EU enacts move to ESEF – with wide-reaching implications for Corporate Reporting

30th May 2019

Yesterday, the European Parliament enacted the transition to a new European Single Electronic Format (ESEF), led by the ESMA. This means that from 2020, all European-listed companies will need to prepare Annual Reports in the ESEF format, which is based on the iXBRL standard and requires a final xHTML format. ESMA’s ESEF Taxonomy for tagging data is largely based on the IFRS taxonomy, and will require XBRL tagging of key elements within the Annual Report for companies producing consolidated company Reports for periods beginning on or after 1st January 2020. 

What are XBRL and xHTML?

  • XBRL stands for eXtensible Business Reporting Language, a standard used to translate any human-readable information into machine language. This translation requires a dictionary, which in financial terms is a taxonomy, with data in the Report tagged to financial concepts from that taxonomy via a tagging software;
  • xHTML stands for eXtensible HyperText Markup Language. Almost identical to HTML, xHTML is stricter than HTML and is supported by all major browsers. Like the SEC’s Edgar platform, it’s designed as a ‘lowest common denominator’ capable of being easily read online.

Why?

Reports will be published on an online National Storage Mechanism, capable of being easily searched. Longer term, this will enable use to perform comparisons between companies using tagged data to make those searches relevant and meaningful. For example, Investors will be able to create comparisons between companies and understand key metrics more quickly and easily, aiding investment decisions.

What will be the impact on listed companies in the EU?

This new requirement will significantly change the reporting process and how CFOs and Boards are treating the digitisation of data. No longer limited by the boundaries of a PDF or a printed document, the Annual Report will also – or instead - become a document for consumption by machines. This will require a considered and intelligent approach to structured data and the creation of the Annual Report, both to meet the Regulator’s submission criteria and also making it easy for investors and analysts to use.

How can we help?

We provide end-to-end solutions across Corporate Reporting, including an XBRL tagging to the ESEF taxonomy and output to xHTML format with the embedded tagging, as well traditional online formats such as PDF or interactive versions, as well of course as printed hard copies.

We’ll help you decide whether you wish to move to one Report, potentially in a simplified format as some companies are doing; or to a dual version approach: a fully designed, integrated Report and a second, simple tagged xHTML version.  And of course, we can also provide services from content analysis and Best Practice structuring, through design and typesetting, to production, creation and distribution in printed or online formats.

For more information, please see http://blackcallowenergy.com and https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1559131464589&uri=CELEX:32019R0815