EFRAG discussion paper on connectivity of financial and sustainability reporting

Accountancy Europe welcomes EFRAG’s discussion paper on the connectivity of financial and sustainability reporting. The paper is a useful starting point, and we support further development through the standard-setting due process.

A common definition of connectivity

The paper provides a high-level definition of connectivity that can be developed further. A more robust definition would help create a common understanding of what connectivity means.

Cross-referencing across jurisdictions

The acceptance of cross-referencing between annual report sections varies across jurisdictions. Any further work on cross-referencing as an enabler of connectivity should take this into account.

Different roles for financial and sustainability reporting

Financial reporting standards were written for reports that can stand alone. Sustainability reporting standards were designed to complement the financial report and other parts of the annual report, so the need for connectivity may be asymmetrical.

Using negative statements carefully

Negative statements can help explain connectivity in some cases, but they should be used judiciously. Preparers and standard setters should expect users to have a reasonable understanding of both reporting frameworks.

Why illustrative examples need context

The illustrative examples are useful on their own. Adding context would make their purpose clearer and explain why they are considered good practice.

No need for new standard-setting at this stage

At this stage, we do not see a need for standard-setting activity to clarify the boundaries of financial and sustainability reporting.