How increased scrutiny is driving asset management reporting
Gone are the days when asset managers would publish compliance-focused annual reports, densely packed with small text. To engage investors and their broader stakeholders, great reporters take a holistic approach, thinking about the most appropriate channels and formats to engage their target audiences – enabling them to tell their story in a clear and compelling way.
In our recent review of asset management reporting, we’ve identified five areas of focus that are driving their disclosure.
1. Impactful storytelling
Asset managers are continuing to embrace engaging ways to highlight their differentiators and convey key messages. Examples include compelling investment case spreads, insightful case studies and impactful feature pages which tell their story in a concise and appealing manner.
2. Focus on responsible investment and engagement
As scrutiny of ESG performance has increased, reporters are keen to showcase their responsible investment credentials. Typically, companies are setting out their approach to responsible investment, their strategy and the priorities and progress they have made. One of the key topics is engagement with their portfolio investments on ESG issues. Most companies align their reporting on this subject with the principles on engagement, outlined in the Stewardship Code. These require signatories to report on their engagement and collaboration, including their approach, specific objectives and activities, issues addressed, outcomes and next steps. The best reporters set out how and why they engage, the outcomes and any future actions required, supplemented by case studies and examples.
3. Transition to net zero
Asset managers are increasingly setting out their own timelines and action plans to reach net zero, with some organisations cross-referencing dedicated reports for more information. This is in response to the UK government’s plans to transition to net zero by 2050 and TCFD requirements coming into force for the largest asset managers from June 30 2023, with smaller firms set to follow suit in 2024.
4. Insightful risk management
Risk management has long been a focus area for companies in the financial sector. However, risk reporting has traditionally been very dense and generic. As stakeholders demand more insightful disclosure, more sophisticated reporters have responded by providing additional context and commentary. Companies are expanding their reporting on risk management and risk appetite, demonstrating accountability by identifying risk owners, and introducing horizon scanning to identify and explain emerging risks.
5. Taking a cross-channel approach
Asset managers are increasingly evolving a cross-channel reporting network to meet the needs of different audiences. We are seeing more dedicated ESG reports with some larger companies publishing topic-specific reports to supplement the content in their annual reports. Additionally, companies are using digital reporting as a way of bringing their story to life – using video and interactive features on their websites. Social media is increasingly used to engage stakeholders. Linkedin is popular with larger companies and serves as a useful channel to highlight initiatives, activities and publications.
Asset managers are under increased scrutiny, as shown by the FCA’s recent letter outlining its supervisory priorities – which include a focus on ESG disclosures. Now, more than ever it is important that reporting is clear, consistent and, above all, authentic.
If you’d like to hear more, please contact Rachel Crossley on [email protected]s