Preparing the annual financial statements in digital format: what’s new for ESEF and ESG?

As the annual closing period approaches, one topic deserves special attention: the digital format of the annual financial report, according to the European Single Electronic Format (ESEF). ESEF remains a key requirement for companies listed in the EU and the UK, and 2025 brings with it a host of new challenges. These include updates to the ESEF taxonomy, ongoing regulatory uncertainty, and the introduction of IFRS 18. Although this standard is not yet mandatory, it is already influencing reporting practices, and its early adoption is expected to be permitted in the EU, with implications for the choice of taxonomy and the mark-up of ESEF reports.

At the same time, companies are beginning to prepare for new ESG (Environmental, Social and Governance) disclosure requirements under the European CSRD directive, which also mandates a digital format for sustainability data. In the United Kingdom, draft sustainability reporting standards (UK SRS) have also been published for consultation.

Preparing for ESEF, despite delayed publications

One of the first key steps is to restart the ESEF mapping process in order to identify the most appropriate tags between financial statements and a constantly evolving taxonomy. This year, ESMA may publish the revised version of the Reporting Manual later than usual, as well as the updated regulations and the new taxonomy (for which a final draft has been published on 11 September). The framework therefore remains uncertain, although no major changes are expected at this stage.

It is also essential to review the presentation of financial statements. Even when issuers consider that their format remains broadly stable from one year to the next, adjustments are often necessary.

In the United Kingdom, issuers on regulated markets must continue to comply with the ESEF format, as the Financial Conduct Authority (FCA) maintains its own version of the taxonomy. In July 2025, the Financial Reporting Council (FRC) published the Draft 2026 Taxonomy Suite for 2026, with the final version expected in November. This draft gives companies visibility on the tags and structures planned for 2026, enabling them to prepare their systems and processes in advance.

What does the adoption of IFRS 18 mean for the ESEF?

The new presentation of the income statement under IFRS 18 will not be mandatory until the financial year beginning on 1 January 2027, but early adoption could be considered, which could complicate ESEF filings.

The IFRS Foundation has already published a taxonomy reflecting this new format, but the current ESEF taxonomy does not yet incorporate it. Its inclusion is expected in the 2026 version of the ESEF taxonomy, which could be accepted in advance for 2025 reports under the new regulatory technical standards (RTS) yet to be published.

As this taxonomy must allow for both possibilities — early application or non-application of IFRS 18 — it is essential to choose the right entry point when preparing filings. Whether or not an IFRS 18-compliant entry point is used, the markup must remain consistent with the chosen framework to avoid validation errors.

There is also the question of tagging new notes specific to IFRS 18 using dedicated macro tags. These tags will not be part of ESMA’s mandatory list, which means that companies will have to decide whether they wish to use them voluntarily to improve the clarity and readability of their reports.

Other tagging considerations should be taken into account, including proposals for tagging alternative performance measures and creating explicit XBRL links between primary financial statements and notes to the financial statements. These are interesting mechanisms proposed by the IFRS Foundation to facilitate analysts’ understanding of financial statements. However, they should not be subject to regulatory requirements and will be voluntary initiatives by issuers, in cooperation with their auditors, who are responsible for verifying the compliance of financial reports with ESEF requirements.

Beyond financial statements: towards ESG

While the ESEF tagging requirement is still limited to financial statements, now is a good time to start preparing for the tagging of ESG information, which is eventually planned under the CSRD directive. A digital format is also expected in the United Kingdom.

Companies can already publish voluntarily according to the GRI taxonomy or the VSME (Voluntary Sustainability Reporting Standard for SMEs) framework, developed by EFRAG to help small and medium-sized enterprises publish ESG data in a simple and standardised manner. These tools offer a valuable opportunity to familiarise oneself with structured ESG data tagging before the full regime comes into force, based on the ESRS Set1 taxonomy published by EFRAG in 2024 and currently under review. For companies affected by the CSRD, the next step is to compare their sustainability disclosures with the taxonomy. This will enable them to identify gaps, align reporting practices and facilitate the transition to digital formats.