Before accountants can start working to align sustainability and financial information, there must be clarity over the distinction between the acts of reporting and disclosing.

Reporting

Reporting includes the process of measuring performance according to a prescribed set of accounting and reporting standards, usually through formats such as the balance sheet, income statement, and statement of cash flows. It may also take other forms depending on the needs of the user.

Reporting generates performance information that is intended either for internal management purposes or for external user purposes, when shared externally it becomes a disclosure.

Disclosing

Disclosing is the process of converting internal performance information into an external output and format; corporate disclosure is effectively the act of providing relevant and reliable performance information to external stakeholders.

It may be useful to think of disclosure as a subset process step of reporting, usually defined by a regulatory body.

Perhaps this helps to explain why there is also confusion between accounting, reporting and disclosure standards, which are distinct concepts.

For clarity, throughout our guidance on connecting sustainability and finance we use the term ‘reporting’ to mean producing performance information, and the term ‘disclosure’ to mean making performance information publicly available.

In any event, it is at the level of the information that connectivity needs to happen for companies to deliver results, achieve performance objectives, and create value (financial and societal).