An insider’s view

Mark O’Sullivan, Director of Corporate Reporting at PwC, gives us his take on the future of corporate reporting.

Q: Last year, you said that corporate reporting was in need of a reboot. Can you explain what you meant by this? 

Technology is transforming every aspect of our lives, but today’s reporting model has – until recently – appeared relatively immune. 

Much of the debate around the future of reporting in recent years has centred on what information companies report rather than how shareholders, and other stakeholders, access and consume that and other information. 

There’s a greater use of PDFs, social media, etc., but this is just scratching the surface of a technology revolution. We’re now seeing technological advances that allow businesses and stakeholders to gather data from multiple sources.

Those involved in the traditional reporting model will find that the traditional route will be ignored in favour of new routes.

Q: Which new or emerging technologies do you think have the greatest potential to change and improve the world of corporate reporting as we know it?

It’s difficult to pinpoint one. Technologies such as blockchain, AI and drones are already increasing the quantity of data; and automation will lead to improvements in how data is collated, accessed and consumed.

In the future, we’ll see technology learn users’ preferences and push information and offer recommendations based on previous experiences and actions, enabling more in-depth analysis of the information that matters most to them. This information will be collated by intelligent software, presented through dynamic visualisation technologies and be supported by an open communications forum that allows users to share data with others and engage in an ongoing public dialogue about the companies that interest them. 

As I mentioned earlier, the traditional singular flow of information from company to user will be thrown out of the window. Company reporting will still have a role to play in a confirmatory nature, but its relevance will decline.

Q: You also said in your report that most of the technologies that will transform the reporting model already exist, but their impact has yet to be fully felt. Of those that are in common usage – social media platforms, corporate websites, digital financial reports and searchable company data – which do you think has the most potential to change the world of corporate reporting? 

They all have potential! At the end of the day, it’s important to remember that the quality of information is key to successful output: garbage in, garbage out!

Websites/online reports, films and infographics improve accessibility, searchable data will improve the efficiency and comparability of the analysis of the data, and social media can be used to convey key messages and drive traffic to the library of information. 

However, many of the developments to date have focused on repurposing the content of annual reports. I wonder whether, in today’s time-critical world, future investment will be channelled into making use of this technology for the prelim results experience rather than the annual report. 

Q: To what extent can technology help corporates maintain the trust of their stakeholders?

Companies need to recognise the relative importance of their information and understand their role in today’s ‘information ecosystem’ and wider corporate story. 

Stakeholders use multiple information sources to assess corporate performance and behaviours. Investors are already using geolocation data from mobile phones to forecast sales in fast food outlets which they can corroborate with what companies report. Against this backdrop, companies need to recognise that trying to control their narrative will no longer be effective or seen positively. Instead, they will need to be attuned to the sources of data they don’t control while harnessing technology to build trust in the messages they do. 

Q: With transformation comes disruption. How do you advise corporates to deal with the inevitable changes that will come?

We’re definitely seeing a maelstrom of technological advances, so it’s important that corporates future-proof their annual reports by keeping up to date with them and understanding, actively listening to and connecting with, their stakeholders – and determining how they might provide information quickly.

However, it’s also important to strike the right balance between humans and machinery: corporates are dealing with humans, after all.

Finally, it’s important that corporates are authentic and accountable. Corporate reporting is undermined when it paints a picture that contradicts the organisation’s behaviour and other communications. Authenticity comes with consistency, both internally and externally, and a strong corporate purpose, supported by values and behaviours that are clearly aligned to the strategy and assessment of performance. 

Q: The PwC Building Public Trust Awards judge an organisation’s openness in reporting and communications. Will this become easier or harder in light of The European Single Electronic Format (ESEF)? 

The jury is still out on the impact of ESEF. We’re still unsure how it’s going to be used and its current scope only covers a small fraction of the information we review/assess as part of our awards. But machine-tagging does present opportunities to take work out of our annual report research, so we hope ESEF will save time and allow us to carry out more strategic reviews!

Q: What impact do you think ESEF will have on auditors?

Again, the jury is still out! I think there’s more work involved than people expect. There are a lot of questions to be asked and only time will tell.

The Luminous view

Technology will play an essential role in the evolution of corporate reporting, altering how the report is prepared and the way that it is delivered. However, we wholeheartedly agree with Mark when he says “garbage in, garbage out”. Technology should not merely allow entities to produce more information, but should instead enable them to provide information that is more relevant and timely – that’s where the value-add is. 

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