At the EFRAG 25th Anniversary Conference, Chiara Del Prete outlined what is becoming the new reference framework for high‑quality sustainability reporting in the EU. Europe is not simply implementing standards – it is building a coherent, future‑proof system designed to stand on equal footing with financial reporting.
🌿 1. Double Materiality as a Cornerstone
Europe’s model starts where others hesitate: recognising that impacts and financial risks & opportunities are inseparable. Double materiality ensures reporting reflects both a company’s footprint on the world and the world’s effects on the company – enabling realistic, holistic and forward‑looking analysis.
🌿 2. Robust Characteristics of Quality
Sustainability information must meet the same qualitative bar as financial reporting: relevance, fair representation, comparability, verifiability and understandability. This is the quiet revolution – sustainability reporting is no longer “extra‑financial” but co‑equal corporate reporting.
🌿 3. Holistic Coverage of Topics
Environmental, social and governance matters are treated as interacting dimensions, not separate chapters. This reflects how real‑world impacts and dependencies unfold – and how they translate into regulatory exposure, supply‑chain fragilities, reputational effects or shifts in market demand, while governance determines resilience.
🌿 4. Principle‑Based Approach
In line with the EU’s standard‑setting culture, ESRS remain principle‑based, enabling proportionality, judgement and sector‑specific relevance. The result is a system that is rigorous yet adaptable in a fast‑evolving landscape.
🌿 5. Structured Sustainability Statements
Sustainability reporting is now the “second leg” of standardised corporate reporting, structurally connected to financial statements. This strengthens connectivity, coherence and long‑term value understanding – anchoring sustainability firmly within the corporate reporting package.
🌿 6. Interoperability by Design
The EU framework is built to onboard other EU regulations and global frameworks (GRI, ISSB & others) through a single, coherent report. This reduces duplication, increases comparability and ensures a holistic view across reporting requirements.
🌿 7. Digital Readiness as a Prerequisite
With digital taxonomies and AI‑compatible structures, sustainability reporting enters the era of machine‑readable, assurance‑ready, decision‑useful data – the foundation for future supervision, analytics and capital‑market integration.
A European Reporting System Built for the Next Decade
These 7 pillars show how far the EU has come: from fragmented disclosures to a coherent, interoperable, digitally ready reporting system supporting Europe’s economic, environmental and social ambitions.
Sustainability reporting is no longer an add‑on – it is a strategic, structured and globally influential pillar of corporate reporting.
What happens when financial reporting, sustainability, geopolitics and technology converge?
EFRAG’s 25‑year milestone offered a rare moment to step back and see the full picture: a reporting system in transformation, a new governance logic, and a Europe determined to lead.
From the political battles of IFRS adoption to the emergence of a fully integrated sustainability reporting system, EFRAG’s 25th Anniversary Conference showed just how far Europe has come – and how much is still ahead.
Sustainability reporting is now strategic and central to capital markets. Sustainability impacts, risks and opportunities are business risks and opportunities. No company can afford blind spots.
I’ve summarised key messages that emerged across panels and keynotes – from connectivity to anticipated financial effects, AI, interoperability, digitalisation and the future of double materiality – and where corporate reporting is heading next. 👇
Enjoy the reading
Leila Hellgren
EFRAG at 25: Corporate Reporting Enters Its Next Era
The 2026 EFRAG Conference marked more than an anniversary. It captured a turning point in Europe’s corporate reporting journey – from the political battles of IFRS adoption to the emergence of a fully-fledged, interconnected system where financial and sustainability reporting stand side by side.
Across panels and keynotes, one message resonated: sustainability reporting is no longer an adjunct. It is reshaping corporate reporting, governance and capital markets – and Europe intends to lead.
From Accounting Debates to a European Reporting System
Speakers revisited the origins of EFRAG: a time when accounting was anything but technical. As Karel Van Hulle put it, “accounting is too important to be left to the accountants.”
The early 2000s were marked by divergent national views, resistance to IFRS, and the political realisation that only an EU regulation could ensure simultaneous adoption across Member States. The 2008 financial crisis then pushed accounting rules onto the front page of the Financial Times, revealing how standards can influence behaviour, market stability and public trust.
This history matters because it sets the stage for today’s transformation: sustainability reporting is now just as political, consequential and contested as financial reporting once was.
The Shift to Sustainability: A More Complex, More Political Landscape
Speakers acknowledged that sustainability reporting has become deeply intertwined with geopolitics, energy security and societal expectations. The ESRS revision – and the forthcoming Delegated Act – reflect this broader shift: not only a rethinking of the role of the economy in society, but also the recognition that corporate activity does not operate in isolation from an increasingly polarised world.
