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THE BATTLE FOR

ANNUAL REPORTING
Audiences, content and channels
The changing face of the annual report
A war of perspectives

A battle has been brewing in the most


unlikely of places: annual reporting.
We’ve seen it play out in client
meeting rooms. Conference hall
floors. Social media. Even in our
own corridors. That battle?
For the future of the annual report
itself. What should it be? What should
it look like? Who is it for?

The battle for annual reporting 2


Polarised perspectives Some hold the view that the report
has been – and should stay –
But over the last decade we’ve
seen the rise of other reporting
primarily a tool for investors. They motivations. Responding to
make the argument that reporting increased corporate scrutiny, rising
should focus on bringing rigour to a stakeholder expectations and
transparent equity story told clearly consumer activism, communications
to shareholders and analysts. This is teams have increasingly had a hand
critical: collectively, reporting makes in the process.
an essential contribution to the They’ve advocated for reporting
“ efficient functioning of markets. to step beyond the niche through
The appearance of the European more powerful storytelling and
Reporting? It’s not Single Electronic Format (ESEF) on content that works for all audiences.
a marketing brochure. the horizon has only fuelled this They’ve pushed for consistency
perspective. Elsewhere, the likes of across the broader corporate
It’s about conveying Unilever and Aviva have thrown out communications mix.
the numbers. the entire notion of the more We continue to see – and take part
communicative, designed report, in – a robust debate between these
publishing instead little more than a two points of view week-in, week-
machine-readable Word document or out. And it polarises perspectives
black-and-white PDF. within our clients’ businesses too: we
frequently take conflicting briefs from
different parts of the same business.
“ So we came to ask ourselves this:
is one perspective ‘right’? What is
It’s not just investors reporting’s true value today?
reading our reports
anymore. We’ve got to
tell a deeper, smarter,
more cohesive story
that stretches way
beyond the numbers.

The battle for annual reporting 3


A new level of insight

We had our own hunch, but wanted Who really reads annual reporting?
to put it to the test. We did it through Why, and how? What do they want
ultra-in-depth research among the from it? The answers to these
people who matter most: the people questions stand to shape the future
who read annual reports. of the discipline: and for the first
time, we have them.

We surveyed the perspectives of: To further investigate annual reporting sentiment Keep reading for more on:
we undertook targeted, in-depth interviews with:

Reporting’s true audiences –

660 350 18 13 and their expectations


Page 5

‘informed business senior analysts and The emerging battleground:


what side are you on?
citizens’ leaders managers investors Page 19

members of the public including 195 involved in report tracking FTSE 350 What the future holds
attuned to current c-suite leaders. preparation from a and EURO 500 Page 26
affairs, the world of range of perspectives companies.
business and reporting. and sectors.

The battle for annual reporting 4


REPORTING’S
TRUE AUDIENCES

The battle for annual reporting 5


On the surface, the status quo remains

As we thumbed through the first


pages of our research, the findings
seemed to reinforce the idea that
reporting should focus squarely on
investor audiences.

43%
retail investors are the

But from
most likely audience to
pick up an annual report

6.3 reports
institutional investors track
more reports at any one time
than any other audience type there the
#
1
regardless of who is reading story changed
dramatically…
a report, consuming
financial information is the
number one priority

The battle for annual reporting 6


Reporting audiences
are more diverse, complex
and engaged than we
previously imagined.

The battle for annual reporting 7


Reporting audiences are… Imagine a ‘typical’ annual report
reader, and you’d most naturally
envisage an investor or analyst

Diverse
poring over a company’s financials.
The reality is very different. A range
of audiences engage with reports,
motivated by a variety of factors.
Nearly half identify as either the past,
present or potential future employee
48% of a company they’re reading about.
of report readers identify More than a quarter have one eye on
as current, potential or a company as a customer of its
past employees products or services.
And, most critically, the vast majority
27 % of readers (88 per cent) have interest
in content that stretches way beyond
identify as customers
the financial numbers.

