Most commentators recognise that the UK has led the way for several years. But the crown may be slipping...
The UK has long enjoyed a reputation for best-practice reporting. Driven by regulation and empowered by reporting teams keen to embrace new ideas, there’s been improvement across the board, from business model and risk, to governance.
However, a number of reports that we’ve seen recently suggest that mainland Europe is catching up with – or in some cases even overtaking – the UK. Many of these reports embrace a strong focus on value creation beyond financial return, with a good level of detail on the resources and relationships that help create that value. One of the most marked differences lies in the approach to transparency. Several European reporters are impressively open about their challenges, with some going so far as to take a warts-and-all approach to their marketplace section. ABN AMRO is one of a number of European reporters to highlight potential ‘drawbacks’, as part of an innovative strategy section that takes the stakeholder on a journey from purpose through marketplace and strategy to value creation.
At this stage, we’re not sure exactly why Europe has forged ahead of the UK. It may be that because the continued FRC guidance on the strategic report already shares many of the principles of integrated reporting, UK companies have been lulled into complacency. What is certain is that instead of responding to guidance by being innovative and rethinking content, some UK companies are merely adding yet another layer of detail, leading to unnecessarily bloated and confusing reports.
The recently revised Dutch Corporate Governance code – which inextricably links value creation with culture – will further encourage take-up of integrated reporting on the continent, potentially stretching the lead that mainland European companies have established.
Interestingly, it’s not only on content that the UK maybe falling behind. While reporters here are still required to produce a printed report, that isn’t the case elsewhere in Europe, and this has led to format innovation to meet the needs of particular stakeholders – such as Maersk’s story-led summary magazine which is targeted at its high number of private investors. We look forward to seeing whether the ESMA legislation leads to increased format innovation in the UK.
Of course, it isn’t all bad news in the UK. Our reporters still lead the world in areas such as governance – and we expect the new FRC guidance to increase the focus on stakeholders, culture, purpose and board responsibility. But recent years have seen companies in continental Europe really embrace innovation and fresh thinking. In these days of flux in our relationship with Europe, it’s more important than ever that UK reporters keep in touch with the trends that are driving best practice across the Channel.