EFRAG Knowledge Hub

Questions & Answers

What does net revenue mean? How is it calculated?

Key Terms

Revenue
net revenue
net turnover

Background

ESRS use the terms ‘revenue’, ‘total revenue’ and ‘net revenue’ as synonyms. ESRS 2 refers to ‘revenue’ or ‘total revenue’ (see ESRS 2 Disclosure Requirement SBM-1 – Strategy, business model and value chain) whereas ESRS E1 and the other environmental ESRS refer mostly to ‘net revenue’.

ESRS E1 paragraph AR 36 (e) states: ‘When preparing the information on energy intensity required under paragraph 40, the undertaking shall calculate the net revenue in line with the accounting standards’ requirements applicable for the financial statements, i.e., IFRS 15 Revenue from Contracts with Customers or local GAAP requirements.’

ESRS do not use the term ‘net turnover’ as used by the Accounting Directive (Directive 2013/34/EU Article 2 (5)) The Accounting Directive defines ‘net turnover’ as the amounts derived from the sale of products and the provision of services after deducting sales rebates and value added tax and other taxes directly linked to turnover; however, for insurance undertakings referred to in point (a) of the first subparagraph of Article 1 (3) of this Directive, ‘net turnover’ shall be defined in accordance with Article 35 and point 2 of Article 66 of Council Directive 91/674/EEC; for credit institutions referred to in point (b) of the first subparagraph of Article 1 (3) of this Directive, ‘net turnover’ shall be defined in accordance with point (c) of Article 43 (2) of Council Directive 86/635/EEC; and for undertakings falling under the scope of Article 40a(1) of this Directive, ‘net turnover’ means the revenue as defined by or within the meaning of the financial reporting framework on the basis of which the financial statements of the undertaking are prepared’.

The Delegated Act (EU) 2021/2178 specifying Article 8 of the Taxonomy Directive related to environmental taxonomy disclosures also uses the term ‘net turnover’ (see the supporting material below).

Answer

The terms ‘revenue’, ‘total revenue’ and ‘net revenue’ are to be understood as the amounts presented in the income statement of the undertaking’s financial statements in accordance with the applicable legislation and/or accounting standards, i.e. IAS 1 paragraph 82 (a)[2] – if IFRS Standards are applied – or generally accepted national accounting principles (national GAAP).

See also Question ID 482 – Breakdown of total revenue – financial institutions.

Supporting Material

Delegated Act (EU) 2021/2178 supplementing Regulation (EU) 2020/852 specifying the content to be disclosed and its presentation by undertakings subject to Articles 19a or 29a of Directive 2013/34/EU, concerning environmentally sustainable economic activities and specifying the methodology to comply with that disclosure obligation, Annex I paragraph 1.1.1 (Delegated Act specifying article 8 of the Taxonomy Directive), states: ‘… net turnover (denominator) as defined in Article 2, point (5), of Directive 2013/34/EU … shall cover the revenue recognised pursuant to International Accounting Standard (IAS) 1, paragraph 82 (a), as adopted by Commission Regulation (EC) 1126/20081.’

Relations

Paragraph	Content
2023 ESRSESRS 2 - GENERAL DISCLOSURES...Disclosure Requirement SBM-1 – Strategy, business model and value chain40. (b)	a breakdown of total revenue, as included in its financial statements, by significant ESRS sectors. When the undertaking provides segment reporting as required by IFRS 8 Operating segments in its financial statements, this sector revenue information shall be, as far as possible, reconciled with IFRS 8 information;
2023 ESRSESRS E3 - WATER AND MARINE RESOURCES...Metrics and targets29.	The undertaking shall provide information on its water intensity: total water consumption in its own operations in m3 per million EUR net revenue .
2023 ESRSESRS E1 - CLIMATE CHANGE...Disclosure Requirement E1-6 – Gross Scopes 1, 2, 3 and Total GHG emissions53.	The undertaking shall disclose its GHG emissions intensity (total GHG emissions per net revenue).
2023 ESRSESRS E1 - CLIMATE CHANGE...Disclosure Requirement E1-5 – Energy consumption and mix40.	The undertaking shall provide information on the energy intensity (total energy consumption per net revenue) associated with activities in high climate impact sectors.
2023 ESRSESRS E3 - WATER AND MARINE RESOURCES...Disclosure Requirements29.	The undertaking shall provide information on its water intensity: total water consumption in its own operations in m3 per million EUR net revenue .
2023 ESRSESRS E1 - CLIMATE CHANGE...GHG Intensity based on net revenue53.	The undertaking shall disclose its GHG emissions intensity (total GHG emissions per net revenue).
2023 ESRSESRS E1 - CLIMATE CHANGE...Disclosure Requirements40.	The undertaking shall provide information on the energy intensity (total energy consumption per net revenue) associated with activities in high climate impact sectors.
2023 ESRSESRS 2 - GENERAL DISCLOSURES...Disclosure Requirement SBM-1 – Strategy, business model and value chain40. (b)	a breakdown of total revenue, as included in its financial statements, by significant ESRS sectors. When the undertaking provides segment reporting as required by IFRS 8 Operating segments in its financial statements, this sector revenue information shall be, as far as possible, reconciled with IFRS 8 information;
2023 ESRSESRS E1 - CLIMATE CHANGE...Disclosure Requirements53.	The undertaking shall disclose its GHG emissions intensity (total GHG emissions per net revenue).
2023 ESRSESRS 2 - GENERAL DISCLOSURES...3. Strategy40. (b)	a breakdown of total revenue, as included in its financial statements, by significant ESRS sectors. When the undertaking provides segment reporting as required by IFRS 8 Operating segments in its financial statements, this sector revenue information shall be, as far as possible, reconciled with IFRS 8 information;