In line with the European common enforcement priorities (“ECEPs”) issued by the European Securities and Market Authority (“ESMA”) on 28 October 2022 and the Law of 11 January 2008 on transparency requirements as amended (“Transparency Law”), the Commission de Surveillance du Secteur Financier (“CSSF”) recently published its enforcement priorities for the 2022 annual financial reports of issuers falling under its supervision. Particular attention will be paid by the CSSF to financial and non-financial statements relating to climate-related matters, the direct financial impacts of Russia’s invasion of Ukraine, the current macroeconomic environment, the taxonomy-related disclosures, the reporting scope and data quality, the identification of alternative performance measures (“APMs”) as well as the block tagging on European single electronic format (“ESEF”). Through this enforcement, the CSSF continues to assume its surveillance and guidance role in the constant transformation of the regulatory framework while preserving investors’ protection and confidence in the financial markets.
The CSSF enforcement priorities apply to those issuers subject to the Transparency Law and preparing their financial statements.
As observed legislators and regulators have developed a strong focus on climate change.
In anticipation of the requirements of the future European Stability Reporting Standards3 that will apply with the forthcoming Corporate Sustainability Reporting Directive, non-financial statements shall include information on the impact of climate change in application of the NFRD.4
As raised earlier in May 2022 by ESMA, the CSSF reminds issuers to present clear and detailed qualitative and quantitative information on the significant impacts, the balance sheet, the income levels as well as on the judgments and assumptions applied in recognition, measurements and presentation of assets, liabilities, profit or loss effects in relation to the Russian invasion of Ukraine on their financial statements.
Resulting from the pandemic-related effects, inflation, increase in the interest rates, deterioration of the business climate, geopolitical risks and more generally of global uncertainty, issuers have been facing significant challenges through the past year. The CSSF reminds that the impacts to the macroeconomic environment and uncertainties will have to be reflected in the IFRS financial statements with a specific focus on (i) impairment of non-financial assets, (ii) employee benefits, (iii) revenue from contracts with customers and (iv) financial instruments.
Therefore, the management report or the IFRS financial statements must contain sufficient information in order to assess and reflect these impacts and provide clear and detailed disclosures to ensure that the investors have been duly informed on the current business framework as well as on the existing financial risks.
The CSSF reminded that it is recommended that issuers assess their entire value chains so as to better measure their actual environmental and social footprints that can be very broad. The latters may have an impact on climate-related matters or/and on other sustainability areas and therefore constitute material information that is to be set up in the non-financial reports.
Moreover, the CSSF encourages issuers to provide transparency on the robustness of their data processes and the due diligence performed in relation to the data. As previously mentioned in the CSSF report of 2021, this will allow the CSSF to come closer to a quasi-real time supervision and prevent crisis and/or abuses.
The CSSF also urges APMs labels to be meaningful and clear to avoid confusing and misleading users of these measures. The issuers should identify each APM when included in management reports or press releases.
Falling, the CSSF reminded that issuers must prepare their annual financial reports in compliance with the ESEF format since 2021 and further block tags will need to be used throughout the document.
 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment.
 ESMA, Public Statement: European common enforcement priorities for 2022 annual finance reports – introduction for management and supervisory bodies of issuers, 28 October 2022, ESMA32-63-1320.
 Please kindly note that the European Commission has issued two documents with guidance on frequently asked questions and ESMA has issued two Q&A relating to ESG financial measures.
 Directive 2014/95/UE of the European Parliament and of the Council of 22 October 2014 as regards disclosure of non-financial and diversity information by certain large undertakings and groups.
Partner, Avocat à la Cour au Barreau de Luxembourg, PwC Legal
Tel: +352 26 48 42 35 60
Senior Associate, Avocat à la Cour au Barreau de Luxembourg, PwC Legal
Tel: +352 26 48 42 35 59