Corporate governance

Helping your annual report build stakeholder confidence

Simon Lowe Simon Lowe

Poor disclosure means companies are not demonstrating effective governance. Our reporting toolkit helps you to build stakeholder confidence with guidance and best practice tips for more insightful reporting.

A good annual report gives the readers a broad understanding of the organisation and how it operates. As part of that, governance reporting provides an insight into an organisation’s best practice and can help build the confidence of investors and other key stakeholders.

Our 2017 Corporate Governance Review1 reveals that although 66% of the FTSE 350 comply with the UK Corporate Governance Code, many governance areas are not clearly articulated:

  • Just 14% of companies provide genuine insight into their succession planning
  • Less than 33% provide good or detailed explanations of how they work to understand shareholders’ views
  • Only 30% provide insightful disclosures on gender diversity in the boardroom
  • 14% achieve the goal of providing high quality, business model-led and interlinked strategic reports
  • 30% of companies fail to show a comprehensive employee gender split.

Companies are missing an opportunity to show how they comply with requirements. Even more critically, they aren’t demonstrating the effectiveness of leadership, the intangible value of internal culture and the resilience of their business model. This is supported in the FRC’s proposed changes to the Code2, where they emphasise the importance of meaningful reporting, and the need for companies to avoid boiler-plating.

Limited disclosure and use of generic text raises the concern of potential weaknesses in governance structure and has been criticised by investors for obscuring the ‘useful information.’3  We have produced the Reporting Toolkit to help companies improve disclosure and avoid boilerplating, thereby helping to build stakeholder confidence.

To add real value, front-end reporting should not just disclose governance processes but also show how governance activities unlock company strategy.

Our toolkit gathers key governance requirements and reporting recommendations (including FRC guidance and best practice) in one place and provides:

  • practical steps that any company can take to deliver its key messages in an interlinked strategic manner
  • key questions to consider when writing the report
  • best practice tips on what investors and other stakeholders are looking for
  • guidance for assessing your reporting against best practice.

This toolkit is required reading for companies already listed on the London Stock Exchange, those aspiring to list, as well as large private companies and other organisations who want to boost their governance reporting.

Our governance team can provide you with detailed analysis and benchmarking, showing how your annual report compares to the FTSE and specific competitors, as well as providing best practice reporting examples. To learn more about our benchmarking offering, and to find out more about how our reporting and governance diagnostics services can help add value, contact Simon Lowe.

Source:

  1. Grant Thornton UK LLP - FTSE 350 Corporate Governance Review 2017
  2. Proposed Revisions to the UK Corporate Governance Code
  3. Clear & Concise: Developments in Narrative Reporting (December 2015) – Financial Reporting Council
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