When the stock market crashed in 1929, legislators mandated all listed companies to publish annual reports. These reports were intended to provide the public with complete disclosures about the workings of the company and protect existing and potential investors. Since then, annual reports have been the foundation for corporate reporting.
However, many advancements have taken place thereafter. Technology has revolutionized the manner in which companies can collect, interpret and present data. Investors’ social expectations have evolved. The economy has moved from being dependent on manufacturing to getting swayed by innovation. And annual reports that were known to effectively convey the company’s workings are no longer considered impactful.
Take for instance SEBI’s annual report of 1993 for instance. This is a report brimming with textual information that uses only the color black and a few tables to present its financial data.
Now have a look at SEBI’s annual report for 2021. With the use of colors like blue, red, white, and black, high-quality images, and different font sizes, this report integrates a variety of design and content elements to allow its readers easy insights into the workings of SEBI.
Annual reports today
Today, annual reports entail much more than just informing the general public about the workings of the company. It allows the management of the company to illustrate their opinion about the risks and opportunities that encompass the company. Documenting the company's obstacles and outlining its future plan helps draw a clear roadmap for its employees and leadership team.
However, the most significant factor in any annual report today is in representing true and fair information. Laying out the company’s failures is just as important as emphasizing its successes. This helps form a genuine connection between the readers of the report and the company. Investors often consider the depth of the information presented in annual reports to determine the company’s credibility and assess whether or not the company is worthy of its investment. As per a survey carried out by Deloitte, out of the 85 investors, 80% said that their perception of the quality of a company’s report impacts their perception of the company’s management and 63% said that disclosure about strategy, risks, and opportunities in an annual report function as value drivers and have a direct impact on their cost of investment.
Companies that have managed to attain competitive advantages have done so by establishing trust, reputation, and value. And to achieve this, they have maintained the integrity of the information they publish, whether or not it is in their favor. This is because business sustainability is now dependent on a lot more than just the company’s revenue – it relies on the relationships it builds with its stakeholders and its environmental, social, and governance (ESG) policies.
Annual reports have gone from being a legally mandated costly exercise to being a tool that helps companies establish a link with all their present and potential stakeholders.
Annual reports tomorrow
As technology constantly changes, people the world over can access additional information effortlessly. This means that people closely monitoring a particular company would be aware of most of the company’s information even before the company publishes its annual report. This additional information will help potential investors make accurate predictions at a faster pace.
However, after being flooded with information, people find it difficult to segregate credible data from the masses and require authentication. This is where annual reports come into the picture. An instrument that enables direct communication between the company and its outside world, the annual report of the future will remain the bedrock of corporate reporting, even in the future.
Nonetheless, it is expected that the future annual report will be proficient in enhancing their ambits with the evolving times. One report with many purposes, this report is expected to be based on 3 broad themes:
Objective-driven – The management of all companies will decide on the final message that the report should convey and the entire content and design of that report will be driven by this one objective.
Communication-focused – Immersed in thought-provoking content, annual reports will engage its readers and encourage active communication between the company and its stakeholders.
One set of principles – Non-financial reporting the world over will follow set standards and principles enabling easy comparisons, complete consistency, and enhancing transparency.
Curating reports that transparently display data and information along with a convincing narrative is no easy task. This requires expertise on multiple levels, including conceptualizing the report and creating compelling content, which is enhanced by visually stunning designs to ensure easy readability.
For this reason, many companies look to specialized business report design agencies to help get their message across and one such agency is Report Yak, which has years of experience helping companies convey their stakeholder engagement results to all readers. Check out some of our work and call us to discuss your next annual report.