Sustainability disclosures: Many UK companies make restatements

Nearly half of FTSE 100 companies restated sustainability disclosures this year, predominantly related to discrepancies in greenhouse gas metrics.

Nearly half of the UK’s largest companies made prior-year restatements to climate and sustainability disclosures ahead of the new EU reporting rules, changes predominantly related to greenhouse gas (GHG) metrics, according to a Deloitte analysis.

Of the restatements made by the 46 companies, encompassing the Financial Times Stock Exchange (FTSE) 100, 89% related to GHG metrics, with the remaining (11%) comprising a variety of other sustainability topics (including waste, water, diversity and inclusion, and health and safety).

Prior adjustments were also made because of changes in methodology (44%), an acceptable practice for GHGs under the GHG protocol, the news release said, but more than a quarter (29%) related to errors in the initial disclosure.

“This is notable because prior-year restatements are comparatively rare in the world of financial reporting and indicate a material change to previously reported figures,” Steve Farrell, partner and head of sustainability assurance at Deloitte, said in the release.

Flaws in Scope 3 reporting have also prompted an upswing in restatements. According to Deloitte’s analysis, 32% of all restatements related to Scope 3 metrics — “indirect emissions that occur in the activities of an organisation”.

To progress Scope 3 reporting, the Voluntary Carbon Markets Integrity Initiative, an international environmental services not-for-profit, opened a consultation in the UK this month, seeking feedback from stakeholders to help companies meet their climate targets.

“Our analysis shows that a significant number of environmental, social, and governance (ESG) metrics reported and published last year by the UK’s largest companies have since been updated, either because measurements have evolved, or worryingly, because they were incorrect to begin with,” Farrell said.

Large public-interest companies in Europe are already subject to the nonfinancial reporting directive, with reports due in 2025, according to the European Parliament. Small- and medium-size entities will also be subject to the rules from 1 January 2026, with reports due in 2027, unless they opt out until 2028.


Resources

  • An e-learning course from AICPA & CIMA, together as the Association of International Certified Professional Accountants, and PwC provides ESG upskilling resources to help finance and accounting professionals meet the requirements of EU standards. The course is available globally (3.5 CPE credits).
  • A new course from AICPA & CIMA looks to empower professionals with artificial intelligence-driven insights to manage ESG strategy in-house through Datamaran’s market-leading ESG software. The next session is on 20 September, 2pm BST (1 CPE credit).

— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.

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