Three must-include themes in your 2019 corporate reporting

Somehow we are already in February of 2019 and as the corporate reporting season starts to heat up and the team here at PwC prepares to delve into the large number of reports that will land over the next few months, I begin to wonder what this year’s trends will be and ask myself a more fundamental question - is anything going to be different this year?

The answer, I think, is I certainly hope so! The same answer would likely be given by the FRC, investors and all other interested parties.

As the tone of corporate reporting shifts towards greater accountability, in most part reflecting societal, political and regulatory demands, companies need to be cautious of taking their eye off the traditional “bread and butter” aspects of a Strategic Report. What I mean by this is a report that provides a forward-looking orientation - not just looking back, but setting out future strategic plans - and anchors all other reporting around a clearly articulated strategy. Without such an anchor, talk of stakeholders and accountability can come across as philanthropic or opportunistic, rather than strategic and relevant. And in this age of disruption and uncertainty it is more important than ever to try and give a glimpse into the future - where is the company heading and how is it going to get there?

Of course, a strategic, forward-looking and integrated narrative remains at the heart of what we will be looking for in the upcoming reporting season but, from our review of companies that have reported over the last 6 months (+50 companies), we would also flag the following areas as you plan for and sign off your latest reports.

The non-financial information statement

I was one of a number of people who found what this meant to be unclear at first, but the FRC has now clarified through its Strategic Report guidance last year that the infamous “non-financial information statement” will be an explicit reporting requirement. So far we have seen around 30% of companies making an attempt at providing such a statement with most of these companies providing a cross-reference table to where more content can be found. The statement actually requires some level of detail, ranging from policies in place to any relevant non-financial KPIs. We encourage companies to think closely about the inclusion of such a table and whether they are able to cross-refer to all the relevant requirements.

Brexit

It’s hard to have a conversation (let alone write a corporate reporting-focused blog) without mentioning Brexit right now. Of course there still remains much uncertainty, but we know from our discussions with clients that a whole range of planning is ongoing. The FRC reiterated in October that good Brexit reporting goes into the detail of this planning, rather than just painting a macroeconomic picture that doesn’t provide much context - I couldn’t agree more. It is surprising therefore that 28% of companies reviewed do not mention Brexit at all in their report.

Stakeholders

I nearly made it to the end without mentioning stakeholders somehow. Without a doubt the biggest theme corporates are tackling at the moment. Of course this isn’t just having a reporting impact, but is also encouraging companies to think about their formal processes and information flows internally, for example around how they (or should begin to) engage with their employees/stakeholders and what impacts this actually has on decision-making. We’ve seen a significant increase this year, with 70% of companies discussing stakeholder engagement. Whilst the reporting requirement is going to have a greater impact during 2019, when regulation and the 2018 UK Governance Code takes effect, now is the time for companies to start thinking about how they approach this and ultimately how they report something meaningful.

As ever we will be issuing guidance over the coming months, and in the Summer we will report back on what this year’s key trends have been. Best of luck to those preparing reports over the next few months and we look forward to reading them!