Start the journey towards modern and efficient annual reporting

Guest blogger: Anders Antonsson, CEO circle360 communication

An annual report is a show of strength for any organization. For listed companies, it is often the single biggest communication effort in the financial year. It is also the document that means the most to all the company’s stakeholders as it provides an overall picture and the board is the sender and responsible for the content. If you are a board member, it may therefore be particularly important to give this article a few minutes.

A financial report such as the annual report should build trust and there needs to be a competent and confident process at all stages to be successful. With stricter regulations on sustainability reporting and tagging, the demands for efficient production and control of content are increasing.

Will the company meet the new requirements?
Every year there are new developments that affect the content of an annual report and now we are facing several legislative changes that fundamentally alter the annual report as we know it. But is everyone responsible, including board members, aware of and understands the new rules and abbreviations that apply?

The most far-reaching directives and legal rules can be summarized as CSRD, ESRS and ESEF. We have been reading about these for a while, but few listed companies have started to work concretely on implementing them in their annual report. Like all journeys, the journey towards a modern and (cost) efficient annual report starts with a first step. This step is to reflect on how the work is done today. Is the company using the right resources and prioritizing the right stakeholder groups? How do these groups want to be informed and build their knowledge of the business? How will the annual report of the future be produced? Are we meeting the requirements for tagging with cost-effective tools?

Make CSRD and ESRS an integral part…
All companies have their own procedures for reporting on their activities and financial performance. With the new regulations such as CSDR and ESRS many new requirements will follow that those responsible for producing the reports must address. Boards and management must describe the organization’s material sustainability issues in the short, medium and long term. These include the environment, social conditions, human resources, respect for human rights and the fight against corruption and bribery, as well as issues arising from the way the company is governed.

With new regulatory and investor requirements, there is now an opportunity to renew a listed company’s practices and relationships with its shareholders and all those who want to know more about its business and performance. With the right tools, process support and experience, those responsible for the production of the next annual report can gain confidence and overview to focus on what matters: the content and messages that build trust.

… for company management, board and auditor
Many people have to work together to produce an annual report. In many cases, the company’s CFO is responsible and that role will become even more important with the new regulations that place higher demands on the board’s involvement. With Xplir’s platform, the project manager gains an efficient and secure process.

The EU’s Corporate Sustainability Reporting Directive (CSRD) aims to improve the quality of sustainability reporting, but it also presents a significant business opportunity. The directive increases transparency and forces a company’s board and management to review strategy, objectives, priorities, and competence development. Companies will also have to prepare and quality assure comprehensive sustainability data, according to a new standard, ESRS. Companies must report their sustainability information to comply with the CSRD, currently the ESRS includes 84 disclosure requirements and 1 178 data points.

The responsibilities of a board in listed companies are expanding, the challenges and opportunities to work strategically are balancing innovation with existing business. With the right tools, such as Xplir’s platform, directors can focus on the important building blocks to ensure that the business’ sustainability work becomes an integral part of the company and that reporting takes place according to the new regulations with a safe and cost-effective process.

The company’s auditor must obtain sufficient and appropriate audit evidence to determine whether the annual accounts comply with the technical requirements set out in the ESEF Regulation. With Xplir, the company receives tagging via XBRL and publication in XHTML format for ESEF and other reporting requirements. The process is secure and provides confidence in the auditor’s review.

Xplir is a Swedish independent partner for companies that want a simple, cost-effective and secure production of financial reports.