The future of corporate reportingStay ahead of the curve
The corporate reporting landscape is changing fast. What does the corporate reporting future look like? We distinct four important trends:
1. The corporate report of the future is digital
There are two main reasons why organizations increasingly report digitally: Because they want to and because they have to.
Why organizations want to report digital
Organizations want to report digitally because it fulfills a need of their stakeholders. They want corporate online information to be easily accessible and searchable. Downloading a pdf also still fulfills a need, but the need for a printed corporate report is rapidly declining. This emerges from the research report ‘Reporting matters 2020’ on the status of corporate sustainability reporting, by the World Business Council for Sustainable Development (WBCSD). One of the key findings in the report is that ’The future is digital’: ‘15% of the (158) reports reviewed provide a digital-first experience; 81% of members with an offline-first approach produce complementary online content, up from 44% in 2017.’
Why organizations have to report digitally
From the reporting year 2021 onwards, public companies in the EU have to comply with the ESEF mandate. ESEF is short for the European Single Electronic Format, a new and mandatory digital format for annual reports. ESEF makes annual reports more accessible and facilitates the analysis and comparability of these documents. To comply with ESEF, annual reports must be prepared in InlineXBRL (often abbreviated to iXBRL). It is a combination of HTML and XBRL which creates a digital annual report that is both ‘human readable’ and ‘machine readable’.
From the reporting year 2023 all large companies are also required to 'tag' their reported sustainability information in accordance with the ESEF Regulation.
2. The corporate report of the future is impactful
Corporate annual reports no longer just look back financially. They also look forward from a strategic perspective and describe an organization’s environmental and social impact. Like digitization, this trend is also driven by stakeholder needs and legislation.
A result of the changing needs of both stakeholders and shareholders is for example the rise of Integrated reporting (IR), a framework for corporate reporting, in which corporate financial and sustainability information are integrated into one report. An integrated report tells a story of how an organization's strategy, governance, performance and prospects lead to the creation of value over the short, medium and long term.
An example of policy that leads to more reporting about impact is the EU’s Corporate Sustainability Reporting Directive (CSRD), which directs organizations to be transparent about the social and environmental impact of their activities.
3. The corporate report of the future is tagged
A disadvantage of corporate reports is that they are not easily comparable, because that data is not saved in a standardized or structured format. To improve the accessibility and comparability of data from corporate reports, taxonomies are developed that meet with uniform agreements on data. An example of this is the ESEF taxonomy for financial data. As mentioned before, from 2023 onwards reporting of non-financial data in ESEF format will also become mandatory. Outside Europe other taxonomies for corporate reporting are also (becoming) mandatory.
4. The corporate report of the future is continuous
Publishing an annual report is basically publishing old news. A lot of the information in an annual report has already lost its relevance to stakeholders at the moment of publishing. For that reason, more and more organizations publish updates on strategy and performance more regularly. For example, in the form of a monthly updated non-financial KPI dashboard or in the form of impact stories. Continuous reporting platforms of organizations that apply this way of reporting, increase the number of visitors because the information is much more relevant to their stakeholders.
A successful example of a continuous reporting platform is the online reporting platform of the BOM. On this platform not only annual plans and annual reports are published, but also a regularly updated KPI-dashboard and an impact stories section. Since the introduction of continuous reporting the number of visitors of the reporting platform has increased tenfold.