FTSE-listed groups say heavier reporting burden distracts from strategy

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Four-fifths of FTSE 350 company boards have less time to focus on strategy because of increased corporate reporting requirements, according to a new survey. 

The findings from Chartered Governance Institute UK & Ireland’s Boardroom Bellwether survey, comes as the UK government and regulators press ahead with reforms designed to reinvigorate the London stock market while attempting to preserve the City’s reputation for high standards of corporate governance. 

The survey of FTSE 350 company secretaries, due to be published on Tuesday, found that almost a quarter believed increased reporting requirements were reducing the time available for boards to hold strategic discussions “to a large extent”. 

Another 58 per cent said there was a reduction “to some extent”, while 15 per cent said there had been no reduction and 4 per cent were unsure. 

The survey was based on 61 responses from company secretaries: 35 from the blue-chip FTSE 100 index and 26 from the mid-cap FTSE 250. 

In addition to reporting on traditional areas such as financial performance, boards over the recent years have faced a rise in requirements to disclose information on topics such as climate change and director remuneration. 

Mark Freebairn, head of the board practice at headhunter Odgers Berndtson, said the time spent by businesses on complying with reporting requirements “comes up every time I talk to someone in an executive role in a PLC”.

He said the reporting burden at listed companies was “creating a situation where a number of the most talented business leaders that we have are actively talking to me about getting out of PLCs”, given that private equity-backed companies generally face fewer reporting obligations and can often offer higher remuneration away from the gaze of public investors.

The UK government ran a consultation this year as part of a review of the non-financial reporting regime for companies that aims “to reduce burdens and drive economic growth”. 

The Chartered Governance Institute said while the findings suggested that the increase in reporting requirements was “ultimately, manageable”, boards spent “too much time looking backwards, and not enough time looking to the future”.

It added that while company reporting was essential to transparency, “the rapid emergence and proliferation of non-financial reporting requirements has led to a legitimate concern that this is taking up a disproportionate amount of board time”.

The Bellwether survey also found a strong improvement in business confidence compared with last year. Almost half of respondents said they expected a slight or significant improvement in the global economy over the next 12 months. Only 29 per cent expected a decline, compared with 76 per cent in 2022. 

However, the global economic environment remained the second most significant risk factor cited by the companies surveyed, second only to cyber risks.