved in sustainability reporting on how we should digitally tag sustainability data using the European Sustainability Reporting Standards (ESRS).
Sound technical? It is. But it’s also a big step toward making sustainability data more transparent, comparable, and accessible. Let’s break it down.
What’s this consultation really about?
The EU is on a mission to digitalize how companies report non-financial (i.e. ESG) information. Under the Corporate Sustainability Reporting Directive (CSRD), large companies in the EU will soon be required to publish sustainability reports using a consistent digital format.
To make this possible, ESMA has published a draft of its digital reporting guidelines, and they’re asking for feedback by 15 November 2024. These guidelines will determine how companies should tag their sustainability statements—think of it like adding hashtags to a social media post so it can be easily found and understood by both people and machines.
The goal? To use a standard format—xHTML with XBRL tags—that makes sustainability reports machine-readable and ready for automated analysis. This also feeds into the creation of the European Single Access Point (ESAP), the EU’s future one-stop-shop for financial and sustainability data.
Check out the ESMA consultation paper here
EFRAG’s role in all this
If ESMA is setting the rules, EFRAG is building the tools.
EFRAG recently published the ESRS XBRL Taxonomy, a sort of blueprint for how sustainability data should be structured and tagged. It’s like giving companies a detailed labeling system so they can ensure every piece of their sustainability report is formatted correctly for digital reporting.
This taxonomy:
- Matches the final delegated ESRS act adopted by the European Commission in July 2023.
- Is based on XBRL (eXtensible Business Reporting Language) – a widely-used standard in financial and non-financial reporting.
- Aims to make sustainability disclosures more consistent and easier to compare.
Why should you care about digital tagging?
Let’s be real—no one loves new compliance requirements. But this one has long-term benefits.
Digital tagging helps:
- Boost transparency – Data is easier for investors, analysts, and regulators to find and use
- Improve comparability – Everyone uses the same tags, so it’s apples-to-apples when comparing across companies
- Enable automation – Machines can read the data instantly, cutting down on manual effort
And remember, this isn’t just a nice-to-have. It’s part of the EU’s broader move toward a data-driven, sustainable economy under the Capital Markets Union. In the future, if you want your ESG reports to be seen and trusted, they’ll need to be digitally tagged—and done right.
Who Should Participate in the Consultation?
This is your chance to help shape the final guidelines. ESMA is looking for input from:
- Companies preparing sustainability reports
- Assurance providers and auditors
- IT and software firms building ESG reporting tools
- Industry bodies and NGOs
- Academics and sustainability experts
Got something to say about the technical feasibility, taxonomy structure, or how this will play out in the real world? Now’s the time to speak up.
Submit your feedback via ESMA’s portal
The Big Picture:
EU Sustainability Reporting is going digital Between the CSRD, the Sustainable Finance Disclosure Regulation (SFDR), and ESAP, it’s clear the EU is pushing for sustainability data that’s as robust and reliable as financial data. Digital tagging is the bridge that connects the standards (like ESRS) to the technology (like XBRL) and ultimately to the people who need the information—investors, regulators, and the public.
This consultation might seem technical, but it’s a cornerstone of a much bigger shift.
