The Financial Reporting Council’s (the “FRC”) Reporting Lab has published its latest report on reporting on stakeholders, decisions, and Section 172 (Crown Dependency adopters of the UK Corporate Governance Code are in scope for Section 172). The report highlights that information on stakeholders and on decisions can help investors understand how a company is progressing in fulfilling its purpose and achieving long-term success. Section 172 statements can then be a helpful bridge between the two types of information.
This report outlines what investors want to see reported in these areas and provides examples from current reporting practice that reflect possible helpful ways of addressing these needs.
Alongside the report, the Lab has published a summary of the questions for companies to consider in determining what information to report on stakeholders and decisions which meets investors’ needs.
In particular investors want to understand:
- Who are the stakeholders relevant to the company’s success, and how they influence the operation of the business model and delivery of strategy.
- How the company builds and maintains strong relationships with its stakeholders and understands their interests, needs and concerns to enable it to pursue long-term success.
- What could affect the company’s relationships with its stakeholders, and how these relationships could affect the company’s pursuit of success.
- What is measured, monitored, and managed in relation to stakeholders to understand the strength of the company’s relationships with its stakeholders and how they are contributing to the company’s success.
- What the principal decisions were and how they contribute to the company’s success.
- How and why the board and management reached those decisions.
- How stakeholders were considered in those decisions.
- Difficulties and challenges in making the decisions.
- The expected and/or actual outcomes of the decisions.
