Corporate reporting or communication is how an organisation relates with its stakeholders and the wider society. It enables organisations to express their character and identity to their stakeholders. Organisations are open and complex social systems in constant interaction with themselves (as a system) and the environment (including stakeholders) to achieve their purpose.
When assessing the current state of corporate reporting through this lens, it becomes apparent the factors that have shaped the reporting landscape up until today. Some have termed it a shareholder-driven type of capitalism.
In recent years, there have been some new trends leading a paradigm shift, and organisations are responding and embracing these new influences shaping the future of corporate reporting.
This approach to corporate reporting is due to observed trends like changing social norms, technological advancement, non-financial reporting, and the skills required.
Role of business
The changing role of businesses in society remains the biggest driver of change in the corporate reporting landscape.
Over the years, we have seen a shift in the view that the sole purpose of business was to make profits. This narrow view is steadily changing to a more comprehensive view on the role of business in society, which now encompasses what is summarised by the triple bottom line reporting as People, Profits and Planet.
It has influenced the demands and expectations placed on organisations by stakeholders and the wider society, including regulators.
Organisations have also come to understand that their future viability is inextricably bound to the shared prosperity of society.
Therefore, purpose-led organisations must report in a manner that addresses this changing role of business in society.
Financial and non-financial
As organisations develop an all-inclusive purpose that includes aspects beyond profits, we have also seen a steady rise in the demand for non-financial reporting by stakeholders and society as they become more environmentally conscious and values-driven.
Therefore, organisations have embraced additional reporting frameworks such as ESG and others to express their identity and communicate their values to enhance their brand and build trust with stakeholders.
More important is the need to provide a link between how non-financial reporting matters impact the financial fortunes of an organisation. The ability for stakeholders to distil relevant financial information from non-financial reporting will become a distinct feature of future corporate reporting.
To achieve this, organisations will have to employ new tools, for example, using technology to perform analytics.
Artificial intelligence (AI)
AI is one of the core technologies driving the fourth industrial revolution (4IR). It is bound to change how we think and reimagine our future generally.
As a technology toolkit, its ability to acquire learning at levels impossible for any human to digest and make significant discoveries improbable with any of the former toolkits ever known to society, makes it the most promising technology for our collective future, as noted by Michael Bhaskar.
From a corporate reporting standpoint, organisations would see AI play a more prominent role in financial reporting and analytics in the future. From providing analytics through machine learning on the relationship between non-financial matters impacting financial performance and position to processing speed and efficiency.
AI will form a critical component of the future of corporate reporting.
Talent management remains a significant aspect of an organisation.
The ability to manage human capital, derive the benefits and make it available for the organisation in the immediate and long term is critical for survival. From the trends discussed earlier, organisations can begin to understand the different skills and specialties required for corporate reporting in the future.
Technology, strategic corporate communication, including financial and non-financial reporting skills are some of the mix of talent for the future.
Awodumila is an Associate Director at PwC Kenya. An author who writes and speaks widely on corporate reporting topics