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Reaping the Rewards

09 December 2019 by Peter Swabey

Reaping the Rewards

The annual 2019 ICSA Awards showcased excellence in governance

On Wednesday 27 November, some 670 of the UK’s leading governance professionals gathered at the Park Lane Hilton hotel in London for the 2019 ICSA Awards – the Corporate Governance world’s equivalent of the Oscars - to celebrate the achievements of those organisations, individuals and teams that are leading the way in good governance and corporate reporting.

It was a fantastic evening, hosted by comedian Simon Evans, and great to see so many achievements being recognised. Many congratulations to all those shortlisted and, especially, to our winners, from whom we will be hearing more over the coming months. Photographs of the evening are elsewhere in this magazine and online, but I thought that it might be helpful to capture just a few of the key points from the judging process as companies start to think about the content of next year’s report – who knows, perhaps it will help you win in 2020! Obviously, I only have room for a few comments here, but will be happy to provide shortlisted companies with a more detailed feedback from the judges on request.

Much of the content of the annual report is prescribed in law and/or regulation, but this is an opportunity for the company to communicate its priorities, what it does and why, and how it differentiates itself from its competitors. We reviewed some very strong reports this year, with some innovative thinking and a number of categories showed significant improvement over last year. One area in which many companies were less strong was in the reporting of their purpose and business model, particularly in terms of inputs and outputs. The ones from Diageo, Derwent London, winner of the strategic report category, Great Portland Estates and from Biffa, winner in our Small Cap and AIM category, were felt by the judges to be particularly good. Derwent London also stood out for the section on stakeholders – winning the new category for stakeholder reporting with a clear explanation of how this was addressed at board level and appropriate links to KPIs.

Our other new category, reporting board evaluation, also showed improvement with a clear description of the process increasingly common. All were good on findings, but the winner, SSE, was particularly good on the tender process for the external evaluator and on progress.

Marks and Spencer stood out for clarity and readability in winning the remuneration report category and Rolls Royce won the board disclosure category with their demonstration of the chair’s leadership of the board, being particularly good on board effectiveness and the contribution of directors.

Our winner in the FTSE 250 category, Hammerson, stood out for some innovative ideas, especially the description of the appointment process for a director, and truly presented the company’s personality. Our FTSE 100 winner, Taylor Wimpey, communicated clearly and honestly with a particularly good governance section and excellent statements from the chair and CEO.

Sustainability reporting is much improved, although generally stronger in the separate reports than in the annual report. Our winner, Pennon Group, was felt by the judges to have thoroughly integrated sustainability within its business and evidenced this throughout its annual report. Much the same could be said of the category on Gender Pay Gap reporting, where there was some good reporting online, but it was a pity that so few companies addressed this issue in their annual report as well as this could be interpreted as showing a lack of real commitment. Our winner, Diageo, was particularly strong on identifying an action plan, clearly linked to its core business.

Audit and risk reporting were improving areas, with some good ideas on how to communicate the work of the committees to stakeholders, although some viability statements that we reviewed were a little bland. Our audit reporting winner, United Utilities, was particularly strong on internal controls and internal audit, and the management of their relationship with the external auditor was very clear, demonstrating the value that the audit committee brings to the business. Our risk reporting winner, Experian, discussed principal risks in a way which showed how integral they were to strategy, and Prudential were strong on the relationship between the audit and risk committees. They also had some innovative ideas, especially the calendar of risk events and CRO report.

All in all, I enjoyed reading the annual reports this year. There were some really good ideas and innovative communication which is most encouraging. I should also end by, once again, thanking our partners and judges for their efforts in deciding the winners, which we greatly appreciate.

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