quality (street) corporate reporting in 2021
A chocolate-themed round up on the key issues in corporate governance for the coming year
Written by Tanya Gass, WOB Ambassador, Legal Trainer & Governance Consultant
As we approach the end of a clearly very challenging year for corporate reporting, you may be wondering what 2021 might bring.
Here is my selection from the Quality Street Corporate Reporting Box:
The Purpose One: The new UK FRC Code has brought corporate purpose to the fore, asking companies to demonstrate how purpose aligns with culture and strategy. Major global companies have put Purpose, People and Planet on their Annual Report front page - look no further than BP for a strong example of this.
Linked to Purpose, is the Green Triangle of ESG (Environmental, Social and Corporate Governance): new legislation (the SECR), the FRC and investors are pushing for more and better reporting of sustainability, and particularly climate, issues. Will the EU Taxonomy be a game-changer?
The Caramel Swirl: There is still pressure on companies to continue to move away from homogenous 'Milk Choc Block' boards and embrace the rich swirl of diversity - not only diversity of gender (33% achieved by the FTSE 100) but also ethnicity (Parker: “1 by 21”), background and other attributes. More broadly, culture goes hand in hand with board diversity. “Culture” is mentioned 44 times by the Code and accompanying Guidance, encouraging boards to promote ethical leadership and develop an appropriate culture to underpin purpose.
Executive remuneration deserves an impossibly chewy Toffee Penny: Remuneration Committees have been tasked with drawing up CEO/Employee pay ratios, exercising discretion over formulaic outcomes and bringing pension contribution rates into line with the wider workforce.
The Toffee Finger: the post-pandemic picture might be sweeter for some but not for others in 2021 – either way, also difficult to chew. Company reporting needs to tread some delicate lines with viability statements, executive remuneration, accepting taxpayer help, workforce voice and social projects. I'd use my finger to point to supermarkets returning Covid-19 business rates relief as a prime example of making higher profits easier to swallow.
The many-sided Orange Crunch represents Section 172 Statements and Stakeholder Engagement reporting: this chocolate is a bit ‘Marmite’ in my house and my view of the first year of reporting here is definitely in two camps. Top marks to Barratt Developments and National Grid for bringing these multi-faceted topics together in a way you have to love.
I can’t decide whether to allocate Brexit, the Fudge or, the one no one ever wants in my house, the Strawberry Delight… you decide. Either way, it looks like it's going to be left in the box until the very last minute.
And finally, the slightly ‘out there’ Coconut Éclair: the future of corporate reporting may look very different if the plans outlined in the FRC’s “bold” Discussion Paper published in October come to fruition.
>> Visit Tanya Gass Consulting to find out more about Tanya's corporate governance training.