Connecting sustainability disclosures and the accounts

The most common criticism regulators make of climate reporting is not missing data but contradiction: a transition plan that retires a plant in 2030 next to accounts that depreciate it to 2045, or a sustainability report that assumes rising carbon prices next to an impairment test that ignores them. The ISSB standards and the ESRS turn consistency into a requirement. This guide explains connected information under IFRS S1, what the accounting standards add, works through a mining company's review of its assumptions, and covers legitimate differences, the ESRS approach and how finance and sustainability teams can work together.

By Mirza Fahad Baig, Chartered Accountant. Reviewed by Hamza Fida, Chartered Accountant. 4 minute read.

Short answer

Connected information is the IFRS S1 requirement that a company help investors understand the links between its sustainability-related risks and opportunities, and between its sustainability disclosures and its financial statements. The sustainability disclosures must cover the same reporting entity, period and currency as the financial statements and be published at the same time. The data and assumptions used should be consistent with those in the financial statements to the extent possible, with significant differences explained, and current and anticipated financial effects should identify the affected line items. Information can be included by cross-reference to another report if it is available on the same terms and at the same time. The accounting standards supply the other half: disclosures of judgements, key assumptions and estimation uncertainty, which the IASB's November 2025 illustrative examples apply to climate-related uncertainties. The ESRS take the same approach, with references to amounts in the financial statements. In practice, the test is simple: a carbon price, closure date or growth rate used in one report should match the other, or the difference should be explained.

At a glance

IFRS S1 requires
Connected information
Same as accounts
Entity, period, currency
Assumptions
Consistent, or explained
Financial effects
Name the line items
Cross-reference
Allowed, on same terms
Accounting side
Judgements, uncertainty
Connecting sustainability disclosures and the accountsIFRS S1 requires: Connected information; Same as accounts: Entity, period, currency; Assumptions: Consistent, or explained; Financial effects: Name the line items; Cross-reference: Allowed, on same terms; Accounting side: Judgements, uncertainty.KEY FACTS AT A GLANCEConnecting sustainability disclosures and theaccountsIFRS S1 requiresConnected informationSame as accountsEntity, period, currencyAssumptionsConsistent, or explainedFinancial effectsName the line itemsCross-referenceAllowed, on same termsAccounting sideJudgements, uncertaintyTax BakersConnecting sustainability disclosures and the accountsIFRS S1 requires: Connected information; Same as accounts: Entity, period, currency; Assumptions: Consistent, or explained; Financial effects: Name the line items; Cross-reference: Allowed, on same terms; Accounting side: Judgements, uncertainty.KEY FACTS AT A GLANCEConnecting sustainabilitydisclosures and the accountsIFRS S1 requiresConnected informationSame as accountsEntity, period, currencyAssumptionsConsistent, or explainedFinancial effectsName the line itemsCross-referenceAllowed, on same termsAccounting sideJudgements, uncertaintyTax Bakers
Key facts at a glance, as set out in this guide.

What is connected information?

IFRS S1 requires two kinds of connection. The first is between different sustainability-related risks and opportunities and the related governance, strategy, risk management and metrics: for example, how a decision to cut emissions affects workforce plans. The second is between the sustainability disclosures and the company's other general purpose financial reports, especially the financial statements. The aim is that investors can read the two reports as one account of the same company. See IFRS S1.

What does IFRS S1 require for connected information?

  • The same reporting entity, reporting period and presentation currency as the financial statements, and publication at the same time.
  • Data and assumptions consistent with those used in the financial statements, to the extent possible considering the accounting requirements, with significant differences explained.
  • Current and anticipated financial effects that identify the related line items, totals and subtotals in the financial statements.
  • Information about risks and opportunities with a significant risk of a material adjustment to carrying amounts within the next year.
  • Cross-references to other reports only where the information is available on the same terms and at the same time, and the disclosures remain complete and understandable.

See current and anticipated financial effects.

What do the accounting standards contribute?

