ESAP approved – an important step towards a sustainable economy

ESAP

On November 9 this year. The European Parliament (EP) has adopted in first reading a regulation establishing a European Single Point of Access (ESAP). This new initiative, aimed at increasing transparency in the business and finance sectors, will take effect in 2027. Over the next four years, we are expected to learn exactly what information the new system will provide.

What is an ESAP?

ESAP’s goal is to create a centralized digital access point to the financial and non-financial information that companies registered in the European Union are required to publish. These include. o Reporting under the Corporate Sustainability Reporting Directive(CSRD) adopted by the EP in 2021. and introduced in 2023. European Sustainability Reporting Standards(ESRS). The implementation of the project will take place at the EU and state level and does not envisage imposing any additional reporting obligations on business representatives. The idea is for one integrated application to automatically collect the data currently being extracted from various systems. Access to them should be free and non-discriminatory.

Basic principles of operation

The ESAP interface is to be user-friendly and available in all national EU languages. The site will include an information browser, where search criteria should meet the needs of individual investors. In addition, the service is to offer the ability to translate individual documents and to download and save them, even in very large quantities. There will also be an option to notify users (upon request) of changes made within a particular unit or type of information.

Responsibility for implementing and managing the ESAP system will fall on the shoulders of the European Securities and Markets Authority (ESMA), which will also handle aspects of data security and protection against possible cyber attacks. Specially appointed supervisory bodies will be responsible for implementing technical standards that will guarantee the usefulness and comparability of the information collected.

The proposal to create ESAP was put forward in November 2021. European Commission. After a series of talks, the current form of the regulation was worked out, which implements the provisions of the Capital Markets Union (CMU) action plan for citizens and businesses adopted in 2020. and the 2021 Strategy for Financing the Transition to a Sustainable Economy. Recall that the objectives of the CMU Action Plan include:

  • Supporting green, digital, inclusive and resilient economic recovery by increasing access to financing for European companies;
  • Making the EU an even safer place to invest and save over the long term;
  • Merging national capital markets into one integrated market.

The ESAP is to be the primary tool for implementing the above plan.

Expected benefits associated with ESAP

The ESAP initiative assumes that easy and structured access to information is crucial for policymakers, investors, NGOs, civil society organizations and other economic and social stakeholders. Increasing access to public information is also expected to support the small and medium-sized enterprise sector and improve innovation transfer.

The European Union plans to support the ongoing digitalization of the financial sector while promoting sustainable finance, which in turn will pave the way for a green transformation. Investors must have access to data on specific companies’ attitudes toward sustainability strategies – only in this way will they be able to make rational capital decisions. At the same time, EMAS will help strengthen public oversight of companies, giving the broader public and NGOs easy and comprehensive insight into the details of the financial and environmental performance of individual entities. This is an important step toward reducing greenwashing.

In addition to the mandatory information that individual legal entities are required to disclose, ESAP will also allow the publication of voluntary data. This initiative is intended to support medium, small and micro companies in particular, which full transparency can help them find investors. The mere fact that all information will be aggregated and automatically collected in digital form will also reduce the administrative ballast associated with the obligation to publish documents and data sets. ESAP will also benefit research and academic units that actively monitor market trends, prepare analyses and studies to support strategic decisions at the national and EU levels.

Next steps towards ESAP

The regulation adopted by the EP must still be approved by the Council of the European Union. This should happen in the next few weeks so that the new law can be published in the EU Official Journal by the end of 2023. Member states and ESMA will be given 12 months to prepare the necessary IT infrastructure before implementing the ESAP. Between 2027 and 2030, the ESAP is to be gradually expanded to include requirements from more than thirty pieces of EU legislation, including but not limited to. PRIIP regulation on key information documents or prospectus regulation. Ultimately, the European Single Point of Access is intended to provide the broader public with all key data in financial services, capital markets and sustainable development.

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