EFRAG wants annual reports to join the dots

Posted on January 11, 2026 by Editor

In mid-December, the European Financial Reporting Advisory Group (EFRAG) published a discussion paper on the connectivity of financial and sustainability reporting. The goal? To close the gap between what companies say about climate and social impacts, and what they report in their financial statements.

EFRAG argues that "connectivity" is a foundational concept for high-quality corporate reporting. Investors, regulators and analysts increasingly want to trace a climate risk from narrative to impairment, or from transition plan to segment performance. But that's hard to do when disclosures are scattered, terms are inconsistent, and sustainability issues are awkwardly bolted on rather than integrated.

EFRAG points to inconsistent terminology, patchy treatment of sustainability related matters in segment disclosures, and fuzzy boundaries around what belongs in financial statements versus elsewhere in the annual report. It provides 17 real world illustrations showing emerging links between ESRS or ISSB based sustainability disclosures and IFRS Accounting Standards financial statements. These examples offer practical insight for preparers, standard setters and technology providers.

Connectivity has been a top priority since EFRAG's 2021 research agenda, and follows its June 2024 paper on annual report boundaries. Now, EFRAG is calling for collective action: clearer guidance, standard-setter collaboration, and better methods to assess qualitative materiality. Structured reporting demands clarity and consistency across reporting domains. Better connectivity means better tagging, better automation and better insights.

Comments are open until 30 June 2026. Read the announcement and consultation details here.