Visma Connect’s key takeaways from Data Amplified 2023
As a global leader as an information exchange solutions specialist, Visma Connect recognises the immense value of data in today's world. We are committed to using information exchange and taxonomies to meet the growing demand for structured data exchange through cutting-edge technologies.
In this blog
- AI, CSR, and New Standards in Digital Reporting
- Standards and Directives
- ESAP - European Single Access Point
- XBRL Assurance for CSRD
- Striving for Accurate and Reliable Digital Reporting Practices
Read further below 👇
Due to the forward-thinking mentality that characterises us, we like to keep our eye on the latest trends and developments concerning information exchange, taxonomies and XBRL (eXtensible Business Reporting Language). As we like to stay ahead of the curve and be part of the conversation, a team of our experts attended Data Amplified 2023 in Zurich. Data Amplified set the stage to hear from regulators and standards setters shaping the world of sustainability, financial and efficient digital reporting.
This blog summarises key trends, insights, and our team’s takeaways from the event, exploring the transformative shifts of the future of digital reporting where sustainability and AI converge to redefine information exchange and on the relevant standards and directives that are setting the pace in the industry.
AI, CSR, and New Standards in Digital Reporting
With increased data volume and complexity, the demand for decision-useful, timely, high-quality, and globally comparable digital financial reports has intensified. At Data Amplified, the focus was set on three critical pillars: AI, sustainability, and the establishment of new standards rooted in reliability and assurance.
In an era where the world demands reliable data, a transformative wave is sweeping through the digital reporting landscape. It's no secret that Artificial Intelligence (AI) has often been viewed with scepticism, veering dangerously close to fearmongering. As Maria Mora, Head of ESG (Environmental, Social, and Governance) Risk and Fraud Solutions at Fujitsu, aptly notes, "No amount of progress in machine learning will ever replace the need for labelled data, i.e., Inline XBRL." The time has come to not only embrace AI but to spearhead its integration into the sphere of digital reporting.
One of the most exciting prospects on the horizon is the synergy of XBRL and Generative AI. Generative AI is a transformative technology with immense potential for elevating digital reporting thanks to its robust qualitative approach. Its ability to turn aspirations into reality rests in harnessing features like auto-tagging, assistance in taxonomy building, and advanced analytics. These applications extend beyond numerical data, encompassing qualitative information that is vital for comprehensive reporting.
It's essential for XBRL technology and practices to evolve. This evolution should entail contextual information within the taxonomy alongside the inclusion of more Generative AI to capitalise on the opportunities it can fully unlock.
Standards and Directives
The need for interoperability among various sustainability standards is a topic that's currently at the forefront of the digital reporting landscape. All three key standard setters, including EFRAG, IFRS, and GRI, have agreed to collaborate on the creation of a digital mapping framework. This framework aims to bridge the gap between the different reporting standards, such as ESRS, ISSB S1, and ISSB S2. As sustainability reporting gains traction globally, this collaborative effort promises to streamline the reporting process, making it more efficient and accurate.
Furthermore, the Corporate Sustainability Reporting Directive (CSRD) is scheduled to be released in January 2024. It will require organisations in the EU to report EU taxonomy disclosures and ESRS statements as part of their management report. This development will mark a new era of structured, comprehensive, and standardised sustainability reporting.
ESAP - European Single Access Point
The European Single Access Point (ESAP) marks a revolutionary leap forward in the world of digital reporting. The first phase, commencing in July 2026, will include information according to the short selling, the prospectus, and the benchmark regulations, focusing solely on collecting data without publishing. The second phase will expand the scope and include, among others, information regarding sustainability-related disclosures. The third and final phase will include information deriving from sustainability-related disclosures. Its three-phased approach ensures that the system is robust and practical, allowing organisations sufficient time to adapt and comply.
ESAP, having an official go-live date set for July 2027, is poised to become the central hub for accessing a wealth of financial and sustainability information, making it a game-changer for businesses, investors, and regulators alike. This initiative is set to revolutionise data access and usability, offering a central point for information exchange.
XBRL Assurance for CSRD
The evolution of digital reporting standards is also evident in the realm of XBRL Assurance for CSRD. The conventional method of maintaining a separate digital document for CSRD reporting is undergoing a transformation. Under the CSRD, sustainability reporting will become integral to the financial annual report, adopting the ESEF (European Single Electronic Format) format. This integration streamlines the reporting process and brings sustainability data closer to the core financial reporting.
One point of consideration is the idea of having a single audit report that encompasses both financial and sustainability aspects, which is currently under further scrutiny. As we progress into this new landscape, the CSRD will begin with limited assurance, with plans to elevate the level over time to reasonable assurance. This incremental approach ensures that as organisations adapt to evolving standards, they can implement these changes with confidence, ensuring accuracy, reliability, and accountability in digital reporting.
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ESG is evolving from a ‘nice to have’ to a ‘need to have’
One of the pivotal takeaways from our team's attendance at the event was noting that there is an imperative shift towards integrating Financial and ESG (Environmental, Social, and Governance) reporting right from the outset rather than attempting to patch these essential components together at a later stage. The landscape of data in this context is undeniably diverse, with companies increasingly expanding their ESG reporting, rendering the conventional ESG ratings somewhat obsolete.
As more organisations commit to disclosing their performance on a wide array of ESG factors, a significant challenge emerges the need to harmonise this data, which is often presented in numerous formats. The solution lies in creating a framework that ensures comparability across the entire spectrum of ESG information. In this endeavour, narrative disclosure emerges as a pivotal player when it comes to ESG reporting, providing context and depth to the raw data. Several key elements come into focus to achieve this harmonisation and facilitate meaningful analysis. These include establishing a consistent level of granularity in data, creating a well-defined hierarchy to offer analysts insights on different levels, and, most notably, recognising that ESG has evolved from a 'nice to have' to a 'need to have', underscoring its critical role in digital reporting and modern business practices.
Striving for Accurate and Reliable Digital Reporting Practices
In summary, the digital reporting landscape is evolving rapidly, with a strong focus on standardisation, interoperability, and the integration of sustainability reporting into financial reporting. Upcoming sustainability reporting is poised to shift towards a predominantly qualitative approach, with ESRS (European Single Reporting Standard) and ISSB (International Sustainability Standards Board) leading the change.
To ensure data accuracy and reliability, user-friendly tools, including AI, for analysis and validation are imperative. As businesses navigate this transformative journey, they must consider how these changes will impact their reporting and assurance processes, ultimately striving for more comprehensive, accurate, and reliable digital business reporting practices.