Digital tagging for European Sustainability Reporting Standards is here

The European Sustainability Reporting Standards (ESRS) are becoming a significant driver of large-scale transformation in the corporate world within the EU. The standards have been broken down into approximately 1,200 individual ESG data points, which are freely available as part of the Implementation Guidance: List of ESRS data points released by EFRAG. Given the thousands of unique entities and their individual sustainability statements, analysing and comparing these data points can be challenging. Hence, a standardized approach is needed. The digital eXtensible Business Reporting Language (XBRL) Taxonomy was designed to provide this common language and structure. XBRL, developed in 1998, is now widely used in financial, tax, and regulatory reporting.

Digital tagging from 2026

Using the taxonomies developed by EFRAG, European Securities and Markets Authority (ESMA) will establish the tagging rules for digital reporting under ESRS Set 1. These tagging rules will then be officially adopted by the European Commission through a delegated act, amending the Commission Delegated Regulation (EU) 2018/815, also known as the European Single Electronic Format (ESEF Regulation).

The digital tagging of sustainability statements will not become mandatory until the European Commission adopts the final taxonomy. According to current information, companies are expected to begin reporting in XBRL format starting in 2026.

How tagging works

Each piece of relevant information in a report is assigned a specific "tag" that defines what it represents – much like a barcode that uniquely identifies a product. XBRL taxonomy assigns digital tags to each data point, ensuring consistent interpretation across systems. This enables the information to be both human-readable and machine-readable, facilitating the automatic extraction and analysis of large amounts of data and improving decision-making.

What reporters should prepare for

Sustainability statements will be prepared in XHTML format using XBRL markup language, which will be provided in the form of electronic XBRL files. These files will be freely downloadable from the ESMA’s website and will offer elements with clear hierarchies and attributes aligned with the ESRS.

The currently available XBRL taxonomy from EFRAG website is intended for testing purposes, preparatory work, or voluntary tagging of ESRS sustainability statements. XBRL-tagged statements can be displayed in any web browser.

There are several XBRL-certified software options, generally divided into three categories: validation processors, review and consumption tools, and report creation software. At present, there is no freely available software dedicated solely to report creation—though Arelle is available for validation purposes.