(This article was published on 22 November 2022 and updated on 31 August 2023)
Highlights
What are the requirements?
Comparative information presented for sustainability-related metrics needs to reflect updated estimates in certain circumstances. This requirement does not apply to narrative disclosures or ‘forward-looking’ estimates. Companies are only required to update comparative information if the change is material.
When a company reports comparative information that differs from the information it reported in the previous period, it discloses:
- the difference between the amount reported in the previous period and the revised comparative amount; and
- why the amounts have been revised.
There are exceptions to these requirements:
- in the first year of adoption; or
- when a company cannot collate the required information.
Like IFRS Accounting Standards, there are separate requirements for when comparative information is updated to correct material errors, or if a metric presented is redefined or replaced.
What’s the impact?
Companies do not need to recalculate comparative information for every metric presented – but they do need to understand the impacts from changes in estimates used to prepare current-year information.
Revising comparative information to reflect certain updated estimates allows users to compare current-period amounts and those reported in the prior period, based on a consistent basis of estimation while avoiding introducing hindsight bias by updating forward-looking information.
Companies need to consider the practical implications that revising comparatives may have – e.g. on systems or where metrics are linked to remuneration.
Actions for management
- Read our guide for more on the requirements on updating estimates.
- Once you are familiar with the types of metrics that you will present, identify your most sensitive estimates and understand what may cause them to change.
- Assess whether you have processes, systems and controls in place to monitor and capture changes in your estimates and deal with the practical consequences of revising comparatives.
1 IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.
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