6%
identify as institutional investors

The battle for annual reporting 8


Reporting audiences are… Readers don’t consume reports in a
binary way. When someone reads
your report, they’re typically

Complex
analysing your content from two or
three perspectives at any one time.
Retail investors commonly have a
‘customer’ hat on, for example.
Our research reveals that customers
are an increasingly common audience
2–3 for reporting. It’s a go-to source of
the number of reading motivations information for those who want a
for each report reader deeper understanding about the
behaviours and impacts of the
companies that make the products
and services they consume.
Critically, investment is rarely a
secondary motivation for these
people – lower average incomes
indicate that their interest revolves
around broader themes such as social
impact and long-term strategy.

The battle for annual reporting 9


Reporting audiences are… Reporting’s audiences are engaged.
Very engaged.
76 per cent of those reading reports

Engaged
with the view to better understanding
a potential employer consume
content at least once a month. For
customer audiences, that figure is as
high as 63 per cent. Elsewhere, over
half of senior business leaders review

5 reporting at least once a week.


Audiences across the board consume
the number of reports tracked by
an impressive array of reports too,
potential employees
tracking an average of 4-5 reports at
any one time.
4.5 Regardless of who reads a report, it
the number tracked by customers isn’t a trivial act. All audiences rate
reporting as their most trusted source
of information and they consider it
#
2 the second most important when
Report is the second most forming an opinion about a company
commonly used information (after the general media).
source when forming an opinion
of a company

#
1
the most trusted source

61%
of ‘engaged citizens’ review annual
reporting at least once a month

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This golden opportunity
to engage wider audiences
can’t be missed

There’s a but.
These headline numbers emphatically
show that report audiences are far
from one-dimensional. They’re diverse
and turning to reporting as a vital

Are reporters
source of information for a wide range
of motivations.

There’s a golden opportunity to


engage them all, delivering the

taking advantage
information they’re looking for either
through a single report or a smartly
designed ecosystem of content.

of this opportunity?

The battle for annual reporting 11


Audiences are The ever-widening gap
currently underserved

Far from taking advantage of the Who audiences feel Reporting’s real
opportunity, reporters adopting a reports are really audience
‘one size fits all’ approach risk leaving aimed at (ranked)… motivations…
important stakeholders underserved.
This point isn’t lost on readers –
particularly customers and employees
1. Investors
48%
– who, despite making up a high identify as
2. Regulators
proportion of the corporate reporting employees
audience, simply feel reports aren’t
aimed at them.
3. Government
43%
identify as
Asked who they feel reporters’ 4. Customers retail investors
priority audiences are, the majority of
our research participants felt investor,
regulator and government audiences
5. Suppliers 27%
identify as
are considered more important than 6. Current employees customers
customers, while the need to talk to
suppliers trumps even employee
communication.
7. NGOs 6%
identify as
All this adds up to two ever-widening 8. Potential employees institutional investors
communications gaps: between
reporters’ intended and actual
audiences; and between what
audiences expect and what they’re
being served up.

The battle for annual reporting 12


“Reporting’s diverse audiences
are leaning in, but feel
underserved. They’re left
in no doubt: reports aren’t
aimed at them.
Louise Ayling
Stakeholder
Engagement Director,
Radley Yeldar

The battle for annual reporting 13


Worse still, reporters Our research revealed
actively talk past a major mismatch:
their audiences

Our research reveals a major Comparing what audiences find What audiences find What audiences think is
mismatch between what reporters most interesting with what they most interesting… well communicated…
are prioritising and what audiences think is well communicated
want to see in a report. revealed a worrying shortfall in
This mismatch is borne out in today’s reporting. They place
significant importance on non-
1 Financial Financial
audiences’ perceptions of why
financial information – and this is information performance
organisations report in the first
information they think is
place. In all their diversity,
communicated badly.
2 Company Information on
audiences overwhelmingly think strategy products and brands
the two main motivations driving
companies’ reporting are to comply 3 Non-financial Company
with the law and to provide performance strategy
financial information. Other
motivations for reporting, such as 4 Key CEO
communicating the company’s trends perspective
strategy and long-term vision, rank
much lower, despite being of most 5 Long-term Long-term
interest to reporting audiences. vision vision

The battle for annual reporting 14


When we looked at how well Very few of the people we
organisations communicate spoke to think these aspects
this critical non-financial are well communicated:
information in existing annual
reports, the picture became
more alarming.

