Rick Sellers, Director, Digital Strategy, offers his take on the digital reporting debate.
Digital reporting has been around for years. From full digital replications of the printed annual report through to ‘interactive PDFs’, from data taxonomies to interactive tools, trends have come and gone.
Most large listed companies have experimented in some way with it, but crucially it’s not mandatory, there’s no recognised standard of how to do it… and often it’s seen as a nice to have.
Investors’ digital experiences in so many areas of their daily lives are fundamentally changing their expectations from corporate reporting.
But no longer. Incoming regulations in Europe and beyond, coupled with changes in the expectations of key audiences, will see digital reporting – in some form or another – become a legal or reputational must.
Regulators and investors have started to use their convening power to stimulate a discussion that is not about software platforms and reporting protocols. Instead, their focus is on what is useful, and what is not.
In short, it is time to sit up and listen.
The Financial Reporting Council’s Lab has embarked on a project called Digital Future. Its aim, to seek out new reporting solutions; its approach, to park technology (at least initially) and instead put the needs of investors centre stage.
The Lab’s recent report, ‘Digital Future: A Framework for Digital Reporting’, sets out a series of characteristics that investors, companies and other stakeholders agree are essential for any digital solution to be successful.
“We hope that Digital Future will provide the practical impetus needed for corporate reporting to embrace the digital age.” - Thomas Toomse-Smith, Project Director, Financial Reporting Lab
The next phase of Digital Future involves an assessment of how technology might meet these needs.
More details on the Lab’s project, and how to get involved, may be found here.
But the Lab’s work is still to come to any actionable conclusion. So, what can a company do today to improve its digital reporting?
The Corporate Reporting Users’ Forum, a global network of professional analysts and investors, has recently issued ‘Digital Media and Reporting: How to Make It Work for Investors’. Its eight top tips focus on improving the usefulness of annual reporting today, including advice on how to ensure that pdfs are adequately searchable and a call for all data to be downloadable in iXBRL.
The CRUF’s Tips can be found here.
The relatively straightforward tips outlined by the CRUF are a good start, but are not the end of the story. Many companies already go well beyond these recommendations in their efforts to improve the usefulness of their reporting.
CEOs often claim that their companies are digital leaders. Digital corporate reporting provides management with an opportunity to showcase this expertise to their shareholders – the medium is the message.
At MerchantCantos we’re seeing trends such as:
- Offering choice. Different users have different needs. While professional investors may be content with numbers in a spreadsheet, others may prefer a more visual or interactive depiction of strategy and performance. Text, graphics, videos, interactive charts – understanding the needs and preferences of your most important stakeholders is Step One on the journey to truly effective digital corporate reporting.
- Breaking down silos. Traditionally, digital corporate reporting has been at best squirreled away in a corner of the company’s website, and more often in a completely different site altogether. More innovative companies are integrating content within the website and surfacing it across different channels. In this way, employees may better see how they fit into the business model, customers may more readily understand a company’s plans for a sustainable future, and shareholders gain greater comfort that the company’s stated strategy really is integrated into the DNA of the organisation.
- Making content work harder. Don’t wait for investors and other key stakeholders to happen upon your latest update. Social media helps companies to ‘amplify’ content to a targeted group of relevant people.
Making corporate reporting more cost-effective, useful and impactful has long been the ambition of MerchantCantos. With the FRC, the CRUF and others now focusing on the digital reporting debate, I sense that we are at a point of inflection.
It is time to examine your digital reporting strategy to make sure that your online presence gives the right signals to your stakeholders.
It is time to keep up to speed on the direction of the digital reporting debate – and where necessary, to try to help shape that debate.
To discuss digital reporting in greater depth, please contact Rick Sellers.