EFRAG Q&A compilation November 2024, page 103 – Question ID 935 

EFRAG has released an answer to our question (ID 935) regarding how to distinguish current versus anticipated financial effects to be published in ESRS 2 SBM-3 paragraph 48 datapoints (e) and (d).

Thank you EFRAG for taking the time to provide this clarification.

ESRS 2 SBM-3 specifies that

• the undertaking may omit the information prescribed by paragraph 48 (e) – anticipated financial effects – for the first year of preparation of its sustainability statement,
• but not the information regarding the current financial effects, in paragraph 48 (d), linked to a significant risk of a material adjustment within the next annual reporting period.

Annex II Acronyms and Glossary of Terms defines:

• ‘current financial effects’ as ‘Financial effects for the current reporting period that are recognised in the primary financial statements’; and
• ‘anticipated financial effects’ as ‘Financial effects that do not meet the recognition criteria for inclusion in the financial statement line items in the reporting period and that are not captured by the current financial effects’.

In other words, the current financial effect has already been recognised at or before the reporting date, whereas the anticipated effect might occur thereafter, be it in the short (within the reporting period, after the balance-sheet date), medium- or long-term.

For example, an impairment charge recognised in the current reporting period in accordance with IAS 36 Impairment of assets is a current financial effect whereas a disclosure in accordance with IAS 36 paragraph 134 (f), requiring the disclosure of a potential impairment based on a ‘reasonable possible change in key assumptions’, is an anticipated financial effect.

According to ESRS 2, the paragraph 48 (d) requires the disclosure of:

• the current financial effects of the undertaking’s material risks and opportunities on its financial position, financial performance and cash flows and the material risks and opportunities
• for which there is a significant risk of a material adjustment within the next annual reporting period to the carrying amounts of assets and liabilities reported in the related financial statements

EFRAG answers that

“This datapoint [48.d] does not qualify as current financial effects, but as anticipated financial effects for which there is a significant risk of a material adjustment within the next annual reporting period.

In this sense, there is an overlap, as the datapoint ‘adjustment within the next annual reporting period’ is also part of the anticipated financial effects to be reported under ESRS 2 paragraph 48 (e). 

The undertaking may incorporate disclosures using cross-references to the respective parts in the financial statements to avoid repetitions.”

Our understanding of this answer is that the datapoint 48 (d) should also read “anticipated” financial effects, and not “current” financial effects.

And, as such, the undertaking may omit also this information for the first year of preparation of its sustainability statement.

Source (ID 935, page 103): https://www.efrag.org/sites/default/files/media/document/2024-12/Explanations%20January%20-%20November%202024.pdf

EFRAG has released the finalized mapping of sustainability matters in paragraph AR 16 of ESRS 1 to the ESRS Disclosure Requirements in topical standards (ID 177).

The tables are available in the enclosed document.

The following can be noted:

⭕ Sustainability matters in ESRS 1 paragraph AR 16 are often interrelated. Based on the facts and circumstances of an undertaking, the materiality of a specific subtopic or sub-subtopic of a topical ESRS can trigger reporting requirements in other topical ESRS.

⭕ The subtopics of Energy and Climate Change Mitigation are closely linked. The datapoints in the Disclosure Requirement E5-1 Energy Consumption and mix cover aspects (energy use) linked to climate change mitigation. Therefore they are connected to Climate Change Mitigation.

⭕ The metrics in S1-6, S1-7 and S1-17 are mapped to the Own Workforce directly, as they provide contextual information that supports the understanding of the information reported in the other ESRS S1 disclosures and these form the basis for calculation of other metrics.  They are to be considered when defining what to report in relation to any subtopic/sub-subtopic.

⭕ The metrics in S1-8, S1-9, S1-10, S1-11, S1-12 and S1-14 are also all related to the topic of ESRS S1 Own Workforce as a whole, as they address fundamental rights.

⭕ Only the metrics in S1-13 (Training and skills development), S1-15 (Work-life balance), and S1-16 (Gender equality and equal pay for work of equal value) are mapped to a sub-sub-topic alone.

The document is available here >>>

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