IFRS S1: How sustainability reporting is connected to the financial statements?

There are two main ways in which the sustainability standards are connected with the financial statements:

1. The sustainability disclosures shall be for the same entity as the related financial statements
2. An entity shall provide information in a manner that enables users of general-purpose financial reports to understand certain specified connections.

Reporting Entity

The users need to be presented with sustainability-related information for the same entity as the entity issuing financial statements.

For instance, when adhering to IFRS Accounting Standards, consolidated financial statements relate to both the parent company and its subsidiaries, presenting them as a unified reporting entity. In this case, the sustainability reporting would also cover the parent and the subsidiaries and a single reporting entity.

Connected Information

An entity should present information in a way that helps users of general financial reports grasp two key types of connections:

(a) Non-financial connections: Connections between various sustainability-related risks and opportunities, that could impact the entity's future.

(b) Financial connections, these include:

• Connections within sustainability-related financial disclosures
• Connections between sustainability-related financial disclosures and related financial statements.