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ACCA survey highlights that non-financial reporting by companies is inadequate for investors' needs

  • ACCA (UK Association of Chartered Certified Accountants) (lt green) Image

11 Jul 2013

The Association of Chartered Certified Accountants (ACCA) has published findings from a survey carried out to gather feedback from investors on their use of non-financial information. The survey highlights that whilst investors are placing increasing importance on non-financial disclosures made by companies, companies must do more in order to enhance the value of the information that they provide especially in terms of creating a better linkage to business strategy, risk and financial information.

In April, the European Commission published proposed amendments to European accounting legislation in order to require certain large companies to provide additional information on social and environmental matters.  It was determined that large companies would need to disclose information on policies, risks and results as regards environmental matters, social and employee-related aspects, respect for human rights, anti-corruption and bribery issues, and diversity on the boards of directors.

An Executive Summary of the Impact Assessment prepared by Commission staff noted that "the majority of large EU companies fail to adequately meet growing demand from stakeholders (including investors, shareholders, employees and civil society organisations) for non-financial transparency", both in terms of quantity and quality. 

The ACCA survey (link to ACCA website) results support this view and follow two reports published in June which highlighted that investors are open to the concept of the integrated report which would encompass reporting of non-financial information alongside financial information. 

The survey highlights the growing importance of non-financial information with the most important sources being Sustainability/Corporate Social Responsibility (CSR) reports and annual reports.  The majority of those surveyed (67%) noted that they always make use of such information where available. 

Additional findings of the survey highlighted:

  • The majority (78%) of respondents felt that current levels of non-financial disclosure were inadequate.
  • 73% highlighted that non-financial information was not linked to the company strategy and risk and 93% were of the view that current levels of non-financial disclosure were insufficient to assess materiality.
  •  92% felt that comparability of non-financial information across companies was poor and it was suggested that additional information such as corporate governance and supply chain impacts could also be reported.
  • Company Boards should be made more accountable for non-financial information and disclosures should be approved at Annual General Meetings.

Click for ACCA survey: ‘What do investors expect from non-financial reporting?’ (link to ACCA website)

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