22 November 2022 (Updated 31 August 2023)

What’s the issue?

Estimates are a fundamental part of sustainability reporting. They are used in forward-looking information (e.g. forecasts about future planned capital investments to mitigate risks) as well as in data that is primarily historical (e.g. metrics).

Comparative information is important to users’ understanding because it allows trends to be seen. Unlike IFRS® Accounting Standards, under the general standard1 comparative information disclosed by companies will need to reflect updated estimates. Companies may need to update their estimates as a result of:

  • changes in calculation methodology;
  • changes in inputs used; or
  • availability of new data sources.

Comparative information will need to be revised for changes in estimates, but revisions related to forward-looking estimates are not required. This differs to the approach for changes in accounting estimates, under which comparatives are not revised in the financial statements.

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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