The annual report remains a powerful tool and is so much more than just a snapshot of a company's performance for the past year. It communicates a company's strength and strategy to key stakeholders and other people of interest. The annual report is an opportunity to highlight a company's key achievements, expectations for the coming year and overall goals and objectives — information that might be more relevant than ever in these covid-19 times.
We cannot and will not predict the impact of corona and the change it might have for individual companies and their 2020 reports. Instead, we will dive into some of the trends we have seen within corporate reporting 2019 and predict what we might see more of in the years to come.
Business models are now being illustrated (and explained) instead of solely explained. An increasing number of Danish top tier companies are making it easier for employees, the media and stakeholders to understand their business model. How? By simply drawing it in their annual report. The newspaper Børsen has mentioned both Novo Nordisk and DSV Panalpina - Global Transport and Logistics, as companies succeeding with illustrating their business models, instead of spelling them out. Furthermore, design and infographics are used strategically to emphasise points throughout reports in general. In the future we predict more companies will take advantage of the possibilities online with illustrations, models and of course motion. All to empower and emphasise on important facts and statements and make it easier for the reader to understand.
Without getting too technical, iXBRL is a new digital and statutory format, all stock valued companies have to use for their annual reporting, after the year 2020. This means all annual reports (by stock valued companies) will be digitalised by the year 2021. A lot of companies have already moved their reports to digital sites or mini-sites like the one we created for Genmab (link). The future will reveal if reporting will become 100 per cent digital. The 'print less' mentality has undoubtedly grabbed the attention of everyone. However, there is still value in printed reports. Some shareholders (maybe of an older generation) might not be online much or just be more traditional. For them, the printed version is still essential.
Speaking of the above, subtle digital transitions can be spotted even in the layout of printed reports. More companies are moving from the classic portrait format to landscape format (just take a look at the top image again and count the number of portrait reports). The development points towards an increasingly screen-friendly format — one ready for digitalisation. But all in all, even though we are looking towards a digitalised future, the use of multiple formats, sizes and channels still serve today's fractured audience, from stakeholders, journalists and professionals to the more casual consumer reader.
The cover of Copenhagen Airport's Annual Report 2019
"Annual reports don't need to be so long. Compliance fatigue is no excuse for lengthy, unwieldy reports. Financial directors must ensure that each word counts." (Robert Bruce, Financial Director).
Reports can seem heavy in both size and information. More and more reports are cutting away the noise to be better understood. Together with Copenhagen Airport, Kontrapunkt did extensive interviews, about the airport’s 2018 report, with both internal and external stakeholders. Across the board, the responses were clear: the report was too long and unspecific. The 2019 report, therefore, sought to cut away all unnecessary information and instead highlight ‘the important stuff'. The 2019 report now shares more about Copenhagen Airport’s efforts — promoting the good, explaining the less than good and outlining how they seek to make better change. The pages themselves have also shrunk from 160 to 120 pages (report link).
Novo Nordisk has in previous years been known for their magazine-style look. This year they too have discarded the clutter and gone for a more clean-cut and straight forward look. Besides the PDF version — available for download — the report is also accessible in an online version (even including notes). The report has moved entirely from the heavy old-school print version and into a digital age. The new online version link makes it possible for the reader to bookmark but also share relevant information.
For many, 'ESG' brings environmental issues like climate change and resource scarcity to mind. ESG reporting is so much more. It covers social issues like a company's labour practices, talent management, product safety and data security — all matters which for some are more important than this year's numbers and the financial aspect of the report. Stakeholders, partners, NGOs and journalists expect transparency and openness within all the issues above. This is of course, not a new trend, the interest and importance of ESG reporting have been known for years, and will undoubtedly continue to be so in the future. It's not nice-to-know info, but need-to-know and need-to-show.
It is not all about numbers, insight, strategy and business models. Reports should reflect the company in style and personality. Storytelling, the company's tone of voice and visual identity are increasingly seen in reports. Companies such as LEGO are famous for play, so why not implement it in the report? Hence, the 2019 report references the company's encouragement to 'fluid play'. Visuals, images, and all-around design emphasises on this and guides the reader through the pages (link). A tone-of-voice example can be seen with Copenhagen Airport. They don't have "strategic objects" they have "strategic take-offs". It is other words all about being holistic about the brand and the company, and reflect this in the annual reports. In 2020 we will see more personal touches throughout the report, not only in design and layout, but also with increasingly unique icons, illustrations and graphics.
The best reports have a clear narrative, they define the company’s challenges and explain targets and strategies in a clear voice — they cut away the clutter and look and sound like the company they represent! Reports can engage, inform, build belief and set a company apart.
We have only just skimmed the top, with some of the overall trends above, each company and each report is and always will be unique. And as a company ready for the future, you need to determine what kind of report serves you and your stakeholders best.
If you and/or your company would like to know more about corporate reporting, please join our next ‘Kontrapunkt Talk’ on May 7 2020, at our office in Copenhagen. It will focus entirely on the future of corporate reporting.
FYI. At Kontrapunkt, we take the government's recommendations in regard to covid-19 very seriously. This means the event might become a webinar — more information to follow in the coming weeks.