We use 15 criteria to assess annual reports, grouped into the four categories you see here.
Understanding the business
This category assesses whether the report gives the reader a good overview of what the business does and the context in which the business operates. The reader should understand which activities/services the business provides, where it does so, how it actually creates value from its operations and what makes the business different from its competitors. The reader should also understand that the business doesn’t operate in a vacuum. It is affected by, and must respond to, market factors, and it relies on certain resources and relationships to carry out its activities effectively.
Explaining and measuring performance
This category assesses whether the report provides the reader with a clear understanding of the strategy that the company is/has been pursuing and how it is performing against it. The reader should have a clear understanding of the company’s overall strategy and the objectives that are in place to achieve this. Objectives should ideally be linked to KPIs, showing how the company measures the success of its strategy, and remuneration showing how the executive team is rewarded. The report should communicate financial performance clearly.
How sustainable is the business?
This category assesses whether the report gives the reader a clear idea of how the business is planning for the future and ensuring that the business is sustainable. The report should describe the principal risks business might face and how it is mitigating against them. The reader should have a clear understanding of the governance structure that is in place and be assured that the board is working effectively. The report should look to the future – questioning the challenges and opportunities ahead, and how to face them. It should also include a view of the company’s key sustainability objectives and what progress is being made.
How effectively is the story explained?
This category assesses whether the report as a whole tells a compelling story in a way that is engaging for the reader, is easy to navigate, links coherently throughout the narrative and contains a balance of positive and negative events. The report should contain information that is key to the company’s shareholders and has clearly been updated year on year. Overarching messages should not exist in isolation, but flow throughout the narrative and relevant sections should link together to provide one coherent story. Creative is used well to highlight key information and make the report a clear and engaging read.