Key findings – annual reporting

The regulatory landscape

Ambitions to create an integrated Europe have been around since the days of Charlemagne. But what are today's European institutions doing to better align the Continent's reporting?

Largely the rules on narrative reporting in EU countries follow the principles laid down in the European Commission's Directives. However, in practice corporate reporting continues to reflect national regulations, practices and priorities - a fact highlighted by the differences between different countries' regulations around areas such as reporting of non-financial information.

Despite - or perhaps because of - these differences, narrative reporting remains an important agenda item for the European Commission as it continues to aim for a consistent reporting approach by all countries. In fact, Brussels recently held two important consultations which indicate its thinking.

First, recognising existing variations, the Commission's consultation on the disclosure of non-financial information focuses on creating a common approach to reporting on corporate responsibility issues. Second, in April the Commission published its Green Paper on how corporate governance reporting should evolve in the EU.

Absent - so far - from any review by the Commission is a focus on the 'general' requirements of the Fourth Company Law Directive.

From a best practice perspective, meanwhile, in 2010 the International Accounting Standards' Board published its IFRS Practice Statement Management Commentary, which sets key principles and characteristics for management commentary and aims to provide a non-binding framework for companies using IFRS - and it bears more than just a passing resemblance to the OFR Reporting Statement.

For now, corporate reporting remains largely national. That said, there are indications of further regulatory convergence - at least in some areas - may lie ahead. And there are some companies which go beyond regulation to transcend national trends. These companies, some of whom are highlighted below, set themselves apart by focussing on communication and the needs of the audience, as well as complying with the requirements of the regulator.

Leading the way

This year, we analysed the annual reports of some of Europe's largest companies. While the approach taken varied widely across the sample, BASF, Deutsche Telekom, Novartis and Novo Nordisk stood out from the pack for their transparent, communicative reporting.