Single or multiple reports?
Should your annual report be one comprehensive document or a suite of documents? It’s been a hot debate for years. But the argument for the single document is being sorely tested by the arrival of TCFD and Modern Slavery. Most companies are now treating these as separate, online-only disclosure pieces.
How far do you go? For larger corporates with more sustainability data to disclose, or for those in more sensitive industries, separation of sustainability/ESG is making a lot more sense. It enables you to tailor information, style and tone of voice to different stakeholder needs. It keeps page count down and it enables the detailed sustainability report to be online only which increases integrity.
How many documents in an annual reporting suite is too many?
An annual or integrated report is a multi-stakeholder document. It needs to appeal to broad range of audiences: your employees, prospective employees, customers seeking to reassure themselves of your ethics, regulators, environmental guardians – as well as investors. It’s a lay person’s document - a broad corporate statement of your total story, what you stand for, what’s important to you, how you're facing today’s many challenges, how you’re creating value. Once your report consciously becomes that storytelling piece, your key messages can become lost if the vast majority of the page count is devoted to complex and arcane financial and sustainability tables. It’s easy for a reader to be put off.
Enough. Let’s separate. But there are constraints.
Our advice to most clients who have strong brand and strategy stories to tell, has until recently been to split their financial statements into a separate document. However, edicts from the NZX and FMA have latterly instructed companies to keep the financials incorporated into the core report. They no doubt have their reasons, but to our mind, from a clarity of communication perspective, it is a retrograde step.
What also makes sense for some companies, is separation of Sustainability and ESG policies, strategies and performance. This thinking applies mostly if you are of a scale or in a sector that requires great depth of environmental, social and governance content and data.
But as you prepare your content outline, differentiate between detailed data (for the dedicated sustainability report) and the strategic sustainability story arc which still has an important role in your lead annual/integrated report.
Keep in mind that page count will increase rapidly the more information you incorporate into your core report. Sadly, that’s a fact of life with the new instructions from NXZ/FMA. But please don’t sacrifice the effectiveness of strong corporate storytelling in the front part of your report because of page count pressure. Digital delivery mitigates the bloated page count effect very successfully.
Be guided by key principles.
The aim of an integrated report is to explain the factors that affect your ability to create value over time for all your stakeholders. Sometimes less detailed information allows the core story to become more apparent. Less is more.
There is no right or wrong here. Make your own judgement. Every company's situation is different, with varying dynamics at play.
While a suite of documents makes sense in this multiple disclosure environment, beware of over-fragmentation, which can make things too difficult for audiences. Our recommendation is:
an integrated mainstream report that broadly covers the key narrative in a carefully crafted and accessible format. Including your key sustainability thinking. Plus the financials. Audience: Employees, prospective employees, customers, regulators, environmental guardians – as well as investors (retail and institutional), market analysts and commentators, and financially literate investors;
a detailed ESG Report with data on environmental sustainability, social and community impacts; employee statistics and initiatives; your climate disclosures report; your modern slavery disclosures etc. A catchall data repository and reference document. Audience: specialist, analysts, regulators.
Tip: the more separate documents you have in your reporting suite, the greater visible effort you need to signal, and link to, the companion documents.
Like most reporting guidance, the needs of every company and its stakeholders vary enormously and so does the reporting solution. The above is designed to help you find the right configuration for your company’s needs. For example, many companies will elect to make the sustainability/ESG portion a chapter within the annual report.
To sum up: Establish a clear view on your audiences, their respective needs and what your document suite components look like, then move on to your content and the best ways to serve up your information to your audiences. We cover that topic in Article 4.
Let’s navigate your reporting requirements together.