Emphasis is placed on how companies think, act and communicate
The new disclosures in financial reporting this year include the most fundamental changes ever, evidencing how directors are complying with issues like stakeholder engagement, purpose, broader value creation and ESG. Emphasis is placed on how companies think, act and communicate.
Authenticity has now become a fundamental feature in the annual report and there is a substantial rise in the development of a corporate narrative that comprises value, purpose and culture articulation.
By virtue of that, we have seen many companies becoming enlightened to the benefits of creating a cohesive story to inspire their people, attract talent, present the environmental and social impacts and ultimately formulate the platform for measurable results and clear objectives.
Living its purpose means that a company reinforces its culture and provides for positive stakeholder engagement that informs sustainable growth and long-term value creation.
Going public with just a few messages that preclude the key elements propelling to long-term success is a weak way of getting the message across. Investor scrutiny has reached new highs, becoming more selective and aware of their investment decisions.
As a result, the corporate narrative should be comprised of succinct articulation of how the foundations are laid to generate value. And value creation is a holistic approach including social, environmental and governance considerations.
The Board’s role and ESG
The role of the Board is to deploy the purpose and take the right actions to ensure that it is lived within the organization. It is imperative to take into consideration the different needs of the stakeholders and incorporate them into long-term strategic objectives.
ESG is in the spotlight, especially on the social aspect, with many companies mishandling social and employee matters and demonstrating dismal ways of responding amid the recent crisis. Investor scrutiny will look into how businesses have treated employees and consumers amid the crisis.
Governance has increased its weight on the corporate agenda heightened by the recent Wirecard scandal calling for a more detailed review of the committees’ role to provide oversight, actions and long-term objectives. Recently investors are more interested in executive remuneration, especially when taxpayers support comes into place.
Executive remuneration should be reflective of the pay of the employees and linked to the underlying results and long-term objectives.
Environmental initiatives may have been shifted for a while but still, underscore a company’s strategy. The goal for a greener world is still and would always be on the agenda. Companies need to make sure that their actions towards their environment have not fallen behind and are communicated equally to numbers.
Entrenching financial and non-financial objectives into the fabric of an organization is a powerful force for sustainable growth.
It is now more pertinent than ever for businesses to demonstrate how accountable they are and how they act responsibly. Many companies will indeed rediscover themselves and come out in different shapes and forms.
At this stage, corporate reporting and various communication tools come into force to bring the story to life through all sorts of platforms and channels.
Storytelling through the lens of Resilience, Adaptability and Agility
Building the narrative around how a company has proven to be resilient, adaptable and agile provide an impetus to financial communication and a powerful way of telling the story.
Demonstrating a company’s resilience translates to trust. That means that a company must have the fundamentals and a business model that fits for purpose.
Adapting to a new reality means a company has the right talent, suppliers and control systems to harness resources and emerge stronger post Covid.
Agility generates the power to move forward. It requires a strong Board that has the expertise and ability to swiftly take decisions and cascade them to the organization that is receptive and ready to set a new direction.
Setting the communication platform on these fundamentals and developing the narrative in conjunction with case studies is the most efficient way to send the message across to stakeholders compellingly and effectively.