The dreaded annual report – so often the yearly blackspot in the corporate affairs team’s (already stretched) workload. When you’re the one grappling with the finance team to nail down the final final figures, vetoing enthusiastic superlatives from the marketing team (best year EVER!!) and finding the page real-estate for a thesis-length sustainability commentary, financial report writing can seem like walking a tight-rope over a pit of hungry, irritable lions who missed out on a doughnut at morning tea.
It’s easy to feel like it’s another tick-box compliance chore and forget the important role of corporate and financial reporting. And as for seeing it as a crucial opportunity for corporate storytelling, forget about it.
Trust me, we get it. But as communications professionals, we also believe any opportunity to speak to your stakeholders is valuable and should be maximised. Presenting a dispassionate financial report with acres of tables and densely spaced text is a missed opportunity of the highest order.
Boring though they can sometimes be, corporate financial reports are unsung heroes that have helped make financial markets as transparent and fair as we expect them to be today. Back in the bad old days, there were no standardised requirements for financial report writing. In fact, one of the factors that led to the Wall Street Crash of 1929 was the widespread sale of shares in fake companies and businesses. Company accounts and reports were not made public, so people had no way of verifying a company’s claims about its profitability and potential.
As stock markets have matured and become ever more regulated, corporate reporting has also become progressively standardised. Publicly listed companies are required to report in specific formats and at certain times, all in the interests of ensuring that investors have access to the same information about a company.
So, it is definitely a good thing that companies have to report on their goings on. But it has led to a certain sameness, if not a robotic repetition, in financial reporting writing. There are some who argue this is useful, because investors can compare apples with apples. But we don’t agree that corporate reports need to be so densely packed and horrible to read to achieve their aims.
The main purpose of financial reporting is to fully disclose a company’s financial situation to the reader.
And therein lies the rub.
There are real people reading them. It’s not just computers absorbing all the information and running an algorithm to decide what’s important. And there is likely to be a range of people reading a financial report, from analysts and accountants to mum and dad investors and NGOs. Some readers will have varying understanding of balance sheets and financial accounting methodologies, so including reams and reams of tables does not necessarily achieve full transparency for these audiences. If anything, it’s more akin to the ‘document dump’ strategy of overwhelming an opponent in a legal matter with a huge quantity of extra information to obscure or hide the relevant information.
The obvious way to make this density of information more accessible is to curate the content, pick out the most important points and summarise the broad trends. Now, the main danger of this is being accused of ‘cherry picking’ only the good news or using ‘spin’ to deliver bad news. This is where judicious use of language can help.
Readers are surprisingly adept at spotting weasel words when companies try to use them. Take the example of Australian baby formula manufacturer Bellamy’s. After several years of record growth, the company announced it was having a “transitional year” instead of a “difficult year”. And then it claimed that “momentum ha(d) been tempered by temporary volume dislocation” instead of admitting that “sales had fallen”. It was easy to spot the corporate nonsense, but the attempt to hide it led people to think there was something even worse going on. So the market voted with its feet. Bellamy’s suffered a 40% drop in share price in one day and was forced to call a trading halt. Shareholders revolted, understandably, and demanded a management clear out.
Would things have gone differently if Bellamy’s had been open about the challenges the company was facing? Instead of spooking investors with their caginess, they could have built trust with honesty and asked for shareholders to hold tight while they implemented their turnaround strategy.
Another way to make financial reporting writing more accessible to a broader audience is to make the language more engaging. A great way to do this is applying some personality or tone of voice. Again, this needs to be done carefully, because financial reports contain important information that shouldn’t be treated flippantly. But there are ways to add personality without undermining the seriousness of the content.
The latest Greggs annual report features smiling photos of their leadership team, captioned with their favourite Greggs snack. It’s a great way to humanise them and link them to the everyday work of the company. After all, who doesn’t love the vegan sausage rolls?
Strangely, the report also features this cracking piece of corporate nonsense: “As we continue to make significant progress in centralising our back office systems, introducing the new ways of working needed to compete more effectively as a centralised brand, we have well-trained and engaged colleagues providing great service to their team members, to ensure we provide the best customer experience possible.”
Well, we started this blog with a reference to walking a tightrope, so it seems appropriate that we come full circle. Yes, financial reporting plays an essential role in making markets fair and equitable. But, no, they don’t need to be dense and impenetrable tomes to achieve their objective of full disclosure.
Language has an important role to play in explaining, summarising and maybe even humanising the content of corporate reports. But it needs to be done in a way that retains a factual, informative approach and doesn’t detract from the seriousness of the report. This is where professional financial copywriters can help. We’re au fait with the technicals, but we know how to engage as well as inform. Because if people can quickly and easily understand what they need to from a financial report, that’s when real transparency is achieved.
Please take a look at the following links for more financial services examples: