As part of their three year Productivity Action Plan, key concerns were raised by members on the information provided in corporate reporting around long-term value drivers. Using this report they look to address some of the key areas that concern investors and provide a list of recommendations that are targeted at creating transparent reporting.
Areas for improvement
The key areas for improvement centre around the transparency of information. Members want to be able to know how well a company can present a return on capital invested and that companies understand how their utilisation of capital, and their decision making process can have a ‘significant impact on its long-term profitability and success’.
Members explained that they are looking for ‘clear, relevant, timely, related closely to the needs of users and directed to sustainable long-term value creation performance reporting’. They are also looking to support companies who provide ‘well articulated and reasoned investments that lead to productivity improvements and increased shareholder returns over the longer term’.
Not only are members looking at financials and planning, they are looking at the role of boards within the companies and how they are able to impact culture. One of the main areas of transition now, according to members, is for companies to break away from quarterly reporting and short term mindsets.
The full report can be found on the IA's website and the overseeing of the implementation of their guidance will be monitored by the IA’s Institutional Voting Service (IVIS). IVIS will review reports with year ends that are on or after September 2017 and provide analysis outlining areas of concern.
If you’re looking for guidance on how to implement transparent, articulate reporting, talk to our team about how we can help.