Overseas investors are focusing on their reporting to build trust
January 11, 2019
Insights from PwC’s Building Public Trust Award 2018 for Reporting in Overseas Investment, by Ewan Fryatt, PwC Partner
In the UK, like in many countries, there is a move towards greater transparency across various parts of the business - including human resources, sustainability and tax. Recently we have seen mandatory disclosures introduced in the UK for performance of companies on the gender pay gap, modern slavery, and tax strategy. All these areas can be subject to scrutiny and can have reputational and trust implications.
While these are UK requirements, these mandatory disclosures apply both to UK-headquartered groups and to overseas-headquartered companies with UK operations. The latter group, which drives foreign direct investment into the UK, is a huge contributor to economic activity in the UK and will remain so regardless of the outcome of Brexit. I know from working first hand with many such overseas-headquartered companies that some of these UK disclosure requirements have first been seen as an extra burden, but often in time as an extra opportunity. So it will be interesting to see how overseas corporate investors deal with these reporting requirements for their UK subsidiaries - for example, will these companies look just to comply with the reporting requirements, or will they use it as an opportunity to further build trust in their companies?
It’s against this backdrop that we’ve introduced a new Building Public Trust Awards category this year for reporting in Overseas Investment. This award is for overseas corporates investing in the UK and it assesses the quality of their reporting across the gender pay gap, modern slavery, and tax strategy.
To create the shortlist, we identified the largest UK inward investors by turnover and employees, and selected the top 100 companies. We then assessed their reporting in these three new mandatory areas, looking firstly at whether they had met all the legislative requirements, and then whether they had gone beyond these and whether they were effective in communicating with non-experts. This screening produced a “long-list” of 10 companies, which a panel of PwC specialists narrowed down to a shortlist of two for consideration by the independent judging panel.
When I presented the shortlist to the judges, they were impressed with the reporting from both the nominated companies. The judges noted that the companies had provided consistent and clear messaging across all three of the key areas of disclosure. They felt the winner was set apart by the quality and scope of its reporting on issues including gender pay and social and environmental impacts.
Having completed year one of this new award, I am now looking forward to the evolution of the award in future years, as well as seeing how reporting by companies develops. There is certainly scope for additional reporting requirements to be introduced - for example there is currently a Government consultation about BAME gap reporting, which we have already voluntarily published at PwC. So I imagine we will see the categories of reporting covered by the award increase, as well as the quality of the reporting by companies further improve as more companies seize the opportunity to tell their story and go beyond the minimum reporting requirements.
To find out more about out what the leaders in reporting in overseas investment are doing right, please click through to read the judges’ comments. And if you’d like feedback on how your business scored in the assessment, please feel free to get in touch by sending an email to [email protected].