“Print is dead!” This was the most popular proclamation of 20 years ago by the evangelist marketers of a burgeoning digital era. Followed closely by “the annual report is dead”, from equally enthusiastic digital designers and savvy investor relations managers. Given the supposed death of print, it seemed natural to predict the demise of a publication so aligned with that format. However our recent experience this last reporting season, and a browse through the reporting practices of many of Australia’s largest corporates, would indicate neither prediction came to pass. The annual report is indeed still alive and kicking, still in print, and looks set to grace the tables of Australia’s boardrooms for some time to come.
Corporate reporting today though has become a very different prospect from the glossy, big-budget vanity pieces of the 80s and 90s. During the 2000s less than satisfactory financial results, belt tightening, changing statutory requirements and the advent of more expedient, digital channels, saw drastic reductions in print quantities and report sizes. At its lowest point the abbreviated ‘Review’ de-evolved, in some cases downsized to a mere DL flyer, with little more value than a prompt to get shareholders to access the obligatory financial report from their website.
Some companies still choose to report that way. However, a growing number of corporate communicators are realising their reporting suite can be used to greater potential as a valuable and strategic communications tool and not just a yearly annoyance.
A survey of corporate reporting by ASX100 companies for 2017 and 2108 reveals corporate reporting spread across a diverse range of print and digital media, being used to communicate finely tuned messages to a broader sweep of stakeholders. An overall trend being to tailor bespoke reporting to meet a company’s own specific communication needs.
Here are a few other trends we’ve observed that indicate the great potential for reporting in the coming reporting seasons.
60 percent of the annual reports produced have returned to being full, all-inclusive books covering all aspects of the companies business in the one volume. 28 percent continued with the trend of the last 10 years to split reports into a suite of smaller targeted documents, or also summarised results in a smaller review (21 percent). It seems the bigger the company the larger the tome, with BHP, Rio Tinto and Westpac all producing reports of over 200 pages, CBA coming in at a whopping 308 pages!
There are some convincing reasons to provide stakeholders with the complete picture at one read. For one, Boards being held more accountable are leaning towards full disclosure and reporting on governance in all areas of the business. Also, the push to integrate sustainability and non-financial performance with financial results means strategically it makes sense to issue a combined report. Although we’re still a long way from seeing fully integrated reporting in Australia, we are seeing moves in that direction.
Only 25 percent of companies surveyed used online reporting. Annual Report content is reformatted into web friendly bites to ensure the message reaches all stakeholders, no matter their preferred reading format. These reports are often accompanied by a printed summary report and function as an additional channel to reach other audiences.
We are seeing specialist reporting, such as sustainability, being presented online, with 10 percent of companies including separate online sustainability reports.
Ten years or so ago there was a massive push to uptake technology and publish annual reports solely online, cutting the cost of print and catering supposedly to a younger, tech-friendly shareholder base. The number of companies doing this appears to have fallen over recent years. Some explanation for this trend could be attributed to the expense and the extra efforts involved to meet the more demanding timeframes required for online development.
There’s no doubt some companies will continue to have an online reporting presence, particularly in larger corporations with big shareholder numbers, but the trends we’re seeing indicate the return to dominance of print formatted reports.
Social media and other online news means that company information is often released instantaneously by informal external or internal channels. A good part of today’s investor relations team’s role is to respond on behalf of agitated Boards to the accuracy and tone of these messages.
The statutory necessity to produce an annual report provides a convenient medium through which a company can tell its story in its own voice. Annual reports can be effective and credible source of information by targeting the appropriate audience, communicating with purpose and setting the agenda with strategically driven content.
The current corporate operating environment has seen a major trend toward the need to report on a raft of increasingly newsworthy, non-financial subjects; including all areas of sustainability, climate change, corruption, risk analysis, governance and materiality. These issues are now recognised as having a major impact on the financial prospects of a company and identify the need to develop strategy to address them.
Of the companies surveyed approximately 30 percent used their reports to convey strategic messaging. 73 percent included detailed reports on sustainability within their annual report (also reported as ESG, GRI, Cr and CSR) with 27 percent providing separate sustainability reports. 43 percent discussed the material issues or risks affecting the company.
So what does all this tell us about the future of reporting? If we project current trends we can make a few deductions.
Reports will be re-purposed to provide a means for a company to gain the trust of stakeholders by demonstrating their understanding of the environment in which they operate and the factors affecting them, and their willingness to be transparent in disclosure. Companies will tailor messages to meet their specific needs and concerns.
Higher priority will be placed on reporting on the future prospects of business and not just past performance, by identifying material issues and risks which can affect future earnings. More importantly companies at the forefront of reporting will identify and report on how they create value for stakeholders by turning risks into opportunities to building a sustainable business.
The effort to report on sustainability will continue to dominate the content of many annual reports. More companies will find ways to fully integrate sustainability into their strategy for growth, which will be reflected in the restructuring of their reports. Smarter companies will move to fully integrated reporting. These reports focus on the 5 capitals and fully integrate non-financial measures, showing how they affect the overall performance of the business. While this style of reporting has not been widely embraced in Australia yet, we can see big things happening in this area in the future.
By Robert O’Farrell, Design Director