VISION AND LEADERSHIP This section analyses how management are featured in the Annual Report. Effective leadership is often seen as a vital element of the success of a company, so it is through these sections that it is possible to convey to the reader the company’s behaviours and attitudes. GOVERNANCE Companies broadening corporate vision The majority of FTSE 100 companies make clear statements about their overall vision or goal – what the company aims to achieve. Yet few give a clear indication of how progress towards achieving this ultimate goal will be monitored and measured by management. Figure 1.1 Figure 1.2 Figure 1.3 MARKET TRENDS AND OUTLOOK To whom does the company make a specific commitment? How many Chairmen or CEO statements set up strategic themes? 78% 69% 81% BUSINESS DESCRIPTION Companies making a clear statement of overall vision: 86% There is a growing demand for companies to report in a meaningful way to all their stakeholders. Historically, companies have been focused on delivering shareholder value but recent changes in legislation, coupled with a broader shift in public attitudes towards wealth creation, have led to more companies addressing the interests of wider stakeholders. Almost half of all companies state a commitment to wide stakeholder groups in their corporate vision while less than a quarter focus solely on shareholders. Clearly for many businesses the interests of shareholders and stakeholders go hand-in-hand and, arguably, value creation for both groups cannot be achieved without the other being considered. As regulation continues to champion the interests of those other than the owners of companies and, as the zeitgeist continues to change, it is more than likely that those companies focusing solely on their shareholders will be in the minority. • • • • ’08 ’09 ’10 STRATEGY Shareholders Stakeholders None 20% 22% 40% Shareholders and other stakeholders 18% Opening statements set the scene For the most part, management statements are a good reflection of what the rest of the report will be like and setting out clear messages with an engaging tone helps to reassure the reader that the company has a story worth reading about. The economic crisis has forced many companies to provide a more honest and transparent narrative which addresses issues head on and works harder to communicate the strategic actions and direction of the company. The number of companies setting out their strategy in the opening statements continues to increase steadily, indicating that Board level ownership for long-term objectives is seen as an important component of disclosure. The quality of reporting in this regard varies considerably, with some companies including the entire discussion of strategy within the CEO’s statement and others merely stating what the long-term goal of the business is. In addition to setting out strategic themes, demonstrating commitment to corporate responsibility (CR) in some way is increasingly a consideration for companies when preparing their Annual Report. Figure 1.4 RISK How are companies discussing CR in the management statements? CORPORATE RESPONSIBILITY 28% 20% 13% ’09 ’10 Rationale for CR PERFORMANCE 26% Discuss CR issues when talking about business strategy APPROACH TO REPORTING Discussions of the rationale for being a responsible business are on the increase, indicating that companies are endeavouring to demonstrate that there is a business case for CR and that it is not simply something which is done as an after-thought. Add to this www.blacksunplc.com © Black Sun Plc 2011 7
