The second discussion on this topic was opened by presentations by members of the UKEB's National Standard-Setters Sustainability Forum set up to develop an understanding of connectivity issues between IFRS Accounting Standards and IFRS Sustainability Disclosure Standards and consider possible solutions that would address stakeholder needs for connectivity between information presented in companies’ sustainability reports and financial reports.

The first presentation, delivered by an AASB representative, provided an overview of connectivity between the IFRS Foundation’s Conceptual Framework and the general features of the ISSB’s [Draft] IFRS S1 General Requirements for Disclosure of Sustainability related Financial Information. It showed that the reporting objectives and the concept of materiality in both documents are very similar, however the degree of alignment in the areas of qualitative characteristics and of presentation and disclosure requirements varies. Also, while the concepts of reporting entity and reporting period are aligned, there are noticeable differences in time horizons and the going concern assumption.

A UKEB representative then presented on connectivity between financial reporting and sustainability disclosures in the context of asset recognition, measurement and impairment. In comparing accounting standards with related sustainability disclosure guidance in [draft] IFRS S1 and S2, the following key connectivity themes arise: judgements and estimates, impairment reviews, useful economic lives of assets, segmental reporting and disaggregated disclosures, non-economic benefits, and emerging areas.

A last presentation by a representative of the AcSB discussed provisions, an area where both financial reporting and sustainability disclosures look at expected future developments. Two key connectivity concerns were identified: Determining when the information disclosed under IFRS S1/S2 triggers disclosure/recognition in the financial statements and different approaches to the disclosure of commercially sensitive information (where the IFRS S1 exemption only applies to opportunities and the IAS 37 exemption applies to contingent assets as well as provisions and contingent liabilities).

The ensuing discussion was lively and very different opinions were expressed. They included:

• On the question of whether there might be legitimate reasons for disconnects between financial statements and sustainability disclosures, one third of participants in the room thought "yes", one third "no" and one third was not sure.
• Participants agreed, however, that even if there are justifiable disconnects, the reasons are not easily identifiable.
• Participants also agreed that (apparent) disconnects should be flagged and explained.
• The reason for (perceived) disconnects could also be an expectation gap.
• There is a need to educate users on what financial statements and reports are supposed to achieve. A corporate report cannot be expected to be "an Encyclopedia Britannica".
• Should connectivity only be focused on ISSB standards and IASB standards or should other GAAP also be considered?
• The more dimensions are considered (local GAAP, standards beyond sustainability) the more unmanageable connectivity becomes.
• Who is supposed to take action when disconnects are identified? Should action be taken at all?
• Connectivity is a two-way process. The bridge connecting the information must be anchored on both sides of the river.
• Do not look at the disconnects, look at the connects.
• One must be realistic as regards connectivity - it is not possible to constantly adapt and adjust and connectivity cannot cover all frameworks.
• Where objectives of reporting differ, connectivity does not make sense. Similarly, there are different recognition criteria and measurement criteria.
• Do not try to connect information that is (not yet) ready to be connected. The maturity of financial reporting and sustainability disclosures is very different.
• Financial reporting is a well-established, well-balanced system, to call for changes to be made quickly would be calling for opening Pandora's box.
• Connectivity is a buzz word that is much used, but little understood. This is indicative of the fact that reporting terminology generally is understood differently by different groups.

Finally, while participants agreed that the research undertaken by the Forum was interesting, thought-provoking and certainly sparked discussion, the question was raised who the addressee of that research was: preparers who should be more consistent in their reporting, users who wanted a holistic picture, or standard-setters who should review their standards.