Non-financial performance
33%
Culture, purpose and values
31%
Sustainability approach and performance
29%
Remuneration and executive pay
28%
Diversity and inclusion
23%
Climate-related information
20%
Gender pay gap
14%
The battle for annual reporting 15
Failing to communicate well on these New generation,
issues also falls short of what our new priorities?
research shows us businesses need to Financial performance is much less of
do to conjure ‘belief’ and turn a dominant driver for millennials
reading reports than it is for gen X
customers into fans, stakeholders into and baby boomers. For this younger
audience, a company’s long-term
advocates and employees into partners. vision comes a very close second
when it comes to content preferences
– and, in a major departure from
other audience groups, company
story and the gender pay gap come
What would cause you to third and fourth respectively.

believe more in a company?

Leave behind a better society Being a good employer

51% 69%
Greater focus on diversity Inspiring purpose and values
and inclusion issues
40% 41%
Increasing sustainable communities Being a good corporate citizen

55% 41%
The battle for annual reporting 16
The monolithic annual Which format do you
report doesn’t serve the prefer to engage with
dip-in dip-out reader companies’ reporting?

We looked beyond the content


reporting audiences want to
consume, considering how they
want to consume it, too.

33 %
66 %
Does the current format of annual
reporting serve this emerging set
of diverse audiences and their
particular interests? Despite the
prefer a printed copy prefer a digital
explosion of new reporting channels
such as standalone microsites, (although interviews with format with an even
machine-readable documents, film investors and analysts show split between PDF
and online formats, reporters are this is in decline) and web-based
overwhelmingly sticking with the
tried-and-tested printed report or
downloadable PDF.

The battle for annual reporting 17


We also found that, perhaps We discovered:
unsurprisingly, it’s rare for
readers to read a report
cover-to-cover.

12 %
19 %
One thing is clear: reporters need An annual report is a single-source-
to rethink how to engage the light of-truth, scrutinised and signed off
touch reader. by a business’ most senior leaders.
Containing a wealth of information read the full read selected
Annual reports must be accessible
about everything from financials report in detail content in-depth
to a very multi-dimensional set
of audiences who want to dip in to corporate vision, employee

25 %
12 %
and out of key sections and easily diversity and the business model,
navigate to specific content of it’s the perfect platform from
interest to them. This means: which to repurpose content for
use across other channels. skim read the look only at
re-imagining the core document as full report the financials
a much more navigable experience For the many stakeholders we

20 %
10 %
that allows for non-linear reading; talked to, the days of a single
and being smarter about repurposing report, aimed at all audiences,
content in different channels for is over. A more ecosystem-led
specific audiences. approach to reporting, grounded read only the read just the data,
Elsewhere people see the report as a in the main document but further key headlines charts and graphics
foundational, springboard document. communicated across multiple
channels and tailored to various
audience needs, is seen as the
way forward. And it maximises
the value of the reporting
investment, too.

The battle for annual reporting 18


As the battle brews,
what side are you on?

PERFORMANCE PURPOSE
NUMBERS NARRATIVE
SHORT-TERM SUSTAINABILITY

The battle for annual reporting 19



Purpose and values
can’t be sold on a
piece of paper

Investor Relations Director

PERFORMANCE PURPOSE

Reporting on purpose is
vital. Investors need to
be comfortable with the
culture of the company

Head of Investor Relations

The battle for annual reporting 20


Performance v purpose

The state of play Conflicting perspectives


A company’s purpose is a core Reporting played its part in raising It’s concerning to see that despite Audiences are already demanding
belief, cause or inspiring reason the profile of purpose and getting it regulatory pressure, purpose change, however 81 per cent of
that explains why it exists and does on the agenda of the C-suite, but information in reporting is ranked survey respondents think a company
what it does. It is more than just a recent changes have seen it rise as one of the areas most poorly should be completely transparent
statement. It’s a living, breathing further up the reporting agenda. communicated (13th of 20 topics). about its purpose. 79 per cent
part of a company’s brand, values The new Corporate Governance Information about financial think it’s essential that companies
and culture. Code and Guidance on the Strategic performance still reigns. But it’s articulate their purpose within
Purpose has been on the radar of Report requires companies to not early days. Will continued their reporting.
business for a while now, with the only disclose their purpose, but to momentum from the regulatory So, in the battle between purpose
likes of Unilever, Lloyds Banking also show the extent to which space drive further improvements? and performance, who wins?
Group and Royal Philips topping senior leaders are walking the talk. Our research shows it’s a draw.
Radley Yeldar’s Fit for Purpose index. They also require evidence of the From a theoretical perspective,
policies and processes that make sure purpose and performance are
it’s more than words on a page: that totally intertwined, although it’s
it’s in fact lived and breathed clear that companies’ reporting on
throughout the organisation. purpose still have a long way to go
before this is reflected in practice.

