Kill boilerplate governance statements, say reports

Investors will take drastic action against boardrooms if they fail to remove boilerplate governance statements from their reports.

Companies’ governance statements often “fail to tell [investors] what they need to know” and are little-studied because of their limited usefulness, according to the PwC and CIMA co-authored study, Report Leadership. Governance statements are included in annual reports and describe the activities of its directors.

Mark O’Sullivan, corporate reporting director, PwC said: “At a time when government, regulators and investors are shining a light on whether boards are doing their jobs, it is essential that companies step up their engagement and we believe that the latest Report Leadership proposals will help companies do just that.”

Tick-box reporting fails to create the trust needed between investors and companies, and the issue remains in sharp focus due to ongoing difficult market conditions, it continued.

O’Sullivan, said: “Too much reporting today fulfils the legal requirements, but does not always enlighten the reader.

“With an integrated approach to reporting, organisations can turn governance documents into real communication that easily engages the reader with the information that they need.”

Company commitment is essential for strong corporate reporting, CIMA said, urging businesses to recognise the benefits of robust thinking on “important challenges for their organisation”.

Governance is a sensitive area focusing on directors’ activities and closely linked to risk reporting, another current battle ground for companies, investors and regulators.

“For many organisations, integrating governance reporting is a tough challenge – the new report will help with some practical suggestions for how this can achieved” concluded CIMA’s corporate reporting chief, Nick Topazio.

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