ACCA Strategic Professional · Strategic Business Leader · Reporting to stakeholders
Valtora plc, a listed manufacturer, publishes an annual report containing audited financial statements, and a separate sustainability report. Its investors say they want sustainability information that affects the company's cash flows, access to finance and cost of capital over the short, medium and long term. Which approach to sustainability reporting best matches this investor focus?
Single (financial) materiality focused on enterprise value fits, because investors want information that could affect cash flows, access to finance and cost of capital. Double materiality goes further by including the company's impacts on society and the environment regardless of financial effect.
- ASingle materiality, focused on enterprise valueCorrect
- BDouble materiality, covering impacts on society regardless of financial effect
- CStakeholder inclusive reporting that covers every stakeholder request equally
- DVoluntary philanthropic reporting of charitable donations
Explanation
Reporting aimed at investors and focused on information that could reasonably affect the entity's prospects, cash flows and cost of capital reflects financial (enterprise value) materiality, the approach taken by ISSB standards. Double materiality adds outward impacts on people and the environment irrespective of financial effect, which goes beyond what these investors asked for.
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