56 %
73
%
of respondents are more interested in a believe a clear purpose is
company’s performance than its purpose essential to strong performance

The battle for annual reporting 21



The only way people
can get an idea of a
company’s culture,
people, why we do
business and the way
we do it, is through
the narrative that we tell

Head of Communications
and Marketing

NUMBERS NARRATIVE

Just give me the
damn numbers

Investor

The battle for annual reporting 22


Numbers v narrative

The state of play Conflicting perspectives


What is a narrative? A report narrative Institutional investors, who have and future outlook. Companies that
provides contextual information, such direct access to the company through take a narrow, tick-box approach
as industry trends, the competitive Q&As, investor presentations and to reporting, without a thoughtful
and geographical context or changes face-to-face meetings, have a slightly narrative, risk missing an invaluable Financial information is
in legislation. It explains the data and different relationship with the annual opportunity to reflect their the most sought-after
performance and conveys the report than other audiences. They organisation’s unique personality information to
company’s story. But developing a rely less on reporting narratives and its perspective on the world
all audiences
credible narrative can be tricky. It to explain performance (though in which it operates.
must be balanced, explaining both narrative is by no means irrelevant).
So, is it numbers or narrative?
the good and the bad, the challenges To them, the report is a reference
The importance of numbers is
and opportunities. point that complements many other
beyond doubt. They’re demanded
It must be easy to understand. And information touchpoints. When
by regulators and are also the
it must reflect the company’s story institutional investors particularly
number one priority for all audiences.
and brand personality. At the same value narrative they do so especially
When it comes to narrative there
time, reports are audited and subject for the context it provides around
are clear nuances from audience
to increasing scrutiny: a narrative risk and company direction.
to audience, but on the whole all
should be realistic and cognisant of In contrast, broader audiences groups are fairly unanimous on its
business problems. such as retail investors, employees merit. The challenge for reporters is
Just 12 per cent read
On top of all that, good reporting and customers all value reporting how to craft and weight a narrative only the financials.
narrative requires agreement from narratives to provide context, to meet a diverse range of needs. A huge 70 per cent think
all stakeholders involved in report explain performance and give a narrative is critical
development – no easy feat. flavour of the company’s culture to contextualise data
and performance

The battle for annual reporting 23



I care about financials.
I don’t read non-financial
information, ever.

Equities Research Analyst

SHORT-TERM SUSTAINABLE

It has swung 180 degrees. We’re
now fielding inbound questions
on sustainability from investors.

