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Issuers need to improve their disclosure of environmental, social and governance (ESG) exposures, according to a new report from European regulators.

The European Securities and Markets Authority (ESMA) published a report on the work of ESMA and other European accounting standards setters at enforcing issuers’ compliance with various aspects of corporate reporting rules.

In 2019, they examined 937 issuers for compliance with ESG disclosure requirements. Over 10% of these cases resulted in enforcement action (95 actions), ESMA said.

“Investors are…increasingly demanding reliable and relevant disclosure on ESG factors,” said Steven Maijoor, chair of ESMA.

“Examinations of non-financial statements during 2019 show that further efforts are needed from European issuers,” he noted.

“Together with national enforcers, ESMA will continue its focus on this area to ensure that investors are provided with high-quality ESG information,” Maijoor said.

The report also noted that in 2019, European authorities reviewed approximately 950 financial statements, representing 17% of listed issuers in European markets.

These reviews prompted enforcement action against 299 issuers for material deviations from reporting standards.

“A harmonized European approach to the application of [International Financial Reporting Standards (IFRS)] is key to ensuring that investors receive high quality and relevant financial information,” Maijoor said.

“In 2019, ESMA and European enforcers focused on the new accounting standards to ensure a convergent application and this effort will continue in 2020,” he said.

Regulators also examined 712 management reports to determine whether issuers’ use of alternative performance measures compiled with ESMA’s guidance in this area. These examinations generated enforcement actions against 109 issuers, it said.