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Companies neglect non-financial reporting

Legislation, expected to come into place in 2003, forcing large companies to report on non-financial data alongside financial information, is being ignored by most businesses in the FTSE 500.

Link: ASB reopens OFR debate

New research found that just one in five companies in the index carry out some form of non-financial reporting – this includes examining the impact of among other things reputational, employment and social factors on business performance.

This, despite 93% of respondents saying non-financial reporting enhanced a company’s reputation, and 74% saying it was important in making business decisions and helping investors judge performance, according to a study by the Institute of Public Relations.

The new legislation is likely to come out of a government White Paper proposing a new Operating and Financial Review, which requires companies to report on non-financial factors. At present the requirement remains voluntary.

Jon Aarons, president of the IPR said: ‘The implications of the OPR are huge. Legislation to pave the way for compulsory non-financial reporting by all large companies is likely to come into force in 2003. Businesses need to wake up to this now if they are going to meet the new requirements next year.’

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