Black Sun was delighted to host a webinar earlier this month looking at how the first set of December year-end companies to publish their 2025 annual reports had responded to the UK Corporate Governance Code 2024 which applied for the first time to this reporting cycle.
We were very grateful to be joined by a panel of experts, including:
The speakers were invited to comment on three key areas of change under the new Code, namely:
For each area, reporting examples from the earliest December year-end annual reports were shared, followed by a discussion. Insights from our panellists for each focus area are set out below.
Effective outcomes based reporting should not be additive.
Jessica Dahlstrom:
At the FRC, we’ve been promoting outcomes-based reporting for some time, but this is the first time we’ve actually had the opportunity to include it in the Code itself. The main purpose of this change is to encourage companies to remove excessive content on policies and procedures; it isn’t meant to be additive.
Just because something is headed “outcomes” doesn’t necessarily make it meaningful reporting, but we are encouraged by the reporting we have seen so far.
Peter Swabey:
The whole concept of looking at the impact of what you’ve done as a board is valuable, and it doesn’t matter if there isn’t an outcome within the financial year under review for some elements of activity.
Reporting on culture has improved in the past few years, and companies have responded positively to reporting on the embedding of culture.
Jessica Dahlstrom:
Our Annual Reviews [of Corporate Governance Reporting*] have shown that reporting on culture has really improved over the past few years, so this Code change, although important, was in some ways more of a nudge. But looking at these early reporters, it seems that it has been well received and responded to.
Reporting on culture embedding doesn’t need to be lengthy in order to be effective.
Peter Swabey:
I agree that you don’t need to write reams in order to talk about your culture.
Effective reporters can be quite concise about how they address culture-related issues and are informative and engaging as well, which is really helpful.
While much has stayed the same in the 2024 Code, companies are now reporting on their preparations for Provision 29 with varying levels of detail.
Jessica Dahlstrom:
In relation to Provision 29, much stays the same, as the provision still asks companies to monitor and review all of their material controls, as it did before.
We don’t expect to see reporting against the new provision until 2027, but we are interested to see that companies are including some information about how they are preparing for this change.
Peter Swabey:
I have a rather hawkish view of Provision 29, which is that it’s not asking you to do anything new; it’s not asking you to do anything different. All the board is being asked to do is confirm that they are satisfied with the internal controls of the company.
External assurance is not a Code requirement; it is for the board to decide. The different approaches discussed by early reporters are therefore taken as a positive.
Jessica Dahlstrom:
Throughout our communications about the changes to Provision 29, we have always said that there’s no requirement to seek any type of external assurance. If you were to look at our guidance, you’d see that it says it’s for boards themselves to decide what, if any, assurance they feel is appropriate around any aspect of this work.
I’m really encouraged to see that a range of approaches is emerging, because it’s entirely legitimate for different companies to take different approaches.
At the start of our engagement on Provision 29, both as it was being developed and when we had settled on the final wording, there were quite a lot of requests and questions around what a declaration should look like. Will you be providing a template or suggested wording, we were asked. Our answer has always been that doing so would defeat the purpose, because we are hoping companies will avoid boilerplate reporting.
Peter Swabey:
I agree. I would have thought that for many, possibly most, organisations, the board will feel able to place sufficient reliance on their own internal mechanisms to be able to do that.
External assurance is not mandated. Is it necessary? Absolutely not. Is it desirable? I think it will be for some organisations, particularly where they’re not as confident as they would like to be that they have everything under control internally.
What you might find, then, is that people will perhaps have external assurance one year and then not feel they need it again for a period.
It’s for companies to make their own decision about the degree to which they need it.
Early reporters’ responses to the changes were welcomed by our speakers, and Peter Swabey summed up with some positive advice on effective reporting:
“Make your reporting about you, make it personal. It’s your story. I always say this with annual reports: it’s your story as a company. Tell it, and tell it in your own way.
Yes, there are statutory and regulatory things that you have to make sure you’ve included, but tell your story — tell the key issues that you believe are of importance to the company.”
Due to technical difficulties, we were very sorry not to be able to gain the benefit of insights from our third panellist, Libby Dawson, but look forward to welcoming her as a speaker on a future webinar.
If you would like to find out more about we can help you to better implement any aspects of the Code, or improve your reporting please get in touch with our Head of Business Development, Bob Crosbie-Dawson.
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