With ever-increasing regulations, the annual report has evolved from a concise summary of performance and prospects into a sprawling volume that thickens by nearly eight pages with each passing year. This isn't a mere trend – it's a burgeoning challenge for reporting companies and confounds investors with its complexity.
For many companies, the pressures of time can also lead to ‘defensive reporting’ and choosing the easy option, which is to repeat the same content from the previous year or even to cut and paste from the reports of other companies, leading to disclosures of marginal importance.
New regulatory requirements and the fear of litigation often lead to over-disclosure and boilerplate jargon, especially around culture, diversity and sustainability risks and impacts. The International Sustainability Standards Board (ISSB) is addressing some of this with new standards for sustainability and climate-related financial disclosures, stressing the importance of materiality in preventing clutter.
As Mark O’Sullivan, Head of Corporate Reporting for PwC, states: “There's so much regulation coming in, we need to streamline the annual, but also ensure that all material information is in the annual report. There was a move to cross-reference outside of it, but we’ve been discussing how to bring that information back in.”
Add to this the new Corporate Sustainability Reporting Directive (CSRD), which is likely to significantly increase the length of annual reports as it brings in audited sustainability information to the front half of the report, allowing investors, regulators and other stakeholders to make more informed decisions about a company’s performance and direction.
So, it comes as no surprise that a growing number of investors and other stakeholders are sounding the clarion call for brevity. They want to understand what story the company wants to tell that year, distilled and focused, not drowned in a sea of pages. They desire potency over volume, relevance over repetition.
The Ever-expanding Annual Report
So how do we ‘cut the clutter’ and refine the content without losing its essence? Our recommendations below are aimed at supporting companies with this.
Audience-centricity
Move it online
Use design in a smarter way
Materiality as a Guideline
Disclosures should be guided by materiality, not checklists. IFRS Practice Statement 2 encourages entities to:
Conclusion
To reduce pages, we could create a better-designed, more audience-focused and digital report, where we untether the static – company history, perennial policies and case studies –from the printed page. Instead, let’s anchor your company’s narrative in the digital realm, where it can be expanded upon, updated in real-time, and enriched with multimedia facets. It's about eschewing the one-size-fits-all approach that typifies generic, compliance-led reports, in favour of a more story-led report that captures the essence of your organisation. Think about your key audience: every piece of data, every story, every insight should be included with the intent of contributing meaningfully to the understanding of your company's performance and prospects.
In essence, the objective is not mere page reduction. It's about honing the annual report into a tool of engagement, a beacon that not only fulfils regulatory mandates but also captivates the stakeholders with its precision and accessibility. It’s about turning the tide on report inflation, shaping a narrative that cuts through the noise with the sharpness of Occam's razor, and crafting an annual report that not only informs but also inspires.
Let us help you cut through the clutter and focus on what investors really want – clarity, consistency and transparency. Get in touch.
In Action: Case study examples:
Sage AR 2023
20 page reduction
For its 2023 Annual Report, Sage wanted to reduce the page count while continuing to showcase its sustainable value creation story. To achieve this without compromising on transparency, we refocused all reporting sections on mandatory disclosures, held workshops with content owners to identify the key purpose and data for the publications in Sage’s wider corporate and sustainability reporting suite with a view to minimising duplication between reports while ensuring clear cross-referencing, refocused the TCFD disclosure on GHG emissions and key risks and opportunities and leveraged hyperlinks and QR codes to drive non-essential content, such as case studies and product information, to the website. This approach saved over 20 pages across the strategic and governance report, which allowed Sage to introduce topical new content, such as an interview with their Chief Technology Officer about how technological innovation, including AI, is benefiting their customers while data is kept secure.
Ocado AR 2022
44 page reduction
Annual reports are vital documents for stakeholders to grasp a company's performance, strategies, and governance. However, they often suffer from garrulity and repetition, leading to reader fatigue. For Ocado’s 2022 Annual Report Luminous collaborated with the Ocado team to reduce the size of their report and improve the reader experience.
The initial step involved identifying and eliminating wasted space by optimising layouts. This included removing redundant images and minimising empty space while maintaining readability. In addition, the strategy section underwent a redesign, focusing on clarity and brevity. Complex ideas were distilled into succinct statements and tables, supported by visuals like charts and graphs, effectively communicating Ocado's strategic direction and saving page space. Related content was consolidated to avoid duplication and streamline information flow. For instance, separate sections on Ocado Smart Platform (OSP) partners were merged into an "At a Glance" overview, providing a comprehensive snapshot while reducing redundancy. Concerning sustainability disclosure, we adopted a materiality-focused approach, prioritising topics based on stakeholder significance and Ocado's business operations. Key metrics, initiatives, and impacts were highlighted, streamlining disclosure while maintaining transparency and relevance.
The successful reduction of Ocado's 2022 Annual Report exemplifies the efficacy of targeted clutter reduction strategies, even for compliance-heavy FTSE companies. Through layout optimisation, content redesign, consolidation, and a materiality-focused approach to disclosure, we achieved a more concise, impactful, and reader-friendly Annual Report.
CLS AR 2023
80 page reduction
Streamlining annual reports is crucial for both clarity and impact. Working on CLS Holdings' 2023 report, we achieved an impressive reduction of 80 pages from the previous year. Our approach to design and content focused heavily on efficiency without compromising content. Through a page-turn of the report non-essential content was moved elsewhere, offering readers additional details without cluttering the Annual Report. Separating less material and deep explanations of sustainability information into a dedicated report minimised clutter and excess content considerably, but still allowed for material issues and compliance. Both the risk management and strategy sections were streamlined to highlight key information and CLS’s strong approach to mitigation and strategic action. Meanwhile, market context was integrated into business reviews and leadership statements to create a more integrated insight into strategic operations in the current environment, while avoiding duplication.
The significant 80 page reduction in CLS’s 2023 Annual Report demonstrates the effectiveness of decluttering strategies and offers insights into other companies aiming to streamline reporting without sacrificing clarity and impact.