The UK Government has just published the findings of last autumn’s public consultation on the Future of Narrative Reporting. In general, respondents were in favour of the proposals for allowing companies to separate out the strategic, headline information into a concise Strategic Report for all shareholders. The remaining information would become the Annual Director’s Statement published principally on company websites. There was little enthusiasm for making the system mandatory with the Department for Business Innovation and Science (BIS) confirming;
“We want to develop a format that is flexible enough to allow companies to tell an integrated story in their own words, starting with their business model and strategy, covering their performance and looking towards their future.”
In terms of the inclusion of non-financial information, the need to be material “to the extent necessary for an understanding of the business” was a reoccurring theme. That said, BIS notes;
“…the increasing interest from investors, consumers and wider society in the environmental and social impacts of business, and believe this should encourage businesses to include these impacts in core business planning.”
Of all the non-financial issues the strongest response was for including information about the proportion of women on boards and in companies in line with Lord Davies’s (separate) recommendations.
The majority of responses preferred high-level principles-based guidance with best practices and case studies. However, many believed greater guidance including the advice on materiality would be needed on non-financial aspects and for developing strategic frameworks, business models or identifying key risks. The next step for BIS is to work with the Financial Reporting Council and other industry representatives. Draft guidelines could be possible this autumn.
The full 26 page document can be downloaded from: