The Less Obvious Sides Of ESMA's Enforcement Priorities

Seeing as the dust hasn't quite settled around IFRS 9, 15 and 16, it can be easy to focus all your attention on compliance with these standards and to sweep everything else under the rug for now.

Good news: to a limited extent, you can! ESMA has indeed announced that their main enforcement priorities will involve the three standards mentioned above. However, these certainly won't be the only priorities—companies still need to keep various other developing areas in mind, including a few that interest other regulatory bodies as well as the end-users of financial statements.

Three such areas are non-financial information, alternative performance measures, and Brexit.

Non-financial information

With the increasing focus on corporate social responsibility, and particularly on global footprints and sustainability, ESMA will at some point shift their magnifying glass towards disclosures of non-financial information required by certain large undertakings and groups, with a particular focus on environmental and climate change matters as well as key performance indicators relating to non-financial policies. This also ties in with the CSSF's press release 18/04 which highlighted the requirements of disclosure of non-financial and diversity information brought about by the Law of 23 July 2016. The main takeaways are that organizations must:

disclose the name of the specific disclosure framework applied disclosure the policies applied and the outcomes of those policies (including the rationale for not developing or pursuing certain policies) disclose non-financial KPIs including the reasons why they were deemed relevant focus on relevant, material, and entity-specific matters A useful guide for companies in this respect is the publication, by the European Commission, of non-binding guidelines on environmental and social disclosures as a common voluntary framework in order to facilitate the comparison of such information at a European level. One point of attention, though: it is not sufficient to simply copy-paste from a general disclosure framework! Use it as a basis, but tailor it to the specificities of your organization.

Alternative...