ESMA GLESI: The Enforcement Framework That Sets the Standard for Sustainability Reporting Supervision
Credit: Lythouse
Published in July 2024 and entering full implementation across EU member states in 2025–2026, the GLESI defines how national regulators must supervise sustainability disclosures with direct implications for cross-border and dual-listed firms.
Context:
In July 2024, the European Securities and Markets Authority published its final report on the Guidelines on Enforcement of Sustainability Information (GLESI), the first comprehensive supervisory framework governing how national competent authorities (NCAs) across the EU must examine, assess, and enforce sustainability disclosures by listed companies. The GLESI entered the comply-or-explain process for NCAs in 2025 and is now being applied across EU member states in the 2025–2026 enforcement cycle.
The GLESI was mandated by the Corporate Sustainability Reporting Directive (CSRD), which requires companies subject to the Directive to publish sustainability statements in accordance with the European Sustainability Reporting Standards (ESRS). ESMA's role is to ensure supervisory convergence, to make sustainability reporting enforcement closely resemble the existing framework for financial information enforcement, so that companies face consistent supervisory scrutiny regardless of which EU member state regulates them.
The context is the first wave of CSRD reporting: companies previously subject to the Non-Financial Reporting Directive (NFRD) published their first sustainability statements under ESRS in early 2025. Enforcement of those statements and the subsequent waves covering more companies from 2026 and 2027 is the terrain the GLESI governs. For UK companies with securities listed on EU-regulated markets, or operating in the EU, the GLESI is directly relevant to their supervisory exposure.
Rules and Guidelines:
The GLESI mirrors ESMA's existing Guidelines on Enforcement of Financial Information (GLEFI) in structure and approach. It covers: the objective of sustainability information enforcement (ensuring compliance with ESRS and Taxonomy Regulation Article 8, supporting investor decision-making and market confidence); types of examination (desk-based reviews of the sustainability statement as a whole, or focused reviews on specific topics or ESRS standards); enforcement actions (correction of material errors, public statements of non-compliance, referral to authorities with sanctioning power); and governance (NCAs must have professionally skilled staff with sustainability reporting expertise, and must coordinate through ESMA's European Common Enforcement Priorities).
The GLESI is subject to a 'comply or explain' procedure; NCAs must notify ESMA whether they comply with the Guidelines within two months of the translated versions being published (translations were completed in Q1 2026). ESMA publishes NCAs' compliance status publicly, creating reputational accountability for member state regulators. The GLESI also establishes the basis for ESMA's annual European Common Enforcement Priorities (ECEP) for sustainability reporting, which complements the long-standing ECEP for financial reporting.
Businesses Affected:
Companies with securities listed on EU-regulated markets that are subject to CSRD, including the NFRD first-wave companies (large listed companies with 500+ employees) and subsequent waves of companies subject to ESRS.
Dual-listed or cross-border companies with both UK FCA and EU regulated market listing, who face parallel supervision under GLESI (EU) and the FCA's CP26/5 framework (UK).
Audit and assurance providers conducting limited assurance on sustainability statements must understand NCA enforcement priorities to calibrate their verification scope.
Investors and asset managers using sustainability disclosures for SFDR-related reporting need to understand the supervisory quality assurance framework underlying the data they rely on.
Next Steps:
Review ESMA's annual European Common Enforcement Priorities for sustainability reporting which will identify specific ESRS standards and disclosure requirements that NCAs will focus on in the coming year. Use these to prioritise internal review of your sustainability statement.
If you are dual-listed on EU and UK markets, map the GLESI framework against the FCA's CP26/5 supervisory approach. Where UK SRS and ESRS diverge, assess whether your reporting architecture can accommodate both regulatory expectations.
Engage with your primary NCA to understand their compliance status under GLESI and their planned enforcement approach. Materiality analysis quality is consistently identified as a priority area; ensure your materiality assessment is documented, auditable, and consistent with ESRS standards.
Assess assurance scope. ESRS requires limited assurance on sustainability statements; the GLESI establishes that NCAs will scrutinise assurance quality. Firms should ensure their assurance provider understands the applicable ESRS standards and the GLESI enforcement framework.
Source | ESMA | Guidelines on Enforcement of Sustainability Information
