Updating estimates in comparatives

Comparative information presented for sustainability-related metrics needs to reflect updated estimates in certain circumstances. This requirement does not apply to narrative disclosures or ‘forward-looking’ estimates. Companies are only required to update comparative information if the change is material.

When a company reports comparative information that differs from the information it reported in the previous period, it discloses:

• the difference between the amount reported in the previous period and the revised comparative amount; and
• why the amounts have been revised.

There are exceptions to these requirements:

• in the first year of adoption; or
• when a company cannot collate the required information.

Like IFRS Accounting Standards, there are separate requirements for when comparative information is updated to correct material errors, or if a metric presented is redefined or replaced.

Companies do not need to recalculate comparative information for every metric presented – but they do need to understand the impacts from changes in estimates used to prepare current-year information.

Revising comparative information to reflect certain updated estimates allows users to compare current-period amounts and those reported in the prior period, based on a consistent basis of estimation while avoiding introducing hindsight bias by updating forward-looking information.

Companies need to consider the practical implications that revising comparatives may have – e.g. on systems or where metrics are linked to remuneration.

• Read our guide for more on the requirements on updating estimates.
• Once you are familiar with the types of metrics that you will present, identify your most sensitive estimates and understand what may cause them to change.
• Assess whether you have processes, systems and controls in place to monitor and capture changes in your estimates and deal with the practical consequences of revising comparatives.