The Investment Association has renewed its call for companies to abandon quarterly reporting in new guidance that seeks to encourage long-termism in the industry.
The 14-page document, Long-Term Reporting Guidance, also provides clarification on information that fund managers want to see in company annual reports, including drivers of productivity in a business, capital management strategy, ESG issues, and human capital management.
Released today, the guidance calls premium listings in the UK exchange to adopt points raised as soon as possible and advises companies with standard listings or part of the Aim market to adopt it as a matter of best practice.
Specifically, the guidance calls for a “continued transition away from issuing quarterly reports and short-term earnings guidance, supported by the provision of greater long term and thematic research”.
“For those companies that continue to report quarterly, either due to competitive market pressures or shorter market cycles, our members ask that those companies publicly explain this position, and how it is relevant to the achievement of their long term strategy,” the guidance states.
It calls for ESG considerations to be taken on board when it comes to setting remuneration and for quantitative disclosures on working capital, investment capex, R&D, capital distribution, including debt servicing, dividends and buy backs; and investment in skills and training.
Last October the IA called for quarterly reporting to be abandoned in favour of “meaningful long-term” reporting.
Andrew Ninian, IA director of stewardship and corporate governance, says all businesses need access to long-term funding to grow, but many who take a long-term view are not currently maximising their appeal to investors.
“The best way to boost productivity and long term returns in the UK is to shift the way many big companies operate away from a short term focus, to more long-term decision-making.
“This will ultimately benefit the economy as a whole by creating more jobs, higher levels of growth and stronger returns for savers.”
From the end of September, the IA’s Institutional Voting Information Service (IVIS) will monitor implementation of the long-term reporting guidance.
The guidance forms one of the key strands of the Productivity Action Plan, announced by the IA in March.