With new reporting requirements on stakeholders just around the corner, how prepared are companies?

08 July 2019

As soon as annual reports start to be published each reporting season there’s a rush in our team to review them to see what the latest trends are. This year was no exception and our eyes were eagerly looking for innovative ways companies brought the stakeholder agenda to life.

 

We wondered… with the revised Corporate Governance Code and new reporting requirements around stakeholder engagement and section 172 applicable next year, would companies voluntarily respond or play a wait-and-see game?

 

To find out, we reviewed a sample of recently published FTSE 350 annual reports who had made at least a passing reference to ‘stakeholders’. What we found was that companies have very clearly responded to the calls for more reporting on stakeholders but that there is still more work to be done to address the detail of the new requirements. Crucially there is also a real need to root the reporting in strategy better.

 

Our full findings can be found here but here are some of the highlights:

 

  • Clear response: Rarely has an agenda been so clearly the major area of change in reporting: 60% of companies made a tangible change in their disclosures around stakeholders in their annual report compared with the prior year. And where there was less change, it was often because the prior year had already reflected the stakeholder agenda to a significant extent.

 

  • Compliance: Whilst we welcome the progress made in reporting on this important agenda, disclosures will in many cases need more attention to address everything in the new requirements - particularly around the effects of engagement on principal decision making. Compliance with the new regulations is not easy. There are particular challenges around what is material and how the new requirements relate to other reporting - including the reporting on section 172 and the non-financial information statement.

 

  • Strategic connection and getting value from the process: fundamentally we believe that reporting against the new regulations should not just be seen as a compliance exercise. If disclosures are driven from a stakeholder process that is integrated with the overall strategy, then this will not only make adhering to the regulations easier, it will ensure companies get maximum value from the effort they put in.

 

So lots of things to consider ahead of next year! In the meantime, we have a wealth of views and information on this area and are collating them all on our newly revised webpage which you can access here.


Should you have any queries or would like to discuss with us further about how your company is approaching this important topic, please feel free to contact us.

 

Gurpreet Kaur | Corporate reporting specialist
Profile | +44 (0) 20 7804 6625

 

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