What happened

The European Securities and Markets Authority (ESMA) published its annual statement of European common enforcement priorities on 13 October 2026. It sets out what ESMA and the national enforcers in the European Economic Area will look at most closely when they review the 2026 annual financial reports of companies listed on EEA regulated markets. ESG Today covered it on 19 October. We checked the details below against ESMA's own release and the statement itself.

The statement covers financial statements, digital filing and sustainability reporting. For sustainability statements it sets two priorities:

  • Materiality. Companies should keep improving their double materiality assessment, assess negative impacts as rigorously as positive ones, and cover impacts, risks and opportunities in their own operations and their upstream and downstream value chain.
  • Connected information. What a company says about its impacts, risks and opportunities should link clearly to its policies, actions, targets and metrics. ESMA says this applies to all topics, but for 2026 enforcers will focus on ESRS E1 Climate change and S1 Own workforce.

On climate targets, ESMA's points include:

  • Targets should be measurable, time-bound and outcome-oriented, with method information specific to each target.
  • If a greenhouse gas reduction target doesn't cover the full inventory, the company should explain that.
  • If an issue spans own operations and the value chain but the policy, action or target covers only own operations, that should be made clear.
  • Changes to a baseline should be explained, with improved Scope 3 estimates given as one example.
  • Absolute values, not only intensity, unless the standards say otherwise, and no loose "science-based" or "1.5 degrees" wording without saying how.

2026 is also a transition year: companies can report under the original ESRS (as amended), the simplified ESRS, or the original set with listed reliefs, and should say which they used.

What it means for a small UK business

This is not a new rule for UK companies. It is guidance to EU-listed issuers and their auditors on what enforcers will check, and it says nothing directly about suppliers. UK small businesses have no obligation under it.

The effect on you is indirect. Your emissions are part of your customer's Scope 3. If an EU-listed customer is being pushed to show how its climate targets cover its value chain, and to explain changes from better Scope 3 estimates, the obvious source of better estimates is its suppliers. So a supplier that today gets a short annual question may start to see more detailed requests: Scope 1 and 2 figures with the method, the share attributable to that customer, and whether you have a target and what you are doing to meet it. We can't say when or how much; that will vary by customer.

The same pattern is already common with UK and US customers. Our posts on what customers can reasonably ask and how to answer a customer carbon questionnaire cover the requests themselves.

A worked example

Take an illustrative supplier using 40,000 kWh of electricity and 60,000 kWh of gas a year. With the 2026 UK government factors, that's about 5.24 tonnes CO2e from electricity (location-based) and 10.94 tonnes from gas: about 16.18 tonnes of Scope 1 and 2 in total. If one EU-listed customer makes up 15% of turnover, a revenue-based allocation puts about 2.43 tonnes in that customer's Scope 3. Give the figure with the method, the factor year and the period, so the customer's auditors can see where it came from.

What to do now

  1. Have a current-year footprint. Scope 1 and 2 for your last financial year, with the method (GHG Protocol), the factor year and whether Scope 2 is location-based or market-based. Our step-by-step footprint guide walks through it.
  2. Know your main Scope 3 categories, even if you have only measured some. See the Scope 3 categories guide.
  3. Set a simple target: a base year, a target year and an absolute percentage cut. If a customer asks for a science-based one, read what to do when a customer asks you to set one.
  4. Write a short action list with dates: the few changes that will actually move your figure.
  5. Keep your method steady year to year, and if you change your baseline, explain why. Our post on when to restate a carbon baseline covers this.

How Carbon Recycling helps

Carbon Recycling calculates your Scope 1, 2 and 3 emissions from bills, mileage and spend with the UK government conversion factors, and its SECR and Carbon Reduction Plan reports set out the methodology and factor year. Its Carbon Reduction Plan report lets you set a baseline year, a target and completed and planned reduction measures, and tracks each later year against the baseline, which is the target and action list an EU customer will ask about. The free supplier questionnaire answer bank turns your figures into model answers, including a revenue-based share of your Scope 1 and 2 for a customer's account.