IR professionals welcome the proposed reforms, which have a focus on digital-first disclosures
Annual report preparers rejoice: the UK government wants to save you time and money by ditching ‘Hobbit-length’ documents in favor of shorter, digital-first disclosures.
Proposals from the Department for Business and Trade aim to refocus UK company annual reports on investors and creditors, providing a more coherent framework for companies of all shapes and sizes. In them, ministers said that the average annual report now runs to 98,000 words, longer than JRR Tolkien’s The Hobbit. For FTSE 100 companies that number stands at an average of 152,000 words.
The hope is that the planned cuts to red tape – which are now open for consultation – will save companies more than £450 mn ($608.3 mn) through efficiencies, with provisions made for AI use to improve the cost and time savings even further.
A ‘digital-first’ framework will examine an expanded role for electronic tagging in disclosures, a greater focus on digital communication and online reporting, and there are plans to even look into whether certain information might be made available outside of a traditional reporting cycle.
Broadly, the move has been welcomed by UK IROs as a positive step toward a better framework. Hannah Boore, senior corporate reporting manager in Lloyds Bank’s investor relations team, was one of many professionals who were consulted on the proposal.
‘While we’re still working through the detail, my initial impression is that the consultation represents a positive step towards a more proportionate and modern reporting framework,’ she tells IR Impact.
‘In particular, proposals to reduce reporting burdens for our smaller entities and subsidiaries, alongside a greater emphasis on digital-first reporting and future technologies, have the potential to improve efficiency while maintaining a strong focus on decision-useful information for investors.’
That view is echoed by Simon Gleadhill, annual report consultant and regular IR Impact awards judge, who describes the government’s focus on corporate reporting as ‘refreshing’.
‘It’s an encouragingly bold proposal by the government: against a historical backdrop of slow progress, these proposals show vision and a desire for change,’ he tells IR Impact.
‘If the proposals are followed, we would end up in a better place, not least because it would put emphasis on boards to decide and express what they thought was material to their company, rather than following a checklist of requirements.’
Against a historical backdrop of slow progress, these proposals show vision and a desire for change.
Simon Gleadhill
The burden of corporate reporting has only increased in recent years, with conflicting requirements and frameworks adding to the complication of the task. A City AM poll in 2023 found that 81 percent of executives at the UK’s biggest listed companies reported that onerous reporting mandates were ‘eating up their time’ and actively preventing them from doing their actual jobs.
For Matt Hall, CEO of the UK IR Society, that focus is key. ‘Over time, reporting requirements have continued to expand, often with good intentions, but the result has been longer more complex reports that can place unnecessary burden on companies and make it harder for investors to identify what is truly important,’ he tells IR Impact.
‘I particularly welcome the breadth of the consultation, which provides an opportunity to consider corporate reporting holistically rather than addressing individual requirements in isolation. The timing is important, especially in the face of rapidly evolving technology.
‘If implemented successfully, the proposals could help IROs and their companies communicate more clearly, focus attention on material information and improve the overall accessibility of corporate reporting for investors.’
Some parts of the proposals have been met with more scrutiny, however, including one suggestion that remuneration reports may drop a requirement for annual shareholder votes to approve them, potentially rendering pay votes as advisory-only. Others have criticized a softer stance on enforcing in-person shareholder meetings.
‘We would like to see careful consideration given to how annual reporting fits within the wider corporate communications ecosystem, including digital reporting, sustainability disclosures and shareholder engagement,’ Hall adds. ‘The challenge is not just reporting less but reporting more effectively.’
