As we come to the end of the main 2022 reporting period and having worked on a good dozen reports over the last few months, I reflect briefly on the trends we are seeing as the landscape continues to evolve:
1. Integrated Repoprting continues to dominate
This trend appears to be the keeper. The reports we’re doing now that aren’t integrated are clear outliers. The few companies that aren’t adopting the integrated reporting framework now are either those that are doing so consciously as not being appropriate for their business, or acknowledging that they need to adopt the framework but aren’t quite ready to take the step.
2. Elements of Integrated Reporting encroach the others
Even those companies not quite ready for the full integrated treatment are adopting some of the mindsets, such as value creation, multiple capital reporting, impacts on the world around them and a future focus.
3. Firmly multi-stakeholder
Today, investors are only one of many audiences. And they look to more than the year’s financials numbers. They know that unless human, environment and social factors are nutured, the long-term health of the numbers will be threatened. And being consciously multi-stakeholder also naturally tends to shift the writing style and page design to be much more accessible.
4. ESG is so loud it’s deafening
These non-financial factors now carry so much importance that they’ve been elevated in investment circles to the term ‘ESG’ (environment, social, governance) because analysts know that non-financial means pre-financial: they’ll impact the balance sheet eventually, so they are lead indicators.
These first four are inextricably intertwined, and the ‘integrated’ in integrated reporting is merely a systematic way to bring them together and draw attention to their interdependencies.
But other trends are also discernible:
5. The tipping point: screen vs print
In general terms, print quantities are now reducing markedly, as the desktop monitor becomes the prime viewing mechanism. The logical corollary is to optimise the design for screens. Reports are swivelling 90 degrees to landscape orientation, type size is increasing to ease readership and fewer words are appearing per page to ensure accessible appeal to a wide range of readers.
6. Dichotomy of story and substance
Reports seem to be splitting into two camps, reflecting a possibly unrecognised tension caused by the desire to appeal to a wider audience. Some companies are sacrificing detailed substance and transparency, dumbing down their content to once-over-lightly storytelling, while others are chasing full transparency with detailed disclosure across multiple business aspects. Both extremes often result in unsatisfying reports. Once the tension is recognised, the best reports find the happy medium or segment reports for different levels of audience engagement.
The truth is that a good report tells a cohesive and clear narrative story, backed with data of substance provided as evidential support. The Framework extolls the importance of ‘qualitative and quantitative information’.
7. Whither the Sustainability Report?
It’s fascinating watching the pathway of sustainability information. If it’s a new area for an organisation to report on, it tends to be added to the annual report which often matures over time into an integrated report.
If, on the other hand, an organisation already produces a separate sustainability report, it tends to initially be combined to become an integrated report. Then, as the sustainability information grows, concern is raised about engagement-destroying page counts and a separate Sustainability Report is once again produced – but this time as a clearly linked companion document to ensure the integrity of the Integrated Report storytelling remains.
8. The rise of ancillary reports
Just when we thought it couldn’t get much more complicated, along came the requirement for TCFD and Modern Slavery Reports. What we’ve found interesting is that while there remains a common misunderstanding that integrated reporting means combining all reporting into one document (it doesn’t), nobody seems inclined to consider TCFD and Modern Slavery in these terms. In almost every case, these ancillary requirements are being dealt with as separate reports, and delivered digitally via pdfs on the corporate website.
9. The re-emergence of Corporate Branding
Companies are recognising that their reputations are enhanced when more audience groups are engaged with an accessible and ‘campaigned’ corporate story. So connectivity and cohesion is the new order, displacing the annual report as a standalone orphan publication. We’re seeing the narrative and design cues reaching beyond the report into websites, announcement presentations, ASMs, suites of ancillary reports and emails, reflecting a more intentional communication strategy.
10. Engaging hearts and minds
Now firmly established as much more than a financial report, today’s reporting actively seeks to tell the comprehensive and holistic corporate story, from who you are to what you stand for, engaging the audiences’ hearts with storytelling while supplying the supporting evidence to engage their minds.
While evolution will no doubt continue, we expect it to be variations of the above themes. We believe the tectonic shifts have already changed the landscape forever and that we’ll only be rebuilding around the minor aftershocks for the next few years.