This is the thirteenth edition of the Annual Report on Annual Reports. Right from the outset, our goal was to build a benchmark against which report standards and reporting practices can be measured. Many things have changed since we started rating and ranking annual reports. The reporting environment has gone through growth, crisis, internet, flu, mergers, bubbles, regulations, quarterly guidance, stock options, more mergers, shareholders' activism (sic), corporate governance and ... greed (no relation), deregulation, enronitis, growth (again), more bubbles, short-termism, sustainability, recession, flu, more mergers, corporate social responsibility, more crises, troubled banks' assets "relief" (sic), stress tests (sic(k) again), regulations, etc.
Come good or bad (economic and other) climate, over the period there has been an overall improvement of reporting standards across the globe, with the notable exception of the U.S. where complacency and compliance have for a large majority taken over at the expense of clarity and communication. We reported about this three years ago, the situation is even worse now. After the "Rule Americana" on reporting (in 2001, IBM ranked N° 1 and 39% of top 200 were still made in U.S.), most now seem to ignore that "Reporting is not just about complying" (to quote the words from the chairman of the Canadian BMO, a top report for years). Reportwise, the "rest of the world" has picked up -and overtaken.
When we started our survey, 70% of top 100 reports were graded B or less for major ingredients ( i.e. financials, risk, performance and investor information). This year, one third of top 300 annuals are rated B+. This is worth noting, especially amid the worst crisis in 25, 50 or more years. 50% of companies ranked this year had to report a decrease in profit or a loss (check the column in our ranking, based on report figures). That said, our rating panel member Kaevan Gazdar was "shocked by the way many companies evaded or marginalized what is certainly one of the major economic crises since decades. So I was all the more impressed by the few companies that had the courage to confront the crisis upfront and present stakeholders with their strategies and goals." Remarkably, some of them came up with (very) good reports, proving that lower results and recession should not necessarily result in poor communication (at least for some). On the other hand, good performance (and even less company size) doesn't automatically translate into nice reports (check the big wheels at the bottom and others simply not report-competitive enough to rank).
That makes company report teams' jobs more difficult. How to inform, communicate, state, differentiate, keep shareholders, attract investors, talk to other stakeholders, keep people's attention in a one-minute online culture world, etc.? Net results? Regardless of countries, cultures and traditions (chalk this up to globalization), many reports tend to tell the same story, follow almost the same regulatory rules, give the same accounts (literally, and bar the numbers and mind the auditors, of course), use the same (buzz)words, follow the same fashions, and look like each other. There is more than a business-as-usual impression on substance, and less of a wow factor on style.
All of those points also make the ReportWatch task much more difficult than thirteen, ten or even five years ago. But we keep on striving for higher standards. And if these naturally include statements and notes, which are the backbone of the report, they also mean a number of "y"-ending words that e.com-ReportWatch and report teams, investor relations officers and corporate communication managers have in mind when it comes to reporting: availability, transparency, accountability, strategy, quantity, quality, consistency, comparability, clarity, fidelity, credibility, novelty, responsibility... It takes some or all of those 13 elements to go from (good) standard to best practice.
I hope you will find this report an interesting read and look forward to your feedback
The Editor
e.com@reportwatch.net
P.S. What happened to the financial sector ... reports? Last year they were included yet the performance on risk reporting was "intentionally left blank." A premonition. Due to the instability, unpredictability, uncertainties, and for comparability and credibility reasons (the latter both at financial groups and at our level), reports were not considered for competition. Sure it would have been funny (or silly? Two other "y"-ending words) to read some. But without a bonus, why wasting time? Too many rotten apples in the pack -and how to check them anyway? Another stress test.
The Annual Reports on Annual Reports 1997 (first edition), 2001, 2003, and 2006 (10th anniversary issue).