Director of Financial Reporting


and Investor Relations

The battle for annual reporting 24


Short-term v sustainable

The state of play the game-changing Taskforce on from investors and analysts about
“ Sustainability is no longer a nice-to-
Climate-related Financial Disclosure sustainability and non-financial
(TCFD). While some of these are related topics.
Companies know what we have in business, reduced to
currently voluntary, they’re becoming
want to hear. They’re all employee volunteering, office Broader audiences’ attitudes towards
increasingly mainstream and expected.
saying the bloody same thing recycling and the installation of solar sustainability are changing too.
panels. It’s a business imperative, Conflicting perspectives People expect businesses to act with
Equities Research Analyst
upon which the future success of any credibility and integrity, and they’re
company will ultimately rely. Across The long-term business case for
increasingly turning to reporting to
any industry, sector or geography, sustainability is solid, but despite
access sustainability information to
business must demonstrate increasing regulation and guidance,
inform their decisions.
responsible practices across the entire companies’ reporting remains
value chain, from climate change and inadequate. The balance between But, as we saw on page 15 and
energy efficiency through to human sustainability and the financials despite a rapid increase in interest
rights, diversity and inclusion, and is still to be found. around non-financial issues,
everything in between. audiences feel reporting on this
Analysts and investors we talked to
information under-delivers.
Reporting regulation is helping to revealed growing recognition of the
bring about change. While many rise of ESG and responsible investing Companies themselves don’t
“ companies produce standalone
sustainability reporting in a range of
in the wider investment community.
However, they themselves were
disagree. The internal stakeholders
we interviewed acknowledged
We haven’t really told our primarily interested in shareholder significant room for improvement
formats, there are numerous
sustainability story desperately returns and the financial health of in their own reporting on
well or in vast amounts of detail, requirements for the inclusion of
non-financial information within the company. Sustainability was sustainability topics. They
partly because we’re still working
annual reports, too. The EU Non- considered a risk-mitigation exercise recognised a need to strengthen
out what that story is and trying
to come up with a narrative financial Reporting Directive, or hygiene factor at best, and a PR or the business case for sustainability
around that. That is something Guidance on the Strategic Report, tick-box exercise at its worst. within their reporting, and to make
that I think we certainly need to and The Companies (Miscellaneous their own sustainability story more
Interestingly, internal reporting
expand on for next year. Reporting) Regulation 2018 all require relevant, beyond standard disclosures
stakeholders are noticing a broader
sustainability-related disclosures. At and boilerplate information.
Communications Director
shift in the form of a significant
RY, we’re particularly excited about increase in inbound enquiries

The battle for annual reporting 25


SO, WHAT DOES
THE FUTURE HOLD?

The battle for annual reporting 26


Our four principles for better reporting

1.
Our research clearly suggests They have specific demands, and Based on what we’ve discovered
reporting audiences are more diverse, there’s currently a gap between the about reporting’s audiences – new
complex and engaged than we’d information they want, and what and old – we’ve come up with four
previously imagined. But in terms of they’re being delivered. principles for better reporting. Identify your
precisely who you engage with which
specific piece of content, there’s no
Reporting is overdue a significant audiences
shift in mindset: it needs to be seen

2.
‘right answer’. One size does not fit by the organisation as a whole as a
all. What’s right for one company valuable and integral part of the
won’t be right for another. wider communications mix and it
But it’s clear that reporting just one needs to get more audience-centric. Understand the role
perspective, aimed at just one group Many organisations are well on the
risks missing a valuable opportunity. road with these changes, but it’s a
of your report in the
Even the traditional audience of long journey – and has to start from broader ecosystem
institutional investors are starting to the top-down.
seek broader context and more
meaning behind the numbers.
Beyond this group a much wider
range of audiences are looking to
So. How can this shift in mindset
take place? How can organisations
find the confidence to produce better
3.
Tailor your
reports powered by better, more
reporting to help them form opinions audience-centric content? narrative
of your company.

4.
Set your
parameters early

The battle for annual reporting 27


Our four Principle one
Identify your audiences

principles Why?
Without first understanding your
audience, it’s impossible to make sure
How?
Ask yourself the following:

for better
Who are your main audiences
your reporting will resonate with the
(primary and secondary) for your
people you want to reach, and those
reporting?
who want to read it. It’s easy to
assume you know your audiences. What do you want to leave your

reporting
After all, you’ve probably been audiences with as a result of your
reporting for years. But as this reporting? Map specific messages
research shows, audiences are against specific groups.
multi-dimensional, and reporting
is currently talking past them. Better still, ask your colleagues from
different business functions of your
To what extent is your annual report business to consider these questions
geared towards your employees? – or ask the audiences themselves.
Spending time upfront in the
reporting process to really consider
your audiences can make all the
difference. It’ll ensure you’re focusing
your resources, time and money on
an approach that’ll maximise value,
and could unlock an opportunity for
broader engagement.

The battle for annual reporting 28


Principle two Principle three
Understand the role of your Tailor your narrative
report in the broader ecosystem

Why? How? Why? How?


