KPIs for ESG - DVFA

Consequently, the DVFA Committee on Non-financials suggests that companies formally orient ESG reporting towards
the requirements of the International Financial Reporting Standards (IFRS) as publish by the International Accounting
Standards Board (IASB).
Below, some adaptations from IFRS2 to DVFA KPIs have been made with respect to consolidation of ESG statements
and handling of cut-off dates in the consolidation process, which may serve as a guideline for corporate ESG reporting:
1. Consolidation of ESG Statements from parent and subsidiary
Following IAS 27, it is recommended that corporates comply with the following rules:
• EFFAS/DVFA KPIs for ESG 3.0 shall be applied in the preparation and presentation of consolidated ESG
statements for a group of entities under the control of a parent. (compare to IAS 27.1)
• EFFAS/DVFA KPIs for ESG 3.0 shall also be applied in accounting for investments in subsidiaries, jointly
controlled entities and associates when an entity elects, or is required by local regulations, to present
separate ESG statements or parts thereof. (compare to IAS 27.4)
• A parent (…) shall present consolidated ESG statements in which it consolidates ESG performance data of
subsidiaries in accordance with EFFAS/DVFA KPIs for ESG 3.0. (compare to IAS 27.9)
• Consolidated ESG statements shall include all subsidiaries of the parent. (compare to IAS 27.12)
2. Differing cut-off dates between parent and subsidiary
The ESG statements of the parent and its subsidiaries used in the preparation of the consolidated ESG statements shall
be prepared:
a) as of the same reporting date. When the reporting dates of the parent and a subsidiary are different, the subsidiary
prepares, for consolidation purposes, additional ESG statements as of the same date as the ESG statements of the
parent unless it is impracticable to do so. (compare IAS 27.26)
b) using uniform policies for recording of like transactions and other events in similar circumstances. (compare IAS
27.28)
Section B: ESG management
Requirements for implementation
Ensuring proper ESG management and ESG reporting in accordance with the EFFAS/DVFA requirements necessitates
that corporates have a system in place to assess the importance of ESG aspects, as well as a systematic process for
correct generation of ESG data.
Analysis of ESG importance and the assessment system must be adequate to legitimise the selection of ESG topics
included in company reporting, as well as the type and scope of presentation vis-à-vis third parties. This could be, e.g.
a portfolio analysis, which assesses stakeholder requirements vs. the importance of individual ESG topics for the
company strategy.
A systematic reporting process as defined by EFFAS/DVFA requires that roles and responsibilities be defined with
respect to the quality of financial systems and accounting, along with process steps for data collection, release,
dissemination and validation. Moreover, control measures must be specified for the ESG reporting process and their
application as well as proper implementation of the overall ESG reporting process regularly audited by an independent
third party.
2
Wording adapted from original wording of IFRS Standards in Wiley (Eds.) 2007, International Financial Reporting Standards (IFRS) 2007. The official
standards approved by the EU.
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