Rules of engagement: What investors really want

With FY25 reports now steadily being released, we at Emperor have finally been able to take a breath and reflect on some of the great content we’ve helped produce, optimistic that it’ll cut through the noise and make an impact. In support of this reflection, Emperor has been engaging with different stakeholders and was recently invited to a panel discussion hosted by the Investor & Issuer Forum to hear from investors about what they really want from corporate communications, specifically annual reports.

The discussion touched upon wide-ranging topics including how disclosures are being used, what influences engagement and voting, and how AI is shaping analysis, and it certainly gave us a lot to think about. Here’s what we took away:

1. There’s no such thing as an unimportant report.

Sadly, reporting companies can’t take a year off or rest on their laurels. According to investors, it’s incredibly important that companies always keep their reporting standards high and recognise that investors use past as well as current reports as ongoing references. If reports aren’t consistent and change too significantly year-on-year this can strain investors’ ability to evaluate performance and potential and will ultimately be marked down.

2. All sections of a report matter. Some sections matter more.

It’s important to understand investors don’t all engage with an annual report in the same way. Sure, some read it cover to cover (or so they say). For many, however, this is not the case. They don’t have the time, and honestly don’t see doing so as worthwhile. As such, many investors are strategic in the way they approach reports, focussing only on what matters most to them and their mandates, or dividing each report into sections to be reviewed by specialised teams.

This means reports do get read and all (or most) sections matter to some degree. Some additional insights from the panel revealed some important nuances for reporters to take into consideration, however. Firstly, the investors on the panel uniformly emphasised the importance of a Chair’s statement in the strategic report, identifying this as a critical signifier of a company’s culture and trustworthiness. Perhaps unsurprisingly, the investors also flagged remuneration reports as high importance disclosure, specifically for their role in clearly outlining the primary priorities of the company under review. The investors also noted case studies are valuable tools to effectively provide insights and illustrate meaningful progress.

Another interesting insight related to sustainability sections. While the panellists agreed that regulation and adoption of standards were improving comparability and credibility, they revealed their ongoing reliance on information provided by ESG rating agencies and aggregators. They did, however, state that dedicated ESG funds with their specialist agenda and expertise would take a different approach and be much more focussed on sustainability disclosures in annual reports.

3. Navigability is non-negotiable.

Investors don’t want song and dance reports. Though they can appreciate good design, the most integral presentation requirement for them is ease of navigation. Given their time limitations, every second is valuable when reviewing a report and any support to enable them to find the information they are looking for as quickly as possible is appreciated. Panel participants championed the use of interactive links within reports and scolded those without such features, forcing them to scroll through every page of the document.

4. Reports aren’t too long. They just need to cut the junk.

The topic of report length inflation is common amongst Boards and reporting teams and has only been elevated as regulatory requirements have increased. It was interesting to hear panel participants saying they generally don’t have major concerns about page counts, surmising that the main issue is quality over quantity. Specifically, they critiqued that too many reports are filled with ‘junk,’ essentially more general information that doesn’t help shape investors’ understanding of performance and potential. At the heart of this discussion, it’s clear that investors want reports to be steadfast (almost puritanical) in their focus on communicating how a company is adapting to its material risks and opportunities and positioned in relation to current investor concerns and areas of interest, which they said aren’t always consistent and can change from year to year.

5. Digital comms might yet have their day, but the Annual Report still reigns.

When pressed on the matter of digital engagement, the panel largely concluded that for their practical interests they only really utilise printed and PDF annual reports, treating them as their preferred, single sources of truth. They do so for ease and trust that the documents have been audited and should also hold all the information that they would need to do their jobs. They also spoke of concerns that, if they were to also review company websites, potential inconsistencies could cause confusion and errors in evaluation. A caveat to this, however, are circumstances in which they may need to do a deep dive on a company’s approach to a specific matter. In such circumstances, they said a company’s corporate website would be a valuable tool.

Cutting through the noise

Looking ahead, we recommend companies take on board these observations from the panel and adjust their reporting approaches as needed. Good reporting and corporate communications more broadly need to consider the evolving needs of investors. What they want are annual reports that are clear, consistent, focused and easily digested. Follow these simple rules of engagement and we’re confident reporting companies can effectively communicate their equity narrative to investors.

We’re working closely with our clients to better respond to changing stakeholder expectations. If you’d like to explore how to improve your reporting strategy and enhance your communication with investors, we’d be happy to help. Contact [email protected]