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Director, Reporting and annual communications
Annual reports are mandatory, highly regulated, and often very long. However, they can be valuable tools for companies to talk about their mission and actions throughout the year when done right. In her blog, Camilla Linniemi explains the new legislative requirements and gives a few tips on how to make your report stand out.
Reporting is becoming more legislative and regulated. In the past year there have been a lot of changes in financial reporting related to, for example, ESEF and IFRS, but also adjustments in Corporate Governance and Remuneration. Now we can clearly see a shift towards more standardized sustainability reporting.
Documenting and communicating financial activities according to the EU taxonomy became mandatory for listed companies during the reporting year 2021. Upcoming legislative changes, such as the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDD), are set to bring increasing requirements for companies’ sustainability work and reporting in regard to how human rights and environmental impacts are managed in global value chains. On top of this, companies must also take into consideration the TCFD climate reporting framework that requires them to analyze the potential sustainability-related impacts, risks and opportunities of their business.
Financials and sustainability are being combined more and more all the time, starting with the ESG recommendations a few years back. The IFRS Foundation is also developing its own set of global Sustainability Disclosure Standards that build on the TCFD and SASB frameworks. GRI, a well-known operational framework, is collaborating with both IFRS and the CSRD on these improvements. All these schemes require that companies understand the financial implications of sustainability. Hence the future of advanced annual reporting involves bridging finance, product development, sales and sustainability – and getting the whole company involved.
If any of these terms or abbreviations are unfamiliar to you, please do not hesitate to contact us. We will help you figure them out and see which you should consider in your reporting.
On top of these upcoming regulation and framework changes, a new global context for business is emerging. Polarized geopolitics, enhanced sanctions and strong citizen advocacy affect everyday business decisions. Demands to take a stance and get the language right in all stakeholder communications, including annual reporting, will build up.
So, the prediction made a few years back that annual reports will disappear does not seem to be the reality in the upcoming years. Rather, the case is quite the opposite – the amount of reporting will only grow.
From a large mass of recently published reports, Finnish and international, we have identified six fundamental themes that will remain important when navigating this new reporting context.
1. Strategy and future outlook
Describing your strategic choices, market position and future outlook will never go out of style. Aside from describing changes in the business for all stakeholders, presenting the business to new readers is also recommended. In addition, many companies have started talking about trends that affect their business or their clients’ behaviors, a mix of the standardized megatrends and consumer trends, for instance. Take a look at how companies such as Fazer, Kempower, Valmet or Telia go about their reporting.
2. Describing your impact and societal role
Reporting processes, policies and historical data will not be enough in the long run. If you are transforming your industry and making a positive societal impact through your business, you should report it. For example, a company that wants to transform their industry is Ylva, and this is stated clearly in their report. Meanwhile, Finnvera and Cargotec provide good examples of how to describe a company’s role as part of society. OP Group and Kesko have started to publish their data balance sheet, something that will have a central role in the future when it comes to, for instance, reporting how your company is fulfilling GDPR legislation requirements.
3. Integrated thinking and reporting
Not all companies have integrated sustainability into their strategy and business. If you have, however, your reporting should reflect this, step by step. Take a look at reports from the forestry and paper businesses such as Tornator, UPM and Stora Enso.
4. Getting your organization involved
Companies will need a whole arsenal of capabilities across functions and businesses to respond to new reporting requirements. Involving your organization widely from early on pays off. Is the report the responsibility of the communications team? Should investor relations handle it or the financial team? Thinking about the evolving frameworks we mentioned earlier calls for the cooperation of the entire organization. Some interesting reports that have taken the upcoming sustainability frameworks into consideration are, for instance, L&T, Finnair (having all of their sustainability reporting in the Board of Directors report); Varma, being a forerunner in TCFD reporting in Finland; and Alma, who has reported on the SASB framework.
5. Tailoring to stakeholders
There is no one-size-fits-all solution when it comes to building a reporting structure that matches your organization’s needs. Think about your specific stakeholders and what they need. It is important to start looking for different ways to reach out to stakeholders. Fortum has made separate smaller reports for years, making it easy to find the piece of information that interests readers. Also, we should keep in mind that annual general meetings have been on hold for several years due to the Covid-19 pandemic, making it important to come up with new ways of maintaining dialogue with shareholders and investors.
6. Reporting as brand storytelling
Utilize the visuals from the report wider in your communications and marketing. Even if the report talks about the previous year, many subjects are also relevant in the upcoming year – creating the report with modular design thinking yields usable elements for brand communications. And understand that for many stakeholders the report can be one of the first encounters with your brand! Rovio has incorporated their game characters into their report. Sampo Group has a new visual concept for all of their communications each year that starts from the report. Other reports that reflect the brand very clearly are, for example, Fiskars, TietoEVRY and Apetit.
The amount of new legislation is seen as more work. And it is true – more people are needed to find the data to comply with requirements. But increasing reporting might not only mean an increasing the amount of work – it can also mean an increasing amount of brand elements.
There is a lot of well-made and curated content in the reports and the smartest companies utilize the content throughout the year. So why not take a few hours to create a utilization plan and think about ways to modify reporting content for targeted stakeholder communications?
At Miltton, we believe in modular design thinking, which enables us to make reports that look like the company brand and make it easy to create both strategic and tactical elements that can be used for stakeholder communication in multiple channels.
Miltton is one of the biggest, if not the biggest, reporting partners in the Nordics. During the reporting season 2021, we helped 100 companies create and develop their annual, sustainability and financial reporting. Reporting is part of our culture, making it possible for our talent to grow and for clients to get to know us. It is a culture that invites and combines people from across society to work with us and to work together.
Camilla Linniemi has been involved with annual reporting for over 20 years, already having her first contact in university by doing her Bachelor’s degree about online reporting. She enjoys creating the themes, content suggestions and concepts for annual reports, but in the end appreciates most the regulation and absolute deadlines about the projects. The balance in her life comes from her daughter and horse, who both make her focus on the present and forget everything that has to do with planning or deadlines.