FTSE 100 companies act on the UK Corporate Governance Code

Major UK-listed companies are embracing transparent reporting, sustainability and strong corporate governance as central pillars of their businesses, and implementing many of the UK Corporate Governance Code provisions, according to a benchmarking study of FTSE 100 company annual reports.

But though the reporting picture across blue chip companies is a vast improvement on practice five years ago, many still struggle to tell their story effectively, says study author Black Sun.

On the positive side, the narrative quality of annual reports has improved, with 72% of companies giving a detailed discussion of their strategy and a quarter giving an analysis of their business model – up from 12% the previous year.

The 68% of companies which claim sustainability is integral to or complements their group strategy grew by 15 percentage points on the previous year.

The FTSE 100 is responding to the government's call to improve disclosure on governance: 40% provide a personal governance report, against 17% in 2009, and 28% discuss governance as part of their opening statements alongside a description of board changes.

In line with government guidance, the FTSE 100 also makes much more use of online reporting. Two thirds of annual reports are now provided in HTML online and two thirds of corporate sites contain links to social media (up from 8% in 2009).

However, on the debit side, risk reporting remains weak, with just a quarter giving details of risk management processes.

Black Sun director of research Sallie Pilot said: “The FTSE 100 has risen to the challenge of the new code [and has] a greater desire to demonstrate transparency to stakeholders. Many corporates work hard to tell the story as completely as possible, linking the different threads to make it more meaningful.  

“While challenging areas still exist, the improvement in the quality of content and the way in which it is delivered even relative to five years ago is marked.”