The annual report is dead. Long live the living annual report!
Publishing old news, that’s basically what releasing an annual report is. So why do we go to all that trouble?!
This is the kind of critical remark I often hear when discussing annual reporting with clients. True, who wants information that in many cases is over a year old? Plus, it’s not very stimulating either to spend lots of time and effort putting together an account that has long been overtaken by events. Sure, organisations are simply bound by legislation to publish an annual report. And it’s certainly useful to look back now and again and review an organisation’s performance. But isn’t the annual report as we know it completely obsolete?
The answer is yes. So it’s about time for a new kind of annual report! But what does this new-style annual report look like? Looking at the 3 main trends in corporate reporting, there’s only one possible solution: the living annual report.
Trend 1: Integrated reporting
Effect: makes the annual report more relevant and therefore more significant.
Integrated reporting is the most important corporate reporting trend in terms of content. An integrated annual report is a summarising report in which organisations highlight their sustainability credentials and how their strategy, governance, performance and outlook generate value, both social and otherwise, for the short, medium and long term. It contains both financial and non-financial information and is primarily a way to turn the annual report into a relevant account. An account that stakeholders will actually value, because it provides them with more broadly scoped relevant information, enabling them to make better-founded decisions.
Integrated reporting is also more efficient: what used to take multiple annual reports can now be done in one single report. More and more organisations are switching to this kind of reporting. A survey of 800 listed European companies by Italian communications firm Message showed that the number of companies publishing an integrated report rose by a massive 27% in 2016.
Trend 2: Digital reporting
Effect: enables targeted communications and an efficient publication process.
Today, digital communications have become ubiquitous, also in corporate reporting. While financial stakeholders still often prefer a paper copy or a printable PDF version of an annual report, other stakeholders want to be able to choose. They want to be able to consult annual report information through different media channels. As a result, the media mix for the annual report is becoming increasingly diverse and, with that, more keenly targeted at specific stakeholder groups: besides paper and PDF versions, other (online) formats are also used to publish strategy and performance information. One online format that has shown a meteoric rise in 2016 is the annual review, a summary of the annual report presented in a visually attractive and interactive way, generally optimised for display on mobile devices, tablets and desktop PCs. The annual review targets a broader stakeholder group, while the complete report is intended mainly for a number of specific stakeholders. The aforementioned survey by Message also showed that the number of online annual reviews quadrupled in 2016. A creative example in the form of a one pager - where all the information is presented on one single scrollable page - was recently published by Mailchimp:
Tailoring your annual report to your target groups leads to greater user-friendliness. Aside from that, digital reporting also helps make the publication process more efficient. Online first publishing makes it possible to custom publish information through multiple channels, both offline and online, from one single online source. Consequently, the linear report, i.e. the PDF, is generated from the online content instead of the other way round. Needless to say, the resulting document is printable. The various online formats, such as one pagers, summaries or fully responsive websites, are also published from this same source, making the publication process more efficient, more secure and faster.
Online first publishing
Trend 3: Continuous reporting
Effect: helps increase transparency and stakeholder commitment.
The third important development is that organisations are increasingly opting to also release current information about strategy and performance externally. Sharing such information internally has long been common practice — most organisations use dashboards and reporting systems that present current data. One example of an organisation that not only publishes current performance data internally, but also externally, is Dutch railway infrastructure manager ProRail. On its online performance page, ProRail gives visitors near real-time insight into the company's performance on the main KPIs from its management plan.
Another good example of an organisation that is moving in the direction of continuous reporting is the Dutch energy network company Alliander. On the online reporting platform http://2016.jaarverslag.alliander.com/ Alliander publishes not only all annual reports and annual plans of recent years, but also an interactive monthly update of KPI’s that that are connected with Alliander’s strategy.
Publishing current data with explanatory notes adds to organisations’ transparency and therefore bolsters their reputation. It also increases stakeholder commitment, because the frequent updating invites stakeholders to regularly check the website.
If we consolidate the three trends outlined above in one single solution, we end up with a new kind of annual report: a living annual report. An up-to-date account covering strategy and performance published for specific target groups. An account that is both relevant and easily accessible, both for makers and for end users, both offline and online. One excellent example is the Tableau Foundation’s annual report. In Tableau’s own words:
‘The Tableau Foundation's Living Annual Report shows you what we’re up to this week—not just what we did last year. Unlike traditional printed reports, our report, which updates weekly, allows anyone to interact with the data and ask follow-up questions.We're sharing our report here to show that foundations and non-profits can move beyond the traditional annual report. With this approach, organisations can share the latest information and cut months of work dedicated to producing a traditional report.’
This innovative way of reporting is not only interesting for non-profit organisations, it is also ideally suited to for-profit organisations. In an age where it is increasingly important to stakeholders to gain insight into the impact organisations create, a living annual report helps meet that need.
The benefits of a living annual report, both for makers and for end users, are clear. And yet there is one key focus point that organisations have to be very aware of when opting to switch to this new reporting method: the context of the information they are releasing.
By context I mean additional background information to the data published, i.e. related information such as whether or not the data has been audited, or an indication of how up to date the information is and to what reporting period it relates. Such additional related information also includes the organisation’s explanatory notes to, or interpretation of the information they are releasing. In the absence of this kind of context, end users simply will not know where they stand. There would then be a danger of them feeling that the information is false or incomplete.
In a nutshell, the new-style annual report is a living annual report. A relevant and up-to-date account that is published in a way that is tailored to specific target groups, and that is produced efficiently. But, most importantly, it is also an account that is presented within a clear context.
So, do you want your corporate reporting to be more efficient and effective? Start publishing a living annual report!