Sustainability Insights
Why Connectivity Is Becoming the Litmus Test of Modern Corporate Reporting
- Thorsten Sellhorn
- Maximilian A. Müller
- Sustainability reporting
- Connectivity
- AFE
In the latest issue of Betriebs-Berater, Thorsten Sellhorn and Maximilian Müller examine connectivity as the structured integration of financial and sustainability reporting under the CSRD framework. A focal point of their analysis is the disclosure of Anticipated Financial Effects (AFE), meaning the expected financial consequences of sustainability-related risks and opportunities.
While both ESRS and ISSB mandate related disclosures, key conceptual and operational questions remain, particularly how AFE can be meaningfully distinguished from forward-looking elements already embedded in IFRS-based financial statements and management reports, and how financial effects can be attributed to specific sustainability topics within integrated planning structures. Methodological approaches are still evolving, and companies remain cautious given legal and competitive sensitivities. Current market practice reflects this uncertainty: disclosures tend to be cautious, high-level, and largely qualitative.
Connectivity is no longer optional but embedded in regulation. However, its technical execution - especially in relation to AFE - remains insufficiently standardized and presents significant governance, methodological, and assurance challenges for reporting entities.
To read the full article click the link below (German version only):