Future Trends: What Would Investors Like to See?

ACCA/Eursif survey shows clear call for integrated reporting
Future Trends: What Would Investors Like to See?
Publ. date 26 Aug 2013
Investors are calling for clearer, more comparable and more integrated non-financial reporting and greater accountability from company boards, according to a new survey. The study, conducted by the Association of Chartered Certified Accountants (ACCA) and the European Sustainable Investment Forum (Eurosif), asked investors to evaluate the non-financial reporting practices of European companies.

Call for clarity and comparability

The majority of investors expressed a belief that in order for non-financial information to be useful, it must be comparable across companies. Most respondents felt they are currently not able to sufficiently compare non-financial reporting and agreed that non-financial information should be better integrated with financial information.

The key findings among the investors were as follows:

  • 89% agreed that reporting should be more forward-looking in addition to providing information on past performance
  • 93% disagreed that current levels of non-financial disclosure are sufficient to assess materiality
  • 84% disagreed that companies make it clear how they identify material non-financial issues
  • 92% disagreed that company boards are sufficiently accountable for non-financial disclosure
  • 92% agreed that financial and non-financial information should be more integrated

Framework for non-financial reporting

When it came to the question of which topics non-financial reports should cover, 66% of respondents agreed with the European Commission's proposal to cover at a minimum environmental, social/employee, human rights and anti-corruption issues. Furthermore, while it was acknowledged that there are a number of non-financial reporting frameworks in use at present, most of the investors surveyed agreed that established standardized reporting frameworks should be used by companies.

Increasing the reporting pool

The European Commission’s proposal states that all large companies (both listed and private) should be subject to the disclosure requirements on a consolidated basis, with large companies defined as those with:

  • over 500 employees
  • a balance sheet exceeding EUR 20 million, or
  • revenue exceeding EUR 40 million.

According to European Commission figures, the proposal will increase the number of companies producing non-financial reports from 2,500 to 18,000 out of a total population of 42,000 large companies in the EU.

 Source: Global Reporting Initiative

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