By Ian Smith , 26 January 2017
If annual reports are anything to go by, George Orwell's six rules for compact prose are not widely read in the communication departments of the corporate sector. Banking giant HSBC's (HSBA) annual report is now regularly longer than 500 pages, and some of its big listed peers are not far behind. The weight of regulatory precepts, pressure from shareholders and lobby groups and the steady creep of legalese have delivered to us these protracted, glossy monstrosities, which do not look likely to be pared down anytime soon.
There is one major advantage to this - comprehensiveness - and a few disadvantages (aside from the carbon footprint for those still printed) - a lack of clarity, a predominance of spin, a reliance on the written word and the colossal table rather than graphical elements that could better demonstrate certain areas of performance. We should welcome, then, that many companies are trying to push beyond the confines of the annual report in their digital communications, using different forms of media in an attempt to make their businesses more transparent.
Communications agency Comprend has published its 2017 Webranking survey of how the largest listed European companies are meeting the needs of capital markets participants (analysts, investors, journalists) as well as job hunters. The UK picture is largely unchanged from last year - although there are a few shining lights, UK businesses generally lag their counterparts in Italy, Germany and the Nordics.
Across the board, the survey data demonstrate a substantial gap between what market-watchers want from European companies' web presence, and what the latter are providing. For instance, 91 per cent of those surveyed wanted market share information provided on a company website, while only 15 per cent of businesses provide it. Nearly all respondents (95 per cent) wanted to know where a company's services and production sites are based, but only 47 per cent of companies provide that information.
Even on the basics - what businesses actually do - the survey finds a shortfall: most companies present this information generically and with little use of interactive features, while two-thirds of companies don't break down their performance figures by business area.
The ready rejoinder would be: 'It's in the annual report.' And it's true that analysts, IC writers and many investors will mine the published data and press the company for what is behind the numbers. But this gap allows companies to present their business utterly as they would like to be seen, rather than how it actually is. A diversification into a new business line can be one day old before it is given equal weight in the digital spiel.
One of the most desired items was a company's financial outlook, which only 13 per cent of companies provide. And only 5 per cent of listed European corporates explain in detail how they are going to meet their financial targets. Domestic companies are particularly bad in this area of investor relations. Only one in four of the UK companies analysed set out their investment case online, which should be a fairly straightforward matter for a public company.
There is always a risk that corporate websites become just as overbearing as annual reports, including everything at the expense of everything else. But with the right nudge, these could become places where there is a convention to provide useful illustrations on what they are selling and where, remuneration structures, a few important targets and the current outlook. Not a glossy 10-minute video with the chief executive, but a performance snapshot at a point in time. Just a thought.