As sustainability reporting becomes a central pillar of corporate transparency, European regulators are sharpening their focus on how companies report their environmental, social, and governance (“ESG”) performance. The European Securities and Markets Authority (“ESMA”) has published its 2025 European Common Enforcement Priorities, outlining the key areas of scrutiny for both financial and non-financial disclosures in the year ahead.
This marks a significant milestone for companies operating under the EU’s evolving sustainability reporting framework. With the Corporate Sustainability Reporting Directive (“CSRD[1]”) in force as of January 2023 and applicable January 2024 (notwithstanding some adjustments in this area) and the European Sustainability Reporting Standards (“ESRS”) increasingly shaping disclosure practices, ESMA’s priorities reflect a clear shift: sustainability reporting is no longer a voluntary or peripheral exercise, but a core component of corporate accountability.
A Dual Focus: Financial and Sustainability Disclosures
ESMA’s enforcement priorities for 2025 are structured around two main pillars: Financial Reporting and Sustainable Reporting, which together reflect a stronger regulatory focus on transparency, consistency and accountability across both financial and non-financial disclosures.
- Financial Reporting
ESMA continues to emphasise the need for transparency, consistency, and faithful representation of financial performance, especially in areas impacted by macroeconomic uncertainty, climate-related risks, and geopolitical developments.
- Sustainability Reporting
Furthermore, ESMA has introduced a new and intensified focus on how companies disclose ESG-related information, particularly under the ESRS. Key areas of scrutiny include:
- Materiality assessments and how companies determine which sustainability topics are relevant to their business model.
- Transition plans and climate-related targets.
- Governance structures supporting the integration of sustainability into corporate strategies.
- Connectivity between financial and non-financial information.
Why This Matters
The 2025 enforcement priorities signal that regulators are moving from guidance to action. Companies will be expected not only to comply with reporting standards, but to demonstrate that sustainability considerations are embedded in their strategy, governance, and risk management frameworks.
This shift also reflects growing stakeholder expectations. Investors, employees, and customers increasingly demand credible, comparable, and decision-useful ESG information. ESMA’s priorities aim to ensure that sustainability disclosures meet these expectations — and that companies are held accountable when they fall short.
What’s Next
This article is the first in a series exploring ESMA’s 2025 enforcement landscape. In the next three articles, we’ll take a closer look at each of the priorities identified by ESMA, namely:
- Part 2: Deep Dive into the IFRS Priorities Enforcement — What ESMA expects from companies within the parameters of IFRS.
- Part 3: Integrating ESG into Financial Reporting — How companies can ensure coherence between sustainability and financial disclosures, and what regulators will be looking for.
- Part 4: Aligning with ESEF Priorities – How companies should align their reporting with the European Single Electronic Format requirements.
Together, these articles will serve as a practical guide for companies preparing to meet the new standards — not merely to comply, but to lead in sustainable and transparent reporting.
[1] Corporate Sustainability Reporting Directive (EU) 2022/2464
