Compliance and EU Single Access Point, What is the Relationship?

Grand “Answer”:

The European Single Access Point (ESAP) is a project initiated by the European Commission to provide a centralized platform for accessing public financial and sustainability-related information about EU companies and EU investment products [1]. The primary goal of ESAP is to increase transparency, efficiency, and competitiveness in European capital markets by making it easier for investors, regulators, and other stakeholders to find and access relevant information [1]. In terms of compliance, the ESAP will help companies and investors adhere to various regulatory requirements by providing essential data and information in a single, user-friendly platform [1]. This will enable stakeholders to make informed decisions, monitor compliance with EU regulations, and contribute to the overall integrity and stability of the EU financial market [1]. Therefore, the relationship between ESAP and compliance can be described as a supportive one, where ESAP facilitates the process of compliance by offering a centralized and efficient source of information [1][2].

Source

[1]

European Single Access Point | Legislative Train Schedule

As part of the Economic and Social policy, the Commission proposed an European Single Access Point for public financial and sustainability-related information.

European ParliamentEuropean Parliament

[2]

EUR-Lex - 52021PC0724 - EN - EUR-Lex

Back to EUR-Lex homepage

The European Single Access Point (ESAP): A Move Towards Digital Compliance

The project we are discussing is closely related to the advancement of the Capital Markets Union (CMU) and the rising focus on transparency concerning Environmental, Social, and Governance (ESG) data. To fully appreciate the reasons behind the creation of the European Single Access Point (ESAP), we need to understand several contextual elements.

The ESAP is one strand of the broader agenda of the European Commission to drive digital and green transitions, an initiative echoed in the European Green Deal Investment Plan launched in 2020. This plan underscores the importance of sustainable finance, which is heavily reliant on transparency, to stimulate sustainable growth. The European Data Strategy unveiled in February 2020 also points to the Commission's ambition to improve data accessibility for economic use, specifically by establishing a shared financial data space.

The role of European capital markets is critical in the post-Covid economic landscape. Increased indebtedness in the corporate sector due to the crisis necessitates ample access to funding, particularly equity, for a robust recovery. However, access to equity remains restricted, making financial and sustainable data transparency a vital component in easing equity financing.

In light of these circumstances, fast-tracking the CMU is vital to underpin the green and digital economic recovery. The Commission has identified easily accessible and comparable company data as a key element in increasing funding. However, two primary structural issues mar the existing data market.

Challenges and Compliance Future for the ESAP

The supposed accessibility of financial data is hindered by its fragmentation, which is due to reasons like lack of a dedicated dissemination channel, absence of a unified digital format for public data disclosure, issues with machine readability, complex data retrieval, etc. The absence of a consolidated EU-level data management system escalates users' search costs and restricts their ability to diversify their investment strategies across the EU. This is particularly detrimental for SMEs and companies with less mature capital markets because of their limited visibility and challenges in attracting investors.

Although there's a growing demand for ESG or sustainability-linked data, its supply is insufficient. This data deficiency obstructs financing for ESG initiatives, primarily climate-related actions, posing a significant challenge for SMEs. In light of regulations such as the Sustainable Finance Disclosure Regulation (SFDR) and the Corporate Sustainability Reporting Directive (CSRD) released in March and April 2021 respectively, which stress on transparency to promote greener investment choices, comprehensive access to companies' ESG data is crucial.

The broader ambitions and possibilities for the ESAP extend beyond its function as a data tool. It is perceived as a crucial instrument contributing to a more sustainable, digital, and inclusive economy, enhancing digital sovereignty, and fostering a more integrated capital market. Several recommendations have been made to expand the project's scope, ranging from processing and adding value to the information collected, to ensuring the platform is flexible, adaptable, and inclusive.

To fully harness the potential of ESAP, standard procedures for ensuring transparency, data integrity, and source credibility need to be established. The ESAP should distinguish between financial and non-financial data, and consider the voluntary publication of social data. Additionally, a dedicated helpdesk and training in financial and digital literacy could ensure better usage of the ESAP.

These ambitious proposals could significantly amplify ESAP's impact in driving a more sustainable, digital, and inclusive economy, highlighting the common expectation that this initiative will be a transformative tool for the European capital market and the wider economy.

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