DISCUSSION How ready is the UK company for a new reporting framework?

by Yolanda Villafuerte _______9th April 2013
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FutureValue, who specialise in strategic value analysis, published a 2012 end-of-year review this month titled ‘FTSE100 readiness for impending narrative reporting changes’. Significant changes for narrative reporting are poised to take place this year – but how ready are companies in the UK for these changes and how many of them are already applying integrated thinking?

The anticipated changes this year range from a new regulation that requires listed companies to produce a Strategic Report, to increasing support for the Integrated Reporting (IR) Framework.  Although still voluntary, Integrated Reporting may become best practice for major listed companies before long. This year, five FTSE100 companies are participating in its Pilot Programme.

FutureValue’s review provides an informed context of six years of research to address the following questions:

  1. What has been the extent of the change in the quality of narrative reporting by companies over the last six years?
  2. How many companies have presented a business model that really explains “the basis on which the company generates or preserves value over the longer term”?
  3. What proportion declared that their only or principal strategic goal is the generic “to increase shareholder value”?
  4. How many give their investors and other Report users the impression that innovation is irrelevant and not an issue for their company?
  5. What percentage of companies pays compliant lip service to the role of their Board in setting the strategic agenda and in monitoring strategic performance?
  6. What number provided reasoned guidance about their expectations of their next year’s performance?
  7. How many claim a strategic role for social and environmental dimensions, but provide no evidence of such?

The report notes that ‘it appears as if the UK Government is looking to align its regulatory changes with the more searching framework of the international IR project’. They both have the same aim of imbuing a greater degree of transparency in how a company sees and reports itself so as to influence the behaviours of all stakeholders. The difference is that the Integrated Reporting is much wider-ranging, complex and demanding, while the new UK mandatory regulations involve small incremental changes. Yet, this has not deterred a number of major UK listed companies like Unilever and Marks & Spencer from signing to the more challenging IR project, with institutional investors and even governments supporting their move.

To find out about how well the IR Pilot Programme FTSE 100 participants have been doing and how the FTSE 100 are matching up to the IR Framework’s Content Specification (Organisational overview and business model, operating context including risk and opportunities, strategic objective and strategies, governance, performance and future outlook) please visit the FutureValues website.

FutureValue is a specialist research-based consulting firm. Strategy is at the core of our research, so we have to be experienced strategists. To use our findings astutely, we are expert communicators – fluent in corporate and investor relations, as well as understanding the contribution of design. And of course, we also make sure our clients keep their bearings in an ever-shifting regulatory environment.

 

Tomorrow’s Corporate Reporting is a programme based on a call for evidence and series of interviews examining what aspects of the current systems architecture and the behaviours, values and cultural dimensions of its output is planned to be submitted at the G-20 in 2011 along with the proposals of the IIRC (International Integrated Reporting Committee). The next steps for the programme are now being formulated, and include influencing policy development in Brussels and feeding into the work of IIRC (International Integrated Reporting Committee). Following the publication of the report, a short policy paper is being prepared to use to inform discussions in Europe and beyond.

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