On 17 December 2025, EFRAG published the Discussion Paper (DP) “Connectivity of Financial and Sustainability Reporting”, a document addressing one of the most relevant topics for the evolution of European corporate reporting today: the ability to connect financial and sustainability information in a coherent and understandable way within annual reporting.
The topic of connectivity had emerged as a top priority for European stakeholders in the 2021 consultation on EFRAG’s research agenda. With this DP, EFRAG aims to provide a conceptual and operational framework to enhance information quality, regardless of the reporting framework adopted.
Beyond the simple link between financial statements and sustainability
The Discussion Paper makes it clear from the outset that connectivity cannot be reduced to a mere cross-reference between the sustainability statement and the financial statements. The concept is broader and concerns:
- the coherence of messages across the different sections of the annual report;
- the consistency of data, assumptions and narratives;
- the ability to explain how ESG impacts, risks and opportunities are reflected (or may be reflected) in financial performance;
- the linkage over time between current information and expected future financial effects.
EFRAG notes that, although connectivity practices are improving, many companies are still at an early stage of implementation. Significant challenges remain, including the use of inconsistent terminology, information gaps and a possible underrepresentation of sustainability-related information in segment disclosures within financial statements.
Key gaps and future directions
The DP identifies several key areas that will require attention in the coming years. In particular:
- the need to clarify the boundaries of the financial statements with respect to relevant sustainability information;
- the development of application guidance to support the assessment of qualitatively material information in financial statements;
- greater focus on the representation of current and forward-looking financial effects arising from ESG factors.
EFRAG emphasises that improving connectivity will require a joint effort by multiple actors: companies, standard setters, auditors, supervisory authorities and users of financial information.
The 17 practical illustrations: connectivity in practice
To support the Discussion Paper, EFRAG has published a Supplemental Document containing 17 illustrations drawn from real-world corporate reporting cases. These illustrations show how connectivity is practically applied between:
- sustainability information prepared in accordance with ESRS, ISSB or other frameworks;
- financial statements prepared in accordance with IFRS Accounting Standards.
The cases analysed cover 15 companies across 9 sectors, with reference to 2024 reporting, and illustrate six different types of connectivity, including coherence, consistency, reconciliation, direct and indirect links, and intertemporal connectivity. The topics range from climate change to workforce issues, from the EU Taxonomy to sustainability-linked financing, and extend to climate risks in the financial sector.
Connectivity as an enabler of ESRS quality
From a sustainability perspective, Chiara Del Prete, Chair of the EFRAG Sustainability Reporting TEG, highlights how the launch of the first wave of ESRS reports in 2024 makes it urgent to improve integration with the rest of corporate reporting. Connectivity is seen as an essential enabler for rapidly enhancing the quality of sustainability reporting.
A central point is the understanding of the boundaries and purposes of the different reporting areas: knowing what can and cannot be connected is essential to avoid expectation gaps between preparers and users of information.
Consultation open until 30 June 2026
EFRAG invites European and international stakeholders to actively participate in the consultation by submitting comments on the Discussion Paper by 30 June 2026. The feedback received will be crucial in shaping future regulatory and practical developments on connectivity between financial and sustainability reporting.
In a context where ESG reporting is increasingly central to the functioning of markets and investor confidence, the Discussion Paper represents a key step towards more integrated, understandable and decision-useful corporate reporting.
