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The power of the reporting process

Is regulation threatening coherent, connected reporting? The right process can bring your investment proposition to life, according to stakeholder engagement consultancy director Brett Simnett.

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Ever-evolving regulation and reporting frameworks have put a spotlight on annual reporting content - and content creators - more than ever before. But while the focus on data and measurement has never been more acute, is it driving increased transparency or hindering balanced reporting narratives? Is the reporting process no longer about reflecting the reality of day-to-day business?


Since my first involvement in reporting back in 1997, I’ve always respected and believed in the importance of the annual reporting process. It’s a once-a-year journey that brings key internal stakeholders together and galvanises the strategic narrative across an organisation.


Looking back to those early days of the UK Combined Code, the enhanced business review and the strategic report, reporting regulation was very much about creating one coherent and connected narrative throughout the report. The focus of content creators was on creating a window into how a business was run and how it was performing that reflected the views of management, the workforce and the world in which it operated. I have fond memories of some truly transparent narratives. Remember Admirals founder and CEO, Henry Engelhardts reviews of the year where he compared the company to puppy dogs and kangaroos?

Henry Engelhardts, Admiral founder and CEO

“I think 2010 goes down as the Year of the Puppy Dog. It was the Year of the Puppy Dog because when one looks at those highlights it looks like an incredibly cute, cuddly year with a lot of moments that you’ll treasure forever. However, as with a puppy dog, sometimes it wee’d on the floor!”


“2012 was the year of the kangaroo: it bounced around a little bit but it turns out to be pretty big, strong and energetic with the babies protected in the mother’s pouch.”

And Aggreko reports, though just two-colour documents, contained brilliantly frank and engaging discussions of marketplace and governance:


“This is all a bit flimsy but, absent spending a fortune of our shareholders’ money on consultants, it is the best that we can come up with and, actually, and most importantly, it is a useful technique for our salespeople because it tells us pretty accurately which markets and sectors we should be concentrating our efforts on.”


“First, we mean that we take governance at all levels in the Company seriously, and we think about it. Second, it means that we do not slavishly follow the strictures and advice of every governance guru or ‘expert’ body, but we try to adopt those approaches that we believe are likely to work in the particular context of Aggreko’s business and culture.”


Like or loathe the tone of these statements, they were driven by the desire to communicate a transparent, connected narrative. Unfortunately, I believe recent regulation has meant reporting has lost its way in terms of communication - as has the process of creating it.


A siloed mentality, driven by disclosure

Current UK reporting legislation has been informed by a plethora of ‘statements’ – Section 172, Viability, Non-financial information, Going concern, SECR, TCFD. All have their merits, and the sentiment of transparency is there, but reporting content has become a set of siloed statements that fail to connect to each other. Ultimately they fail to give a clear, concise, and reflective view of how a business is being run. We are also seeing a detrimental effect on the process, with more siloed teams, less focus on collaborative content creation and the pressure to collate data and meet disclosure requirements clouding well-written narratives. Don’t get me wrong: data is important, and consistency across reporting allows for consistent analysis. Ultimately however, investors and stakeholders alike want to see into the heart of a business to make investment decisions. This requires more than data: it needs a qualitative and authentic story that supports it.


That authentic story can only come from a connected reporting process where content creators are working alongside each other, as well as with reporting contributors such as the C-suite, senior managers, and the wider workforce. Only through that collaboration can disclosure reflect: a business model, strategy, KPIs and risk as explicitly linked concepts; stakeholder engagement that truly influences strategy and vision; governance that drives culture and behaviours; and sustainability seen as central to everyday operations.


Don’t let the output drive the input

We talk so much about transparency and balance in the reporting world, but I’ve deliberately used the word ‘authentic’ in this article as a driver for great reporting content. I encourage all content creators to use it as the foundation to their reports. Don’t be scared to be you! Make sure the way your reporting is written truly reflects your brand, culture, and management. Don’t shy from addressing your challenges as well as successes and use your data to reinforce, not dictate, the narrative.


And don’t let reporting regulation be the only driver to what ends up in your report.


To repeat: the spotlight on reporters has never been brighter. But that focus provides a clear opportunity to bring your investment proposition to life through engaging, balanced, and authentic reporting.