Companies are having to deal with uncertainty and change in a way that has not been experienced for many years. Expectations of business have also changed, with companies being pressed to step up and play their part in tackling environmental and social issues. It’s hardly surprising that the annual report, and indeed the corporate reporting ‘ecosystem’ generally, has not found it easy to keep up. Add to this the steady stream of new technical requirements, with no end in sight, and we think it’s time to draw a line in the sand.
“In the current environment where trust, transparency and accountability are key to a company’s success and credibility, corporate reporting has an increasingly important role to play. Quality reporting that stands up to scrutiny and tells a balanced story can ultimately set a company apart from its peers and build trust with stakeholders. But it’s difficult, and only getting more challenging.”
Watch an overview of our findings
5:38
Drawing a line in the sand
PwC’s annual review of corporate reporting in the FTSE 350 in 2021/22
View Transcript- This year’s findings
- Drawing together the challenges
- Game-changers for reporting
This year’s findings
A significant amount of additional content has been added to the annual report in relation to ESG matters, most recently with climate change reporting requirements under the Task Force on Climate-Related Financial Disclosures (‘TCFD’) framework. Companies have responded positively to these new requirements, and the resulting disclosures have added useful new information considering it’s only year one, but they have often felt detached and have certainly contributed to the growing length of the annual report. Despite the progress with respect to new ESG-related content, our review found relatively little change in the quality of reporting and minimal innovation - a story that has been playing out over several years.
12% growth in the length of the average strategic report year-on-year
26% of the strategic report is dedicated to ESG matters on average, up from 21%
Drawing together the challenges
To understand the root cause of our findings, we talked with a number of those preparing and reviewing annual reports about their views on the annual report itself, and the work that goes into it. Encouragingly, we found real commitment from preparers to do as good a job as possible, but we also heard a lot of frustration at how difficult that is in practice.
“It would take one A4 page to explain our story – what we do, why we do it, how we are structured and our governance – it is very simple. But by the time this information has been applied across the structure of the whole annual report, it becomes complex and confusing.”
FTSE 350 company
Game-changers for reporting
From what we have seen and heard, we believe there is a real appetite - and need - for change. Recognising the challenges, we have put together a set of practical suggestions for companies that we have referred to as ‘game-changers’. We believe they have the potential to make a radical difference to many reports and ensure they are fit for purpose in the future.
“Companies need to stand back and think ‘what would my stakeholders want to know and does the annual report deliver this in a way that is accessible and usable?’ The annual report should provide a simple, easy to follow narrative that is digestible and which brings together all strands of the content in a coherent way. If done well the annual report should tell a story and be relevant for all stakeholders.”
Investor
Contact us
Follow us
