How will your corporate reporting change to balance all stakeholders’ needs?

Our changing world is increasing demand on companies to deliver value for a broader stakeholder group – and corporate reporting needs to keep pace.

We are living at a time when business failure – be it financial, ethical or societal – is making news headlines.

Driven by a number of global megatrends, business is expected to recognise its broader societal contribution and its responsibility to a wide stakeholder group.

To do so – and rebuild trust – organisations must ensure alignment of their governance, stewardship and corporate reporting, balancing the needs of all their stakeholders.

Hywel Ball, EY UK&I Assurance Managing Partner and Head of UK Audit, recently delivered his thoughts at the Financial Reporting Outlook Conference about how better governance and a greater focus on long-term value can create a more stable business environment.

Click the video below for more.

Global megatrends

Over the past few years, the world has seen the emergence of four indisputable and enduring megatrends, touching every business, regardless of sector, size or jurisdiction:

1. The rise in stakeholder capitalism
   
2. Geopolitical shifts
3. The fourth industrial revolution
4. Enhanced governance and stewardship.

These megatrends collectively shape the environment in which businesses operate and in which disruption is occurring. They represent a business’s core risks and its greatest opportunities.

It is no longer enough for companies to simply report on their performance using financial measures alone. A wider group of stakeholders is expecting them to better demonstrate the consumer, human and societal (as well as financial) value they deliver, and detail how they identify and measure their non-financial assets which influence long-term sustainable value.

With this wider group of stakeholders also demanding greater transparency, the boundaries of reporting and disclosure are shifting. At the same time, regulators, recognising the need for companies to do more, are introducing new transparency requirements across both financial and (increasingly) non-financial performance indicators.

Hear Paul Druckman’s thoughts on corporate reporting going into 2020 in this podcast with Loree Gourley.

Businesses and their regulators are starting to respond to this demand for transparency in their corporate reporting – because it is key to telling their value-creation story to investors and providing the information they are increasingly asking for. Critically, it is also key to earning the trust of a wider group of other stakeholders, including society.

Yet despite this, many companies are yet to identify what they should be measuring, and lack the systems and processes to do so.

What does this mean for you?

Companies need to better identify, measure and report on intangibles such as culture, innovation and environmental impact, which form the foundation to rebuilding trust with this wider stakeholder group; only if reporting comes together in a cohesive story will trust be built and value fully recognised.

The challenge is that many businesses haven’t identified what non-financial aspects they need to track and report against. They are not measuring what needs to be measured: all the non-financial measures which help stakeholders get a good picture of the value they add.

The question business leaders should ask is: What can you do in your organisation to rebuild stakeholder trust?