Long term reporting - Investment Association guidance

12 June 2017

The Investment Association (IA) has published guidance on long term reporting (the Guidance) setting out the expectations of the IA’s members. It is principally aimed at companies whose shares have a Premium listing on the London Stock Exchange but other listed companies (eg those with a Standard, AIM or high Growth segment listing) are also encouraged to adopt it as best practice.

The Guidance asserts that a company’s annual report is an important source of information for investors and that IA members use it when making their investment and stewardship decisions. Therefore, the IA says that annual reports should provide a true long-term understanding of the business and its drivers, its financial strength, and the quality of management and their decisions.

The IA’s Institutional Voting Information Service (IVIS) will monitor implementation of the Guidance, through analysis of annual reports for years ending on or after 30 September 2017. The IVIS will then highlight to IA members those companies that continue to adopt short-term reporting models and/or are not making the recommended disclosures.

The Guidance contains recommendations to companies in five areas:

Business models

Companies should no longer issue quarterly reports and quarterly earnings guidance. Instead, they should focus on long-term performance and strategic issues. Companies are encouraged to review their current approach to business model disclosures against the FRC’s Reporting Lab's Business Model Reporting recommendations and ensure better linkage of business model information to other sections of the strategic report.


Companies should identify the main drivers of productivity and regularly assess productivity within their business. They are encouraged to develop Key Performance Indicators against which productivity improvements can be reliably measured over time.

Capital management

Disclosures should explain the approach a company have taken to managing its capital, provide assurance that it is allocating capital efficiently and demonstrate that it is acting in a manner that is consistent with shareholder's interest in sustainable, long-term value creation.

Disclosure of material environmental and social risks

The Guidance notes that increased disclosure on environmental and social risks can help provide a broader assessment of:

  • The environment in which companies operate
  • Their performance in managing different stakeholders, and
  • Give a fuller understanding of the full spectrum of the financial and non-financial risks they face a company.

The IA wants companies to demonstrate how they are creating, sustaining, and protecting value through the management of material environmental and social risks, and how this helps achieve the business’ long-term strategy.

Human capital and culture

The Guidance highlights the limited reporting by companies on their approach to human capital management, how they are working to develop a positive operating culture, and of the significant investments being made to improve the productivity of workforces over the longer term. The IA believes that companies should be more transparent on these issues and asserts that human capital considerations are integral to its members’ initial decision-making processes and ongoing stewardship activities.

The Guidance goes on to provide examples of the information that companies might disclose in each area, with particularly extensive suggestions around capital management. It has been designed to complement the requirements relating to the strategic report and recommends that it should be read in conjunction with the FRC’s Guidance on the Strategic Report.

Read the Investment Association guidance on long term reporting.

For help and advice on corporate reporting please get in touch with your usual BDO contact or Scott Knight.

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