A recalibrating of the purpose of financial and non-financial reporting is under way. But worries over how far the investment community is engaging with this remain. Two recent conferences in the UK underlined this. At the first one, run by consultant Black Sun, Deepa Raval, project director in the accounting and reporting policy team at the Financial Reporting Council, (FRC), emphasised just how far ahead the UK was in the use and development of narrative reporting. And how the recently issued FRC guidance on strategic reports should encourage companies to continue to experiment and be innovative in the way they developed their annual reports.

Meanwhile at the second conference, the Non-Financial Reporting Forum, there were doubts that all this innovation was reaching the consciousness of the investment community. Lucinda Bell, the finance director at British Land, made the point that analysts have only three minutes at their internal briefing meetings to present and communicate the essence of British Land’s results and inevitably, given the data-heavy nature of financial reporting, the non-financial information tended to get lost. Another panellist later in the day, Robert Miller-Bakewell, senior independent director with RPS Group, drew on his previous thirty-year experience as an equity analyst to provide an ever less-promising picture. Picking up on Bell’s point he said that analysts would usually have half-an-hour from first seeing a company’s results to the point where they delivered a three-minute report on them. And that half hour, he said, included the time it took to submit a written copy of what they intended to say and have it cleared by the compliance team. His conclusion was simple. There was not going to be much chance of any of the non-financial information getting into that.

And there were different views of how far investors and shareholders use annual reports. At the Black Sun conference Douglas Radcliffe, head of reporting and operations, investor relations, at Lloyd’s Banking Group pointed out that the bank had the largest shareholder base in the FTSE100 at around 2.7 million shareholders. This meant a huge operation involving 8,000 copies of a 396-page annual report, 75,000 copies of a 52-page annual review, and 2.6 million copies of an eight page performance summary. The scale of the task was enormous. And the scale of the battle to engage with as many people as possible was dramatized by one of the remarks at the Non-Financial Reporting forum. Charles Nichols, group controller at Unilever, remarked that it was quite depressing how few people read the formal report and accounts. The biggest audience, he said, was pensioner shareholders.

But the advantage of breaking out from the crowd and a greater emphasis on non-financial and narrative reporting was the comparative freedom it gave organisations to report a wider range of useful information. Lucinda Bell made the powerful point that financial reporting was very heavily regulated and thus it was much harder to communicate information which might be useful in assessing what the future might hold. Whereas non-financial reporting was not subject to the same stifling level of regulation and could be used to give users and investors a better idea of what they might expect.

Both events were broadly convinced that going on the offensive was the answer. 'The change has been intense’, said Sallie Pilot, director of research and strategy at Black Sun. The useful information was increasingly in the reports and the linkage, the connections between the different parts of the information, was on the increase. Black Sun’s most recent survey of trends in FTSE100 corporate reporting showed that a steadily increasing 83% of companies connect their strategy information with their key performance indicators. The push towards greater flexibility and greater emphasis on non-financial and narrative reporting is coming from within. And this cultural change, embodied by initiatives like integrated reporting, is gathering force as an inevitable consequence.

In answer to a question Charles Nichols made it clear that in Unilever integrated reporting was not just the responsibility of the finance function. It was a part of the overall business systems. By tradition the finance function had the role of measuring performance management but with integrated reporting the responsibilities had moved wider within the business. As British Land’s finance director Lucinda Bell put it, the finance function is now part of the conscience of the business. And that, she said, was sign of how mainstream all this had become.