Preparing an organisation’s financial statements can be tasking, particularly for large and complex groups with subsidiaries and investments in different sectors and jurisdictions.
For organisations that will apply the IFRS sustainability disclosure standards, IFRS S1 (General Requirement for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures), it is essential to pay attention to the standard’s requirements regarding the timing of reporting.
An organisation must report its sustainability-related financial disclosures at the same time as its related financial statements. These disclosures are also required to cover the same reporting period as the related financial statements.
This requirement for the timing of reporting could introduce additional challenges for organisations that consider themselves stretched when reporting on their financial statements.
Therefore, organisations must be ready to comply with this requirement, understand how it impacts them, and put measures in place proactively to ensure a smooth reporting process. Some of the key considerations include the following.
One consequence of this requirement is an increased demand for and involvement of human capital. Getting the sustainability reports over the line at the same time as financial reports will require more human resources as organisations might be unable to leverage the same human resources on both financial reporting and sustainability reporting.
Therefore, organisations should have a human capital resourcing plan that complements their existing team to ensure they comply with the IFRS sustainability disclosure requirements.
Another area to consider is changing the governance processes around sustainability reporting from year-end, one-time reporting to all-year-round reporting.
This internal switch is critical to accelerating the sustainability reporting maturity of the organisation.
More frequent monitoring and reporting reduces the effort required at year-end to prepare the sustainability report because the data requirements and disclosures will be easily made available by data owners, and preparers will easily demonstrate the storytelling and connection to the financial statements.
Finally, develop internal assurance programmes through their internal audit teams on the information within the sustainability report.
Ensuring that information is verifiable goes a long way to shorten the reporting process by increasing confidence in the sustainability information reported.
Understanding the impact of the reporting timelines of the IFRS sustainability disclosure standards enables organisations to comply in a timely manner.
Akinyemi Awodumila is a Partner at Deloitte East Africa. He is an author who writes and speaks widely on corporate reporting topics.
