Information on stakeholders and on how decisions are taken can help investors understand how a company is progressing in terms of fulfilling its purpose and achieving long-term success. This is where Section 172 statements come into their own: they help connect one type of information with the other. The FR Lab has now published a report that assists with these disclosures: Reporting on stakeholders, decisions and Section 172.
“The Section 172 statement describes how the directors, when performing their duty to promote the success of the company for the benefit of its members as a whole, have had regard to a range of matters including, for example, the interest of employees, relationships with customer and suppliers, and the likely consequences of decisions in the long term,” explains Sarah Dunn, ICAEW Technical Manager. “The Section 172 disclosures are far-reaching and require careful consideration by directors. Judgement is required as to the nature and detail to be disclosed.”
As a relatively new and evolving area of reporting, the FRC Lab’s report and the corresponding summary provides useful insights into investor needs and highlights best practice. “Identifying questions for companies to consider when determining what information to disclose on stakeholders and decisions will serve as a helpful guide for companies preparing Section 172 statements and will promote better quality reporting in this area,” she continues.
A podcast is also available where the Lab’s project manager, Marie Claire Tabone, speaks to Freddie Woolfe, Global Sustainable Equities Analyst at Jupiter Asset Management and Helen Price, Stewardship Manager at Brunel Pension Partnership. They discuss linking information on stakeholders and decisions to strategy and company success.
Further guidance on the strategic report and s172 Statements can be found at icaew.com/nfr