top of page

Conceptual Framework for Sustainability Reporting

First published by Capitals Coalition.

The Conceptual Framework for Financial Reporting (CFFR) sets out the fundamental concepts for financial reporting. It helps to ensure that accounting standards provide useful information for investors, lenders and other creditors. Financial reporting has been through various attempts to consolidate and standardize its approach to reach the current state of the International Financial Reporting Standards (IFRS) but perhaps the most significant point of consolidation was the articulation of a Conceptual Framework. As reporting is not a scientific endeavor, the principles that underpin reporting are not fixed but represent choices and norms. Perhaps the most important recent change is the decision of the IFRS to establish the International Sustainability Standards Board (ISSB) to sit alongside the International Accounting Standards Board (IASB).

The purpose of this paper is to stimulate discussion and contribute to the development of these standards by, as far as possible, applying the logic and structure that the CFFR uses in determining useful information to sustainability. This approach should show points of commonality as well as highlighting the main differences.

The CFFR focuses on financial capital and physical capital within the boundaries of the reporting entity. As both are incorporated into what is commonly referred to as produced capital, this report focuses on the missing capitals of natural, social, and human capital (see Diagram 1). Natural, social, and human capital are important concepts and form the foundation of human wellbeing and economic success but are missing from the CFFR. By understanding the sustainability context and how organizations impact and depend on all the capitals, they can make holistic decisions that create value for nature, people and society alongside businesses and the economy. A capitals approach moves beyond considering only how we impact on the capitals to also highlighting how we depend on them. This shift in mindset contextualizes our relationships with the capitals and helps to illustrate a clear business case for their protection and investment in their health and resilience.


Back to the homepage
bottom of page