Event Highlights | Corporate Governance & Reporting this season
What are the key things you need to know about corporate governance and reporting?
We were honoured to co-host our third “What to expect this reporting season” event this year with senior members of the FRC.
Due to changes in regulation, as well as pressure from investors, shareholders and wider stakeholders for more effective reporting, this event has become an insightful mechanism to gain first-hand information from the FRC itself.
Black Sun was on hand to facilitate that discussion and provide an outline of the industry, giving all 150 participants the “state of play” in the corporate reporting community.
Our Key Takeaways
Key Trends Shaping the Future of Communication
Using information from our extensive research of the FTSE 100, Sallie Pilot, Director of Insight and Engagement, focused on key trends shaping the future of communication. Using the report’s Six Principles of Trust as themes, she illustrated how regulation, better practice and other levers of change have affected companies and how they communicate through annual reports.
Convergence of Governning and Reporting
Outgoing CEO of the FRC Stephen Haddrill, spoke about the convergence of governance and reporting, effectively explaining that sound governance is the basis for a company’s long term value creation potential, and communicating this intent and ability is absolutely essential to its success. In this way, the annual report has become a better vehicle for engagement and communication about corporate governance.
Authenticity and Section 172
Deepa Ravel, Director of Narrative Reporting shared some thoughts on authenticity and Section 172. She explained how Section 172 has always been a component of the code, and how some entities have wondered if it is a new element – since more emphasis has been placed on this portion of the code since 2016. She did note how promising it is to see more boards evaluating their composition in light of Section 172, specifically the capacity they need to consider things like culture in their business.
Integrating HTML with XBLR Tags
On integration regarding HTML with embedded XBRL tags Phil Fitzgerald, Director of the Financial Reporting Lab, talked about how these reporting requirements will likely become clearer in the new year, but acknowledged that Brexit may influence how UK companies meet the ESEF requirements going forward. From a sustainability point of view, he also shared that the Government has set its expectation for all listed companies and large asset owners to disclose in line with the TCFD recommendations by 2022. To this end, the FRC will be monitoring how companies and their auditors consider climate change factors in the strategic report and financial statements going forward.
David Styles, Director of Corporate Governance and Stewardship, gave a succinct and clear update on some reporting trends he has observed. A few key highlights were that the better corporate purpose statements were the ones linked to strategy, or which use SDG’s and other clear concepts to communicate. Culture as a concept is being owned more by business leaders, specifically the company Chair. Engagement with stakeholders is predominantly through the designated Non-Executive Director route when considering the three options outlined in the UK Corporate Governance Code, and that it is promising to see engagements with employees through mechanisms like Employee AGM’s. However the FRC is looking forward to seeing more detail on the outcome such engagements going forward. They are also hoping to see increased links between remuneration and strategy in reports, as well as more balanced board evaluations with more information on the outcomes of these processes.
In addition to insightful table discussions, the event’s participants were able to direct questions at an experienced panel of FRC speakers. During this session, the transition of the FRC to ARGA – the Audit, Reporting and Governance Authority was described generally, and included a note that new body would have additional powers to influence reporting and audit.
If you’re looking for reporting inspiration or want to see how the rest of the FTSE 100 have been doing, have a look at our latest research, “The Ecosystem of Authenticity”.