Reporting and long-term value creation

It is always a big day when government declares it is seeking to do less rather than more. The new strategic report in the UK has an agenda to allow companies to tell their stories through reporting, together with insights into the challenges and opportunities now and into the future. Best practice must be shared – not defined or set by government. All very grown up – so much so, in fact, that it makes the case for reporting to be firmly on the agenda of the board. After all, who else can really tell the company’s story most effectively to providers of financial capital and other stakeholders?

The concept of ‘telling your story’ is reflected in the Financial Reporting Council (FRC)’s guidance to the UK’s Strategic Report, which is consistent with the International <IR> Framework.

I have recently spoken at two conferences in the UK, held by communications consultancies, where new analyses of corporate reports have been discussed. A new report based on analysis of FTSE 100 reports by Black Sun finds the most informative, accountable and integrated strategy reporting in the nine-year history of their study (‘Making Connections’). It notes that 95% of the reports they analysed now include a business model. It was only 42% five years ago. On the other side, risk reporting is connected to strategy or the business model in only 46% of instances.

Radley Yeldar (‘How does it stack up?’) welcomes ‘the commitment of many reporters to transparent and appropriate disclosure’ – but notes a yawning gap in relation to forward-looking reporting. RY have also identified three UK companies – Anglo American, AstraZeneca and M&S – as good models for integrated reporting.

So what else do we need to do? It all looks rather rosy.  But are reports providing evidence of value creation using a wide range of capitals – and the outcomes of the value creation process? Is that embedded within the company’s thinking? It is fantastic to hear about positive directions in reporting – even as we can identify ways in which organisations can continue on the journey to <IR>.