Providing investors with decision useful information

This article featured in the July Issue of Informed Magazine, published by the Investor Relations Society. 

Over the past decade, Luminous has been analysing the trends in corporate reporting. Looking ahead, there will be significant changes for sustainability reporters in the coming years. We were thrilled to host a panel discussion where we updated attendees on upcoming regulatory changes and provided early insights into key reporting trends. Areas covered were ESG integration, governance, digital reporting, and reporting on the use of AI.

Our main discussions covered the International Sustainability Standards Board (ISSB) requirements and the Corporate Sustainability Reporting Directive (CSRD), which are set to reshape how companies report on sustainability information.

Our discussion highlighted proactive approaches taken by early adopters outside the UK, who have already incorporated elements of the CSRD and IFRS 1 and 2 into their annual reports. These companies demonstrate how forward-thinking strategies can provide a competitive edge and meet evolving stakeholder demands.

Key takeaways

• Annual reports are getting longer and longer each year, especially with CSRD and ISSB coming into play; companies should take a step back and ensure that they contain decision useful information for investors and other stakeholders that is consistent, comparable and verifiable.
• 50% of the companies we reviewed had sustainability statements exceeding 50 pages, with the longest reaching 95 pages.
• Over 50% of the companies maintained other sustainability related reports, reflecting the growing importance of comprehensive sustainability disclosure.
• Change is coming, and in order to prepare, companies should proactively align with upcoming standards, consider your broader communications ecosystem and ‘cut the clutter’ in annual reports to make space for new regulatory requirements.

The session underscored the pivotal role of high-quality information in investor decision-making. Investors rely on comparable, verifiable, timely, and understandable information to make decisions about their investments. While the specific needs of investors may vary, the overarching objective remains: to achieve a return on investment.

The insights shared during our session highlight the importance of adapting to regulatory changes and embracing best practices in corporate reporting. By learning from early adopters and integrating key elements of the ISSB and CSRD frameworks, companies can enhance their reporting, meet investor expectations, and ultimately drive better business outcomes. My top tip is to proactively align with standards and understand your investors and their disclosure needs.

For further details, please don’t hesitate to reach out to our Marketing Manager, Matilda Paterson.