22nd edition of the Annual Report on Annual Reports, the independent global survey on annual reporting practice prepared by the e.com team and produced by ReportWatch.

Views about the present and future of annual reports


The annual report is dead, long live the annual report

The annual report has actually become even more important the last couple of years.

With global trends such as fake news, where facts and figures are ambiguous, companies need to provide their stakeholders with accurate and reliable information. The annual report has been reviewed by auditors; it has been read, approved and sealed by both the board and the management. That makes this document hugely important.

There is no other content produced and published from a company that has that level of authenticity. With that in mind, the annual report needs to be adapted to today’s reality -i.e. how people find and consume content- to keep being relevant. Almost all professional stakeholders read the annual report on screen today, according to our research, so why isn’t it yet designed for this?

Video and voice are the most efficient carriers of messages that convey more than hard facts. It is perfect for topics such as strategy, values and corporate behaviour. And lastly, why do we stick it in a virtual “cupboard” on our sites and hiding it for our users? We have an obligation to share the content and make sure that it’s found at any time where people are looking for what we have to say. This goes beyond archiving a pdf file.

Staffan Lindgren, chief executive officer, Comprend, digital corporate communications (Stockholm, Sweden).





Towards living reports?

I feel that the annual report still remains one of the most effective ways for a company to communicate to all its various stakeholders. It provides a unique platform for the company to tell its own story and to clearly explain why it exists, how it works and what it delivers. It will also grow in its importance and overall effectiveness as more and more companies embrace an integrated approach to corporate reporting.

But how it’s produced and delivered will change, I believe more and more companies will adopt a digital first approach, allowing them to provide stakeholders with the widest choice of ways to access the report.

Which in turn, could even lead to living reports!

Reg Pauffley, corporate communication, reporting and branding specialist (Bosham, West Sussex, UK).





A key part of governance

I don't see the low usage statistics of proxy materials or annual reports as an issue. Having a legal requirement to prepare an annual report is key part of governance. It's a key part of strategic marketing too.

The fact that it is not used or read is irrelevant - people are busy.

Companies have a moral and legal obligation to prepare their annual reports in differing formats and media to ensure it is available at any time as a transparent mechanism of disclosure that's widely available, if needed.

Rob Stangroom, qualified accountant and manager at Africanfinancials.com (Harare, Zimbabwe).





Core and more

Annual Reports continue to be the key document to communicate the company’s strategy and performance to a broad stakeholder group. After years of increasing in size – mainly due to regulatory requirements – substantial effort is now being put into streamlining Annual Reports, for example by cutting clutter and duplication, moving certain information onto the web and presenting corporate strategy and business models in a more connected and concise manner.

Rather than focusing solely on the Annual Report, we also see companies analysing their entire reporting suite including sustainability reporting to ensure they provide information in an effective and efficient way. The key word here is ‘core and more’: providing the Annual Report as one central document for all stakeholder groups, but adding smaller, targeted publications, which are tailored to a specific target group both in terms of content as well as language, layout and format (i.e., print, pdf vs. online).

Examples of such targeted publications are investor factsheets, highlight versions of the Annual Report with more storytelling elements, sustainability reports, online reports on microsites, or brochures on compensation or AGM-related information.

In spite of that changing landscape in corporate reporting the Annual Report was, still is and will be the most reliable, reputation and trust building communication instrument in the future.

Dr. Petra Nix, owner and managing partner of Petranix (corporate and financial communications) (Zurich, Switzerland).





Succinct, not dumbing down

Report readers recognise that shorter reports are more attractive, although it’s important to grasp that shorter should be achieved by covering complex issues more succinctly, not by dumbing down.

Mark O’Sullivan, head of corporate reporting at PwC (London, UK).





Beyond compliance, increased disclosure

Good reporting goes beyond compliance and pulls back the curtain to showcase good governance and robust management processes, providing insight into how a company is positioned to capture future value. The very best reporters go a step further, disclosing what they are doing to ensure the long-term sustainability of their business model and profits. Almost always, this involves understanding ongoing changes in what stakeholders -including customers- perceive as valuable.

Where do we see this in reports? Increasingly through robust reporting on stakeholder engagement, strategy setting and managing innovation.

How will this change in the future? These areas of disclosure are likely to become even more important, as they give investors critical forward-looking insight.

Susan Blesener, founder and managing partner of The Art of Value, integrated reporting specialist (Amsterdam, Netherlands).





Reporting hinges on intelligence, not on volume

Less is More?’ The title of this year’s Reporting Symposium in Zurich was meant to provoke. And indeed, some companies like the Italian insurance group Generali and the German conglomerate Siemens have radically reduced the size of their annual reports. Others, including the Dutch bank ABN Amro, have adopted the strategy ‘More reporting, more reports’.

