Trends from the first 25 annual reports
With the possibility of early adoption of Companies Act and UK Corporate Governance Code changes, how companies have approached their reporting is particularly interesting this year.
We have analysed the first twenty-five December 2018 FTSE 100 reports to be published and highlighted a number of trends and learnings that will be useful for those yet to report.
Five trends that stood out are:
1. Purpose is the theme of the year
Just over half of the reports clearly set out their purpose and 57% of companies who have a cover theme base it on their purpose.
2. Early adoption of new requirements
Looking at some of the new reporting requirements, we found that 28% have already set out which mechanism for employee engagement they plan to, or already, use; 52% are already reporting their CEO to average employee pay ratio; while just two companies have produced an approximation of a Section 172(1) statement, on how directors consider their wider stakeholders in strategic decision making.
3. Strategy is founded on growth and efficiency
In the reports reviewed this year, we saw a number of common thematic strategic pillars. The two most common pillars related to growth and efficiency, featuring in 80% and 72% of strategies respectively.
4. Diverse approaches to sustainability reporting
Sustainability featured as a pillar in 48% of strategies, testament to the topic's recent increase in profile, while there was a reasonably even three-way split, in terms of where the information was placed, between a standalone sustainability section (36%), integration throughout the strategic report (28%), and a sustainability section but also integration into other sections of the strategic report (36%).
5. New requirements increase the average page count
As new regulations increase disclosure requirements the net effect is a 7% increase in the average page count of the strategic report (to 58 pages). The average length of the governance report remains unchanged.