Five tips for your annual reports
“A great piece of advice I received that has stuck with me is to remember that your annual report is only one of many hitting someone’s desk or arriving in their email inbox, so you want to make your journey and information as clear as you can. Understanding the reporting pressures that the users of the accounts have, particularly those with TCFD requirements that are needed earlier than yours, can help you design your report to be of most value to them. Think about the people on the other end.
“I fully understand that preparing annual reports can be a mammoth task. As pension funds are under their own reporting obligations, we need to report earlier than other organisations. So as Chair of the John Lewis Partnership Trust for Pensions, annual reports have been on the board agenda for a while and we have been grappling with our TCFD reporting elements. As Chair of Polar Capital Technology Trust, we are working on how to help our wealth manager investors meet their reporting obligations.
“Annual reports will evolve considerably over the next few years, especially when it comes to climate considerations. Here are my top five top tips for tackling this reporting season:
- People tend to think of annual reports as episodic events, but it is helpful to give a sense of context and summarise your journey over the last few years, as well as where you’re going next, especially when turning net zero ambitions into action.
- If you’ve mentioned net zero in your report, make sure you include what your pathways to it look like. This might include interim targets and how you are working on them. It could also be worth acknowledging that the path to net zero might not be straight, given changing conditions and improving data.
- The data required often isn’t easily available, especially for newly emerging areas, but there are different types available and it’s worth exploring options.
- Think past the reporting season. These reports can help get stakeholder reactions to the importance of climate change in a company’s thinking. Any evidence of how that affects its employee or consumer brands can be very helpful.
- Collaborate. This links into the advice above about considering who will be using the report and what they need, but it also feeds into the wider system view of how reporting will develop and change as companies and industries adapt to the net zero challenge. As different requirements and pressures are put on different industries, and new data becomes available to share (especially for areas like Scope 3 emissions), collaboration will become increasingly important.”
Watch: Taskforce on Nature-related Financial Disclosures
Watch Deloitte's discussion into the TNFD disclosure recommendations, including how they may be used to inform future standard setting and regulations, alongside considering the actions companies can take now to integrate nature and biodiversity into decision-making and reporting.
Audit Committee Dialogue Summary: Transition planning and the changing sustainability reporting landscape
In 2023, Chapter Zero organised a series of two roundtables for Audit Committee Chairs and members in partnership with Accounting for Sustainability (A4S) to explore forward planning, effective communication, and an understanding of emerging requirements for Audit Committees to drive climate action on boards. With expert input from A4S, the second session focused on transition planning and the changing sustainability reporting landscape. These are two topics that are critical for Audit Committees to keep ahead of, and you can find the key session takeaways below.
The TNFD: a briefing to address nature in the boardroom
In September 2023, the Taskforce on Nature-related Financial Disclosures (TNFD) published its final Recommendations for businesses and financial institutions to disclose material interactions with nature. This briefing, produced by the Climate Governance Initiative, explains what these recommendations mean for you as a board director and key questions to ask in the boardroom.