Supply‑chain disruptions, geopolitical tensions, social fragmentation and the energy transition all shape the risks companies face, and the expectations placed upon them. Sustainability reporting is therefore becoming a tool to navigate complexity, demonstrate resilience and maintain trust in a context where economic decisions are inseparable from political and societal dynamics.
Interoperability and the Global Landscape
In this contexte, Europe and the ISSB “have different north stars but look in the same direction.” The EU’s choice to remain independent – driven by its own political goals and double materiality approach – was widely seen as the right one.
Interoperability is the pragmatic solution: a way to reduce duplication, support global comparability and ensure that companies can access capital markets across jurisdictions.
Over 40 jurisdictions have adopted ISSB standards, each with their own policy objectives. Europe’s voice is heard – and increasingly influential – in this global dialogue.
Connectivity: Europe’s Distinctive Contribution to Corporate Reporting
A central theme of the conference was connectivity – the structured linkage between sustainability information and financial statements.
Speakers stressed that:
- Sustainability goals influence financial decisions, provisions and performance.
- Impacts drive risks and opportunities, which ultimately shape financial outcomes.
- Financial reporting is the X‑ray; sustainability reporting is the MRI scan.
- Together, they offer a full picture of a company’s resilience and long‑term value creation.
Connectivity is not consolidation. It is coherence: consistent boundaries, reconciliations, cross‑references and a shared narrative. As one preparer put it: “It is difficult to connect on paper what has not been connected in internal processes.”
This is why connectivity is ultimately a governance issue, not a reporting one.
Anticipated Financial Effects: The Next Frontier
Anticipated financial effects (AFE) remain one of the most challenging areas. Practices are immature, methodologies differ, and companies fear disclosing assumptions that may change.
Yet investors see AFE as “an analyst’s dream”: numbers build confidence, especially when accompanied by transparent methodologies and scenario‑based narratives.
The long phase‑in period until 2030 reflects this complexity – and the need for learning, capacity building and cross‑disciplinary collaboration.
Digitalisation and AI: Opportunity and Risk
Digitalisation was another recurring theme. Despite lobbying to remove XBRL, Sébastien Harushimana (FCCA) stressed that research shows that AI complements structured data – it does not replace it.
AI can streamline reporting and enable real‑time analysis, but it also introduces risks:
- Models are probabilistic and may produce different outputs: press the button again and you may have another outcome.
- Sustainability data is less mature and less structured than financial data. AI systems perform best when the data they analyse is consistent, standardised, complete and historically rich. Financial reporting meets these conditions: decades of harmonised standards, clear definitions and structured formats. Sustainability data does not – yet.
Structured formats remain the backbone of reliable, machine‑readable reporting. And transparency about which AI models are used becomes essential.
Sustainability Risks and Opportunities are Business Risks and Opportunities
No company can afford blind spots. If you truly understand your business, you also know where the vulnerabilities lie – even if speaking about them feels uncomfortable at first.
And if a company chooses not to disclose, investors will construct their own view from external data sources. Reporting is where companies can tell their story on their own terms.
Why Companies Should Not Wait
A strong warning was issued to companies outside the CSRD scope: the wait‑and‑see approach is dangerous.
Not understanding your impacts, risks and opportunities is a governance failure. Value‑chain due diligence obligations will still apply. And investors will create their own assessments if companies do not disclose.
Early movers gain:
- better internal management of impacts, risks and opportunities
- clearer value‑creation logic
- stronger investor trust
- readiness for future regulatory or market expectations
As one speaker noted: “The topics on the CSO’s table will be on the CFO’s table within two to three years.”
The Future: A More Integrated, More Strategic Reporting System
Several themes emerged as defining the next decade:
- Standardisation is replacing the “alphabet soup” of voluntary frameworks.
- Double materiality will remain Europe’s distinctive contribution.
- Performance, strategy, risk and resilience will shape sustainable business models.
- Connectivity will reduce “cheap talk” and reward companies that tell a coherent story across financial and sustainability sections.
- Technology will bring real‑time communication between companies and investors.
Above all, sustainability reporting is not a burden – it is a strategic tool for risk management and decision‑making.
A System Still Evolving – But Here to Stay
The conference closed with a clear message: sustainability reporting and connectivity are here to stay.
Europe must continue learning, adjusting and balancing ambition with operational feasibility. But the direction is set: a reporting system that is relevant, reliable, connected and forward‑looking.
