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Investor Communications: What Shareholders Want

In the 6 years that we’ve been conducting our “What’s inside the mind of an investor?” research at SAS London, the corporate reporting landscape has changed completely and irrevocably. Now with the emergence of new communication platforms and influences such as the BIS’s narrative reporting consultation and IIRC’s integrated reporting pilot programme, we discuss where reporting could be headed, whether professional investor needs are being met, and how to strike the right balance between technology, communication and compliance.

Over 60 delegates from organisations as diverse as AstraZeneca, Aviva, Barclays, BP, BT, Bupa, GlaxoSmithKline, Hays, Home Retail Group, Marks & Spencer, and Unilever attended a meeting that we hosted in London.

We invited a leading authority on global investment industry sentiment, Steve Kelly, who is the global head of Thomson Reuters Extel SurveysLouise Tyson, Head of Corporate Reporting at BP also shared a case study that demonstrated how they respond to new reporting developments.

Straw Poll: Embracing Comms Opportunities

The straw poll taken on the day showed that companies are making significant plans to embrace the current communications opportunities open to them in terms of integrated reporting, social media and mobile, but that many have yet to implement these plans.

Encouragingly, communications is prioritised over compliance, with over two-thirds of companies thinking equally or more about communication than compliance when compiling their annual report.

SAS Insights

Let’s take a look at some of the key insights we presented on attitudes to report formats, content, design and communication channels, including the use of online tools, apps, social media, mobile devices and opinions on integrated reporting.

  1. Slowdown: The effect of the last wave of legislation is slowing. Investors still see improvements in corporate reporting as a result of increased pressure on companies but this is slowing. The BIS’s narrative reporting consultation and IIRC’s integrated reporting pilot programme may re-energise this.
  2. Financials, always! But also an increased focus on the way companies are run. The last 4 years have seen a consistent return to financials being the most read section of the report and this year especially remuneration and corporate governance are under the spotlight.
  3. Disclosure and transparency are still sought after but not always delivered. Investors are demanding more segmental information both in terms of detailed operational data, financial breakdown and access to divisional management. Investors continue to search beyond the IR section for relevant information. The popularity of all sections of the corporate site and other tools within the IR section and online reports demonstrates investors’ continued search for nuggets of information to give them the edge over their peers.
  4. Reporting format preferences remain consistent. The searchable PDF remains the most popular format for institutional investors, closely followed by the printed copy, interestingly consistently more popular than the online report.
  5. Online and mobile interactions are growing fast. From accessing the PDF online, to the IR section of the website, corporate website and video and audio to explain business strategy, investors value online interaction with companies. Mobile access to information among investors has doubled since 2008 and this trend is expected to become exponential. The use of apps has grown, but there is a certain amount of scepticism. Apps aren’t widely used as for this audience they fail to bring any additional value beyond existing channels but this may change as improvements are made.
  6. Demand For More Insights: The need for honest and credible communication continues. Over 80% of investors feel both annual reports tend to provide lots of information but very little insight and that the annual report is too corporate and led by PR departments. Just because you write something, it does not mean they understand or believe it. Investors do not feel management are effective at creating trust or communicating with honesty and credibility through annual reports and websites. They are searching for more meaningful insights from the leadership teams into the future prospects of the businesses in which they invest.
  7. What Is Integrated Reporting?: The value of integrated reporting has yet to be proved. Tellingly, 36% don’t know what integrated reporting is and only 7% think it will make investment decisions easier.
  8. Social Media: Currently, the investment community rarely engages with companies via social media. While social media is proving its worth for stakeholders such as journalists, employees and customers, for the institutional investment community this is less the case as it provides nothing new or material.

Investors Demand More CEO Insights; Shareholder Activism

Steve Kelly reiterated the increased demand by investors for more CEO insight and segmented information around marketing context, and revenue from a geographic, and operational level. He also shed light on the wave of shareholder activism currently underway and the increased internal competition within the buyside.

Case Study: Building Trust & Reputation

BP’s Louise shared her experience at the helm of one of the most challenging and, at the same time, interesting reporting programmes. She revealed how through design, digital and content improvements, BP is using the reporting suite to rebuild trust and reputation among their wide range of stakeholders

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