EFRAG Publishes Paper Addressing Interplay of Connectivity and Annual Report Boundaries

EFRAG Publishes Paper Addressing Interplay of Connectivity and Annual Report Boundaries

By Prathamesh 9 July, 2024
news

June 28, 2024

“As part of the EFRAG proactive research project, Connectivity between financial and sustainability reporting, EFRAG has published an initial paper “Connectivity considerations and boundaries of different Annual Report sections”. The paper lays out the conceptual foundations, categories and benefits of connectivity, a relatively new concept (i.e., not in Conceptual Framework for Financial Reporting), which has been introduced within mandatory sustainability reporting requirements (i.e., ESRS for EU entities and ISSB Standards for entities in adopting countries). The paper also analyses reporting boundaries across different Annual Report sections and points to several grey areas on the location of information. It suggests steps to enhance connectivity and lessen the expectation gaps around reporting boundaries. A short version is also available.”

As part of its proactive research workplan, EFRAG has published a paper “Connectivity considerations and boundaries of different Annual Report sections” (hereafter referred to as the EFRAG Connectivity and reporting boundaries paper). This paper has been developed amidst an ongoing corporate reporting evolution marked by the growing prominence of sustainability reporting, which aims to facilitate the creation of sustainable businesses and the allocation of investment capital towards them. However, the prominence of sustainability reporting has been coupled with an often-disconnected reporting of sustainability-related matters in the financial statements. At the same time, there is a risk of duplicated reporting of other matters across sustainability and financial reporting. Hence, both European and global stakeholders have called for increased connectivity (including linkages/connections, consistency and coherence) of information across the distinctive sections of the Annual Report.

Connectivity is a new and multi-dimensional concept that has only been introduced into the mandatory sustainability reporting requirements, which are applicable for a) ESRS-reporting entities in the EU; and b) entities in jurisdictions that will adopt the ISSB Standards. Hence, the EFRAG Connectivity and reporting boundaries paper lays out the conceptual foundations and different aspects of connectivity. Amongst other things, this is intended to contribute to a shared understanding amongst stakeholders of the different aspects of connectivity.

To find out more details please visit : https://efrag.org/