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News from the AGN EMEA Accounting, Auditing & Education Committee (AAEC)
In this article, Carsten Ernst – AGN’s expert in financial (IFRS) and sustainability (ESRS and GRI) reporting, explains some important terminology in the European Sustainability Reporting Standards (ESRS), which are prepared by the European Financial Reporting Advisory Group (EFRAG).
The EFRAG must follow the guidelines of the CSRS. The European Commission adopts the ESRS and reviews them at least every three years.
Reporting Areas
GOV (Governance), SBM (Strategy), IRO (Impact, risk and opportunity management, MT (Metrics and Targets). The disclosure requirements are assigned to the different reporting areas.
Disclosure Requirements
These form the core of the ESRS and consist of the wording, the objectives and the disclosure requirements.
Entity-specific Disclosures
The entity-specific disclosures enable readers to understand the undertaking’s impacts, risks and opportunities in relation to environmental, social or governance matters.
Data points
Disclosure requirements consist of more granular datapoints (subelements).
Sustainability due diligence
Process to identify, prevent, mitigate and account for actual and potential negative impacts of a company’s operations on sustainability issues.
Dual materiality
Two perspectives are to be distinguished:
- Inside-out perspective: impacts of a company’s operations on sustainability aspects.
- Outside-in perspective: Impact of sustainability aspects on business performance, business results and the company’s situation.
Materiality analysis
Analysis and classification of sustainability issues according to the concept of dual materiality. Structuring of the approach:
- Compilation of relevant sustainability topics (long list).
- Internal classification and categorisation of sustainability issues
- Integration of the external perspective
- Summary as a short list
- Internal and external quality assurance of the short list
- Release of the final short list as a starting point for reporting
- Preparation of the materiality matrix
Should you ever lose track of the big picture, my colleagues and I from the AGN EMEA Accounting, Auditing & Education Committee (AAEC) will be happy to help and guide you safely through the IFRS and CSR jungle. As a member of AGN International, you can use the AGN AAEC Helpline at any time or contact me by email at carsten.ernst@wirtschaftstreuhand.de or by mobile phone at +49 173 8710322.
Happy accounting and stay sustainable,
Carsten
 Carsten Ernst Managing Partner Wirtschafts Treuhand Group Stuttgart, Germany | – Expert in financial (IFRS) and sustainability (ESRS and GRI) reporting – Audit of financial and sustainability reports in accordance with ISAs – Member of the following AGN bodies: – EMEA Board of Directors (Chairman) – EMEA AAEC Accounting, Auditing and Education Committee (Member) |
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