What is the purpose of EFRAG?

What is the purpose of EFRAG?

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The European Financial Reporting Advisory Group (EFRAG) plays a pivotal role in shaping financial and sustainability reporting standards within the European Union. Established to provide technical advice to the European Commission, EFRAG influences the development and endorsement of International Financial Reporting Standards (IFRS Standards) and drafts EU-specific sustainability reporting standards. Its objective is to enhance the quality and consistency of corporate reporting, ensuring that it meets the needs of stakeholders and aligns with regulatory requirements. EFRAG also promotes European perspectives in global reporting debates.

The Role of EFRAG in Financial Reporting and IFRS Standards

EFRAG supports the development and implementation of high-quality international financial reporting standards, primarily focusing on the endorsement and adoption of IFRS Standards within the EU. EFRAG ensures that these standards meet European requirements, incorporating stakeholder input and promoting transparency and comparability in financial reporting. As a result, EFRAG plays a key role in ensuring regulatory compliance within the EU's financial sector.

EFRAG and Sustainability Standards

In addition to its role in financial reporting, EFRAG plays a critical role in shaping EU sustainability reporting standards. These standards are aligned with global frameworks and regulatory expectations, ensuring that companies are not only compliant but also contribute to environmental and social governance. EFRAG's work in sustainability reporting focuses on drafting standards and amendments that reflect the principle of double materiality, meaning they consider both the company's impact on the environment and society, and the impact of environmental and social factors on the company.

Technical Advice and Stakeholder Engagement

The European Financial Reporting Advisory Group (EFRAG) provides expertise on financial and sustainability reporting, advising the European Commission. Established in 2001, EFRAG aims to promote European perspectives in corporate reporting and develop EU Sustainability Reporting Standards. Its activities are divided into financial reporting, which involves influencing IFRS Standards, and sustainability reporting, focused on drafting standards and amendments. EFRAG's work ensures comprehensive and transparent corporate reporting, emphasizing stakeholder engagement and alignment with regulatory requirements.

Conclusion

In conclusion, the purpose of EFRAG is to ensure the quality and consistency of corporate reporting within the EU, whether it's financial or sustainability reporting. It provides technical advice to the European Commission, influences the endorsement of IFRS Standards, and drafts EU-specific sustainability reporting standards. By doing so, EFRAG meets the needs of stakeholders, aligns with regulatory requirements, and promotes European perspectives in global reporting standards.

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