Issued on 25 November 2021, the European Single Access Point (ESAP) is a new legislative proposal by the European Commission. ESAP will act as a centralized platform that can be accessed for publicly disclosed financial reporting and sustainability-related information about EU companies and investment products.
ESAP will provide investors with seamless opportunities to access company information and invest across borders. Small companies, regardless of their location, will be able to get better visibility, raise capital and finance their growth. With this proposal, non-listed organizations will also be able to disclose information on a voluntary basis.
In 2020, the Commission published a new Capital Markets Union (CMU) action plan to ensure greater access to publicly disclosed information on financial services, capital markets, and sustainability across the European Union. This action plan aims to establish ESAP by 2024, and its implementation will be phased from 2024 to 2026. Additionally, companies’ ESG and sustainability-related information would be accessible on ESAP. This new proposal will be a fundamental supporter of the 2020 EU Green Deal and will also help in boosting growth across the EU by developing a single market for capital.
All About The Capital Markets Union
The Capital Markets Union was established in 2015 by the EU as an initiative to break down barriers between the bloc’s capital markets and integrate them as one. The goal of the union is to provide a better allocation of capital and make it easily accessible across the EU to benefit consumers, investors, and companies.
The commission published a progress report in 2019 to show the development of the initial roadmap toward a more diversified and sustainable financial ecosystem. The High-Level Forum (HLF) published a Final Report in 2020 containing 17 interconnected recommendations that the EU needs to implement urgently to support the economic recovery following the pandemic.
Based on the HLF recommendation, the European Commission presented a 16-point Action Plan on the CMU with the following key objectives:
- Making financing more accessible to EU companies to support a green, digital, inclusive, and resilient economic recovery
- Making the EU a secured market for individuals to save and invest in the long term
- Integrating national capital markets into a genuine EU-wide single market for capital
ESAP Implementation And Scope
The functioning of ESAP will be monitored collectively by European Securities and Markets Authority (ESMA), European Banking Authority (EBA), and European Insurance and Occupational Pensions Authority (EIOPA). An annual report will be published on the basis of the qualitative and quantitative indicators allotted by the European Commission.
All information by EU financial reporting entities within the publicly disclosed reports and documents will be required to be submitted to ESAP. The platform will also provide access to data applicable to financial services, capital markets, and sustainability that is disclosed publicly on a voluntary basis by any EU organization. The first submissions to ESAP are expected by 2024.
What It Means For Complying Entities
The goal of ESAP is to provide information in a systematic and non-discriminatory manner to investors, financial analysts, and other users for better decision-making. Financial Reporting organizations and Small and medium-sized enterprises (SMEs) in the EU, regardless of their company or market size will be able to submit data directly to the ESAP which means:
- Better allocation of capital across the EU
- Voluntarily disclosure of public information by non-listed companies and SMEs
- Greater visibility and scope of development for small economies and SMEs
- Steer investments to build a resilient, low-carbon economy
Acting as an important legislative proposal, ESAP will harmonize the division across the EU that occurs due to location, format, and language. ESAP will enhance the quality and availability of data wherein investors and other users can access everything from a single platform, bringing data to investors’ fingertips.
With digital financial reporting already being adopted by ESMA, it will be interesting to see if ESAP adopts new obligations in terms of machine readability and data standardization. Digital financial reporting formats like XBRL and inline XBRL will help to make data comparable, enhancing ESAP efficiency and usability.
Read one of our earlier articles on the ESAP here.