The research shows that annual Once you’ve identified and The research reinforced the role Develop an overarching theme
reporting is considered the most understood your audiences’ of a clear and engaging narrative for your report that reflects the
trusted source of information about a preferences, as well as the key that puts data and information key messages you want to convey
company. Unfortunately, it isn’t used points you want to convey, think into context. It’s indispensable for while remaining authentic to your
to its full potential. It’s a no-brainer about how best to ensure your explaining your performance and the business ambition, direction, and
then, to hold onto the trust of this content resonates. What channels reasons for certain trends. And in a challenges. Weave your theme
moment-in-time document by do you already use? Which ones sea of sameness, driven by increasing through your report using design
repurposing its content across a could you use? And which ones do regulation and prescriptive approaches and key messages.
broader ecosystem of channels, your audiences use? to reporting, a narrative can help inject The narrative itself should be
aimed at different audiences. Think about the role of certain your brand’s personality and convey informative and balanced,
types of content, and where it your culture and values. It can act as compelling and easy to understand.
could best fulfil its potential. Be the glue that holds your reporting It’s something you can dial-up and
comfortable with different pieces communications together. down to suit different audiences,
of communications doing different across any channel. Done well, it
jobs, and think about how to join it should mean that anyone entering
all up, with a cohesive theme and your reporting, at any point, through
narrative. Consider your report’s any format, gets a feel for the ethos
UX: how can each reader have a of your business and a balanced
seamless experience? view of the progress you’ve made.
Don’t forget to monitor the level of
engagement across each channel,
to measure its success and inform
future communications decisions.

The battle for annual reporting 29


Principle four
Set project parameters early
Why? How?
Internal stakeholders we interviewed These conversations aren’t Embedding change isn’t Consider:
enthused not just about the always straightforward, however. straightforward. It takes tough
Setting the parameters for the
potential of the report to produce Traditionally, reporting teams conversations, hard decisions and
project early. Reach a consensus
valuable content, but also its power and processes were built first investment – to say nothing of a
with your full range of senior
as an internal management tool. and foremost to deliver these willingness to challenge the status
stakeholders about what the
To them (and our clients more gargantuan projects with unparalleled quo. Thankfully, a shift towards
organisation expects from reporting
generally) it is a tool that can attention to detail on time and on reporting more closely oriented
in the short and longer-term and
galvanise stakeholders around budget. Today many reporters – around your most important
set KPIs against related measures.
strategy, spark decision-making on working on the same foundations – audiences – whoever they are –
key issues and offer a yardstick for are wrestling with siloed teams and doesn’t need to happen overnight: Recruiting a core delivery group
measuring performance. Internal thinking, juggling the need to you can evolve at a pace that suits to support you in achieving these
conversations inspired by the very bring content owners together you and your business. goals. We suggest aligning them
act of producing an annual report with the tightest of deadlines. However fast you choose to to audience types rather than
are worth their weight in gold. In this context cohesive, narrative-led change, think carefully about along departmental lines.
reporting across a range of channels bringing peers and colleagues Analysing past reporting processes
is difficult and time-consuming. on the journey with you through in detail. Where are the bottlenecks?
The solution? Re-engineering the a process built for the job. Do collaborative ‘moments’ happen
process to empower the kind of at the right time? Does it help or
joined-up, collaborative thinking hinder opportunities for a joined-up
that can empower more expansive, narrative?
targeted reporting.
Run a ‘cracker’ workshop with
your core stakeholders early, using
it to set the key guardrails for
reporting (from your approach to
emerging regulations to design
and tone of voice).

The battle for annual reporting 30


Identifying audiences?
Crafting a narrative?
Wrestling with regulation?
Improving engagement?

The battle for the future of reporting Get in touch with us if you’d like to Radley Yeldar is an award-winning
continues, and we’d love to help you talk through our research findings, independent, creative consultancy
work out where your business stands. how they relate to your business and with offices in London and
No organisation is the same, after all. your true audiences in more detail. Birmingham.
No set of audiences is, either. We’d love to talk. Our one-of-a-kind blend of integrated
hello@ry.com expertise in corporate reporting
+44 (0)20 7033 0700 and communications, investor
engagement, brand, sustainability,
ry.com employee experience, corporate
websites, campaigns and film can
help develop the right reporting
approach for you.

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