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Investor expectations for Section 172 stakeholder and decisions reporting

Financial Reporting Council (FRC) discussions with investors highlight that investors are ultimately interested in understanding how a company is progressing towards fulfilling its purpose and achieving long-term success. Information on stakeholders and decisions can help that understanding and is brought together in the Section 172 statement.

The FRC obtained feedback from investors on what information they would like to see in Section 172 statements about stakeholders and the decisions taken during the financial year.

Investors expect to see companies reporting more significant and difficult decisions than usual, especially in light of the COVID-19 pandemic.

Companies should not shy away from discussing thorny issues and should demonstrate how they have considered the impacts and consequences of decisions on different stakeholders.

Information on stakeholders

Many investors would like information on stakeholders that is less generic and which provides sufficient discussion on what really matters to the company and does not avoid negative issues.

Investor’s view information on key stakeholders as critical to understanding the company and its prospects and want companies to set out clearly:

Information on decisions

Investors wanted companies to set out clearly those significant decisions taken during the year and how they link to the company’s purpose and strategic priorities.

For each significant decision investors would like to know:

Section 172 statements

The statement should tackle what the company is doing to be successful for the long term and highlight the board’s role in this.

Investors emphasised that the more useful Section 172 statements:

The FRC’s report highlights examples that demonstrate an approach to useful disclosures and illustrate the principles that investors have highlighted.

If you would like to discuss any of these issues further, please contact Lee Marshall.

authors:lee-marshall