New twists bringing innovation to the world of corporate reporting
Corporate reporting might not seem like the most innovative subject. After all, regulators want their filings, while investors and analysts are just looking for the numbers, right? Wrong. As documents have moved online, a wave of new corporate reporting trends is allowing companies to show off much more than their profit margins or net debt to EBITDA. Instead, investors can now get a view of the company through videos of the CEO in the field, embedded into a streamlined annual report that can be viewed offline in a dedicated app.
Spring cleaning the annual report
As new regulatory requirements and disclosure policies have come into effect over the years, many annual reports have ballooned in size. Certain industries – particularly the financial sector – have been under added pressure to reveal all since 2008’s financial crisis, with some banks offering up reams of reporting at the end of the fiscal year. HSBC’s mammoth 2013 annual report stretched to 596 pages, for example.
Now, however, some companies are battling the bulge. During research for this year’s Investor Perception Study – Europe 2014, a number of IR professionals told IR Magazine they had been working on cutting down the length of their annual reports.
‘One of the things we’ve seen with our clients is that when they’ve scaled back the printed version – when they’ve departed from a traditional annual report – they’ve done more in their online version,’ says Nina Eisenman, president of Eisenman Associates. And the big trend in online reports? Video.
Citing member-owned agricultural co-operative Land O’Lakes as an example, Eisenman explains how the printed version of the company’s 2013 annual report included the usual letter from the chairman and CEO and accompanying photo, while the online version ‘had the text of the letter but then also a video of the CEO presenting to all of the stakeholders at a big conference. So the video wasn’t redundant: it wasn’t just him reading out the letter. It was additional, supplementary content that would be of interest to those stakeholders.’
And while you might expect consumer brands or tech firms to lead the way when it comes to spicing up annual reports with video, Eisenman says the medium appeals to companies across the board. ‘We posted a list of the 24 Fortune 100 companies that do video, and you can see that it’s such a mix,’ she notes. ‘Coca-Cola: a consumer brand; FedEx: sort of a consumer brand. But then you’ve got Goldman Sachs, Liberty Mutual, Etna, Citigroup – a lot of financial services firms, in fact – and also GE, Ford, General Motors, certain oil and gas companies, technology firms and companies like Caterpillar.’
In fact, the almost 25 percent of Fortune 100 companies that use videos in their 2013 annual reports represent a 15 percent year-on-year increase, Eisenman continues. ‘Most companies start by dipping a toe in’, often repurposing existing assets, she explains; after that, ‘it seems that once a company has tried video-enabled annual reports, it will expand on them the following year.’
So as a growing number of companies seek to enhance their annual reports, what’s the future for video-enabled annuals? ‘I think it’s going to be about the quality of the video itself,’ says Eisenman, ‘going from a very homespun, DIY, ‘shoot the chairman in the conference room with a blue screen and a teleprompter’ style – one that’s not very engaging – to videos with higher production quality.’