The question being: What makes sense? In my opinion, arbitrary stipulations of size or volume are irrelevant. The value of reporting derives from the effectiveness of the way a company profiles itself. Most companies fail in their financial and sustainability reports because they merely reproduce facts, rather than marshalling evidence that bolsters their key messages. That indeed would be the intelligent thing to do.

Kaevan Gazdar, lecturer, former corporate reporting officer at a large bank (Munich, Germany).





Investors’ demographics

The annual report is and I suspect will always be important as investors want to see where and how the company is spending money, their growth rate and what the returns are on their investment.

As to the report format, it depends on the audience as older investors will still want to see printed annual reports and the younger ones (say 35 and under) are all about digital. So, it depends on the demographics of a company's investors. I'd suggest having a small portion printed with a PDF available for download, and a standard HTML version to meet the reading preference of all investors.

Loa Fridfinnson, corporate relations and marketing specialist (Vancouver, B.C., Canada).





A once-a-year opportunity

It’s safe to say that the future of annual reports, as with many publications, is going towards simplification and individualisation in various digital formats. Irrespective of format, which I am sure will evolve drastically in the years to come, I believe that the annual report is as relevant as ever. This is the company’s once-a-year opportunity to validate or reset its strategy; to outline the market trends and segments; to describe the company’s dynamics, how it seeks to grow and increase income, how it tackles sustainability issues and how it contributes to broader goals.

It is also a once-a-year internal opportunity to engage, analyse and realign the key definitions when explaining the inner workings of the company. Such high-level messages hardly come across in quarterly reporting, news releases or in the social media flow.

The annual report gives a comprehensive overview that is vital for stakeholders to understand the company, and the access to previous years’ reports provide valuable insights. Due to tighter regulations, it is likely that there will be greater standardisation of the audited parts in the future, allowing for even better benchmarking.

Among other trends, one may ask how corporate governance reporting will evolve. Instead of merely describing the governance processes and procedures, stakeholders will expect more evidence of how those processes and procedures have been effectively applied.

Helena Fournial, corporate communication specialist, former PR and IR officer at Sweden- and UK-based companies (Paris, France).





More narrative, more interactive

From my point of view, the corporate reporting of EU companies has remained a locomotive and a beacon for reporting in other areas, even though overall quality in these is growing. At the same time, it should be noted that with ESMA regulations entering into force, the landscape of the entire corporate reporting market might change significantly. The reporting will either again be divided into compliance and narrative / engaging parts, or the companies will learn to combine both approaches without sacrificing any stakeholders’ expectations.

I see great potential in the development of interactive reports, as a tool that allows companies to communicate and provide reliable and relevant information to all stakeholders with better involvement of the audience as an aim. According to current internal data, over 50% of the stakeholders' audience switched to online reports (only in case it was published simultaneously with PDF).

Another trend, which we observe for Russian companies, is the way these are catching up in the field of mandatory disclosure of non-financial indicators within the framework of corporate reporting.

Andrey Kozhevnikov, co-founder and chief executive officer of Zebra, corporate communications (Moscow, Russian Federation).





A tool for ‘long-termism’?

The annual report can still be a valuable communications tool; however, its ultimate value is determined by how the company chooses to use it. We find that using the annual report as a platform to communicate to multiple audiences/stakeholders (investors, current and prospective employees, customers, etc.) provides the best return for companies. The case for the annual report as an investor-only piece is not as strong as it used to be, given the fast pace of business, technology and change in these times.

While the annual report may take on different formats (i.e., digital, printed) and varying approaches, we at Dix & Eaton believe the concept of annual reporting is still an important part of a company’s ongoing communications cadence. It provides an opportunity, once a year, to reflect on the successes and challenges of the recent past and to take a long view of the go-forward strategy.

As more and more investors and companies consider tilting the balance away from short-term thinking to ‘long-termism,’ the annual report could be a critical tool in making that shift happen.

Angela Rodenhauser, senior vice president at Dix & Eaton, specialist in IR strategy and executive communications (Cleveland, OH, U.S.A.).





A need for automated investment analysis

Annual reports are regaining their importance owing to the need for automated investment analysis. In the present day, investment research is suffering setbacks due to traditional methods still being used as a primary method of analysis. Documents like annual reports will stand among the most important sources of information while we move forward to inculcate artificial intelligence and robotics to facilitate automated research.

Pradip Seth, former equity research analyst, managing director, S-Ancial Technologies, (Mumbai, Maharashtra, India).




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