The tips have been developed following the Financial Reporting Lab's discussions with investors and other stakeholders about what information would be most useful on how directors have had regard to the matters set out in section 172(1) (a) to (f) of the Companies Act 2006 when performing their duty under Section 172 to promote the success of the company and how it can be presented effectively. The Financial Reporting Lab has also spoken to companies to understand the challenges they are facing in preparing the Section 172 statement. 

The tips are structured under three headings:

Building in useful content - the Section 172 statement should: 

• not merely be a compliance exercise but instead should reflect on how the company met the requirements, should explain what is relevant to it and what happened during the year and, where applicable, what the board and management plan to do in the future. 
• explain the board's reasoning behind why, for example, particular stakeholders are identified as key and why particular engagement methods were effective.
• link to strategy.
• include difficulties not just positives.
• reflect the board’s oversight - specifically information on how the board challenges and oversees engagement with stakeholders and formulation of strategy and what stakeholder management processes are in place.
• include material KPIs on the key stakeholders.
• address future consequences and planned actions - specifically when setting out the engagement undertaken and decisions made, companies should disclose the implications of the feedback received, the impact of decisions on relevant stakeholders, and what actions have been taken or are planned as a result. Where the statement highlights issues or concerns raised by a stakeholder, it should be clear how they have been or are going to be addressed.
• be consistent with the rest of the annual report.

Presented in a way that make sense - the Section 172 statement should:

• reflect the strategic link and be clear about the board's role.  Companies are also advised to think about where to place the statement so that it is positioned in the most helpful and useful position for investors and logically flows to other information presented in the strategic report.
• be clearly labelled and referred to in the contents pages of the annual report.
• make use of cross referencing, where appropriate, to expand upon points made in the statement and provide further context.  However, this should not just be a list of links and the statement should still provide a coherant message by itself.
• include examples and case-studies of significant strategic decisions taken during the year, explaining how stakeholders were taken into account to bring the statement to life.

Supported by process - companies should:

• start considering their Section 172 statements early in the year and not leave considerations until the end of the year. 
• consider tailoring board agendas, papers and minutes to include reminders for both the board and management to consider which stakeholders are relevant for decisions. 

The press release and publication are available on the FRC website.