IFRS Accounting Standards already require disclosure of significant judgements, key assumptions and sources of estimation uncertainty, and of any other information needed to understand the financial statements. In November 2025, the IASB published six illustrative examples applying these requirements to climate-related and other uncertainties, including disclosures where no amounts change but the information is material, key assumptions in impairment tests, credit risk and decommissioning provisions. See climate risk in the financial statements.

Connected information in practice: a mining company's assumptions

Before publishing, a mining company compares four assumptions across its sustainability disclosures and its financial statements.

A mining company's assumptions in both reportsA mining company's assumptions in both reportsSustainability reportFinancial statementsActionCarbon pricein 2030US$100 a tonne,1.5°C scenarioUS$60, bestestimateExplain, givesensitivityMine closure2035 in thetransition plan2042 in depreciationand provisionAlign to 2035ElectrificationspendingUS$400 millionby 2030Not in impairmentcash flowsExplain theIAS 36 ruleFlood-exposedassetsUS$250 millioncarrying amountSame, in PPE noteCross-refer
Differences are fine when the rules require them and they are explained.

The carbon price differs because the transition plan uses a 1.5°C scenario while the impairment test uses management's best estimate; the company explains this and gives the sensitivity of value in use to the higher price. The closure date was a genuine inconsistency, so the accounts now depreciate the mine and discount the rehabilitation provision to 2035. The electrification spending is excluded from the impairment test because IAS 36 excludes cash flows from future enhancements, which the company explains. The flood-exposed assets match the property, plant and equipment note, and the sustainability report cross-refers to it. See climate risk in impairment testing and climate and useful lives.

When can assumptions legitimately differ?

When the accounting standards require something different: IAS 36 measures assets in their current condition and uses management's best estimates, while scenario analysis explores possible futures; fair values reflect market participants' views rather than the company's own plans; and the financial statements look mainly at existing assets and obligations, while sustainability disclosures look further ahead. A difference is acceptable when it follows from these rules and is explained; one that simply reflects two teams working separately is not. See climate scenario analysis.

How do the ESRS handle connectivity?

Under the CSRD, the sustainability statement is a section of the management report, published with the financial statements. ESRS 1 requires references to related amounts in the financial statements, allows information to be incorporated by reference, and expects consistency between the data and assumptions used. The revised ESRS ask for current financial effects with a significant risk of material adjustment in the next year and allow ranges for anticipated effects. See ESRS 1 general requirements.

How can finance and sustainability teams connect their reporting?

Keep one register of shared assumptions, such as carbon prices, retirement dates, capital spending and growth rates, owned jointly and approved through the same governance; review the drafts side by side before either is signed off; align the reporting entity and boundaries; and involve the auditors of both reports early. See climate commitments and provisions.

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Questions people ask

What is connected information under IFRS S1?

The requirement to explain links between sustainability-related risks and opportunities, and between sustainability disclosures and the financial statements, including consistent data and assumptions.

Must sustainability disclosures use the same assumptions as the financial statements?

To the extent possible, considering the accounting requirements, with significant differences explained.

Can sustainability disclosures cross-refer to the financial statements?

Yes, if the information is available on the same terms and at the same time and the disclosures remain complete and understandable.

Why might a carbon price differ between the two reports?

Because scenario analysis explores possible futures while accounting estimates such as value in use use management's best estimates; the difference should be explained.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. IFRS Foundation: IFRS Sustainability Disclosure Standards (IFRS S1 and IFRS S2)
  2. IFRS Foundation: complementary and connected information, connectivity webcast series, episode 1
  3. IFRS Foundation: near-final illustrative examples on climate-related and other uncertainties in the financial statements, July 2025
  4. Grant Thornton: IFRS Foundation issues illustrative examples on reporting uncertainties in the financial statements
  5. EFRAG Knowledge Hub: revised ESRS 1 General requirements, delegated act version
  6. EFRAG Knowledge Hub: revised ESRS 2 General disclosures, delegated act version

Rules and fees change. If you are reading this long after October 11, 2026, confirm the figures with the source before you rely on them.

SustainabilityIFRS S1: general requirements explainedSustainabilityClimate risk in the financial statementsSustainabilityCurrent and anticipated financial effects

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This guide is general information. It is not tax or legal advice for your situation.