C-Suite and Investors Want Better Value Creation Information - Black Sun Global

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C-Suite and Investors Want Better Value Creation Information

A new research report, ‘Purpose Beyond Profit: The Value of Value, Board-level Insights released today, reveals that executives believe that they need better information to deliver future success. Only 11% of executives who were surveyed report being able to make strategic decisions based on a broad range of quality financial and non-financial information generated internally. However a substantial 38% reported that their businesses are working on capturing new types of information and creating new tools to better understand performance.

These findings align with recent investor research, indicating that investors want companies to disclose better quality non-financial information, not more non-financial information. Purpose Beyond Profit is a report and project coordinated by The Association of International Certified Professional Accountants ('the Association'), Black Sun Plc and the International Integrated Reporting Council (IIRC) and is based on a global survey of business leaders which analyses how value creation information is used and understood.  The study was conducted with over 400 AICPA and CIMA members, a cohort including 41 CEO/Presidents, 177 CFOs and other executives from over 50 countries. Key findings of the research include:

  • 93% of executives agree that effectively explaining value creation is important
  • 79% agree that a longer-term perspective would improve value creation
  • 96% agree that bringing financial and non-financial information together provides a more forward-looking, longer-term view of performance
  • Only 28% report a high level of confidence in the strategic information their businesses disclose (including goals and competencies)
  • Only 24% report a high level of confidence in business model reporting (including types of value created for different stakeholders)
  • Only 24% believe their company's disclosure does a very good job of meeting external information needs

The Purpose Beyond Profit survey results also mirror the results of recent investor surveys, summarised in the report, which highlight the need for better disclosure as opposed to more disclosure.  These findings illuminate the disclosure changes necessary to achieve real progress.  A 2017 investor survey by the CFA Institute found that the biggest factors limiting the use of non-financial information include:

  • Lack of appropriate quantitative environmental, social and governance information (a concern of 55% of investors)
  • Concerns about the quality of data or lack of verification of data that is disclosed (a concern of 45%)

Andrew Harding, FCMA, CGMA, Chief Executive Management Accounting, the Association, said: "This report reinforces that explaining the value creation process in business is about much more than just the bottom line. It is about using information to tell a complete corporate story. We welcome this report as further evidence that business leaders understand the need to capture information and report in more impactful and useful ways. This is good news for management accountants, given their expertise in dealing with financial and non-financial data and helping businesses to create value over the short, medium and long-term.”

Richard Howitt, CEO, IIRC said, “I am pleased that executives around the world see tangible, practical value in integrated thinking and reporting. An overwhelming majority of executives surveyed for this report, 83%, believe that adopting integrated reporting supports business success."

Sallie Pilot, Black Sun’s Chief Insight and Engagement Officer said, “The integrity of a company's value creation story is essential to building trust with stakeholders. Purpose Beyond Profit reveals that while executives believe that meeting the needs of investors will continue to be important, meeting the needs of customers and other stakeholders will be significantly more important to business success in the future. As expectations of businesses change, reporting and disclosure also need to change.”

Read more and download the full report here

For further information contact: [email protected] Kaarina Vieru, Communications Manager, Black Sun Plc