EFRAG Publishes Discussion Paper on Connectivity of Financial and Sustainability Reporting
EFRAG has released its Discussion Paper (DP) "Connectivity of Financial and Sustainability Reporting", following its 2021 research agenda consultation, where connectivity was the top-ranked topic by EU stakeholders. The DP highlights concepts, types, and mechanisms of the connectivity of reported information. It also highlights that connectivity can enhance reporting quality irrespective of the underlying reporting framework.
The DP emphasises that the importance of connectivity extends beyond linking sustainability statements to the financial statements or addressing only sustainability-related matters. It shows that connectivity is improving even though companies are still in the early stages of applying this concept. It identifies current gaps, such as inconsistent terminology, and possible underreporting of sustainability-related information in the segment disclosures in the financial statements. The DP also suggests the way forward, including clarifying the boundary of financial statements with respect to disclosures, and developing application guidance for the assessment of qualitatively material information in the financial statements. It underscores that improving connectivity will be a multi-stakeholder effort involving preparers, standard setters, auditors, and enforcers.
The DP has a supplemental document containing 17 real-world illustrations from company reports. These illustrations demonstrate practical instances of connectivity between sustainability disclosures under ESRS or ISSB Standards and financial statements under IFRS Accounting Standards, and they help stakeholders visualise how connectivity is applied in practice.
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Download the Illustrations
Sebastien Harushimana, Chair of the EFRAG Financial Reporting Technical Expert Group (EFRAG FR TEG), stated:
The real-life illustrations demonstrate how the connectivity concepts set out in our initial paper, “Connectivity considerations and boundaries of different annual report sections”, published in June 2024, are applied in practice. Through this Discussion Paper, we seek to encourage further work by standard-setters at a time when investors increasingly demand integrated and connected information across the annual report to support informed economic decision-making. I would like to thank all those involved—EFRAG CAP, the EFRAG TEGs, the EFRAG FRBs, and the EFRAG Secretariat—and I warmly invite stakeholders in Europe and around the world to share their views.
Chiara Del Prete, Chair of the EFRAG Sustainability Reporting Technical Expert Group (EFRAG SR TEG), stated:
With the first wave of ESRS reports in 2024, sustainability reporting has now become a reality. If we want it to rapidly reach the necessary level of quality, integration with the rest of corporate reporting is a priority, and connectivity serves as an enabler of this process. Awareness of the purposes and boundaries of financial and sustainability reporting is essential for proper connectivity. Preparers and users need to understand what can and cannot be connected to avoid expectation gaps. The EFRAG Discussion Paper arrives at the right time, providing an illustration of the boundaries, techniques, and emerging practices in connectivity.
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Stakeholders are invited to submit their comments by 30 June 2026.