What Is EFRAG?
The European Financial Reporting Advisory Group (EFRAG) is a private body that provides expertise related to accounting matters, including financial reporting and sustainability reporting.
The European Financial Reporting Advisory Group (EFRAG), formed in June 2001, is a private body created to provide the European Commission with expertise and advice related to accounting matters. Its mission is “to serve the European public interest in both financial reporting and sustainability reporting by developing and promoting European views in the field of corporate reporting and by developing draft EU Sustainability Reporting Standards.”
EFRAG was formalized through a Working Arrangement indicating that “EFRAG will provide advice to the European Commission on all issues relating to the application of IFRS [International Financial Reporting Standards] in the EU.” Its purpose is to ensure that financial reporting is done appropriately and is “clearly articulated in the international standard-setting process.”
What does EFRAG do?
EFRAG has organized its activities under two pillars:
Financial reporting: Influences “the development of IFRS Standards from a European perspective and how they contribute to the efficiency of capital markets and providing endorsement advice on (amendments to) IFRS Standards to the European Commission.”
Sustainability reporting: Involves “developing draft EU Sustainability Reporting Standards, and related amendments for the European Commission.”
The IFRS is similar to GAAP—Generally Accepted Accounting Principles—which are used in the U.S.
In 2022, EFRAG approved updated European Sustainability Reporting Standards (ESRS), with mandatory reporting required for companies with more than 250 employees beginning in January 2024.
What type of employee data is governed by EFRAG?
People, or employee-related data will be required under the “social” category of ESRS related to the workforce, workers in the value chain, affected communities, consumers and end users. This would include data related to employees including the diversity of the workforce, and how workers influence the company’s value chain.
Tracking, maintaining, and analyzing people data will be an important aspect of corporate reporting driven through EFRAG’s efforts to ensure corporate sustainability.
Read more on EFRAG and corporate reporting:
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