Electric mobility, software-defined vehicles, new regulatory requirements and geopolitical uncertainties are transforming business models, investment decisions and value creation structures within the automotive industry. This, in turn, raises new questions regarding financial and sustainability reporting. Our publication „Driving Reporting“ shows how companies can consider these issues holistically and what implications they have for financial statements, management reports and sustainability reporting.
Thinking about financial and sustainability reporting together
The focus is on linking financial and sustainability issues: Rather than considering individual standards in isolation, our experts focus on the practical issues that companies face.
The framework is structured around five perspectives that bring together the key challenges facing the sector:
The publication highlights interconnections that, in practice, are often spread across different specialist areas. It demonstrates which issues in financial and sustainability reporting arise from industry developments and regulatory requirements, and where there are interdependencies between the two reporting areas.
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From practice, for practice – Examples of accounting issues, questions relating to ESG topics
In this publication, we use 55 specific real-world examples to illustrate how typical issues in the automotive industry can be analysed from various perspectives. Topics covered include new sales and revenue models, software and digital services, battery and platform strategies, financing models in the supply chain, and collaborations between manufacturers and suppliers. At the same time, sustainability issues are explained using typical challenges facing the sector.
Financial reporting along the automotive value chain
The publication takes as its starting point practical questions relating to financial reporting under IFRS. Topics covered include new sales and revenue models, research and development, software and cloud arrangements, financial relationships within the supply chain – including factoring and reverse factoring – the new requirements of IFRS 18, as well as collaborations and equity structures. Where practical differences arise for companies in the automotive industry, the treatment under commercial law is also set out. This makes it possible to understand the various implications for recognition, measurement, presentation, disclosures and key performance indicators.
Sustainability issues and their financial interrelationships
The sustainability perspective encompasses climate transformation and the circular economy, as well as consumer concerns, corporate governance and working conditions. The publication explains the reporting requirements relating, amongst other things, to CO₂emissions and transition plans in accordance with ESRS E1, critical raw materials and battery recycling in accordance with ESRS E5, and consumer concerns in accordance with ESRS S4. It also covers the organisation’s own workforce under ESRS S1 and working conditions in the value chain under ESRS S2. At the same time, the publication highlights where the underlying impacts, risks, opportunities and measures may have financial implications. This highlights the interplay between sustainability reporting, corporate governance and financial reporting.
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Your contact
Dr. Andreas Ries
Partner, Global and Germany Head of Automotive
KPMG AG Wirtschaftsprüfungsgesellschaft