Format, strategy and promotion.
Applicable since January 1, 2024, the European Corporate Sustainability Reporting Directive (CSRD) promises to challenge the communication departments and communication practices of companies.
Impact of the CSRD, relevance of the annual report and alternatives, good practices… to explore this subject further in the midst of General Meetings and the publication of annual reports, we met an expert on CSRD subjects at Spintank and VP Content, Camille Laval.
Could the CSRD directive, which aims to improve the quality of ESG (Environment, Social, Governance) data, signal the end of the annual report as we know it? Answers in this new Drivers of Change.
How will the CSRD directive transform companies’ communication practices, particularly with regard to annual reports?
Camille Laval: The CSRD raises expectations for companies when it comes to sustainability reporting. Reporting required in the management report. The directive therefore does not apply directly to corporate communication or the annual report exercise. But the provision of an increased number of extra-financial data and information, more qualitative and harmonized at the scale of listed companies, offers a unique opportunity to strengthen the sustainability discourse of companies in CSR communication but also in the annual report which remains a reference document for all internal and corporate communication.
Companies that produce integrated annual reports can only praise the entry into force of the CSRD since integrated reporting and the European directive pursue the same objective: to show that the company takes ESG issues into account in its strategy and governance and that it creates financial and extra-financial value over time. All this while meeting a requirement for clarity and transparency.
This approach also fully meets the expectations of the audiences of annual reports (investors, shareholders, candidates and employees, etc.) and of corporate communications more broadly, who are increasingly attentive to corporate responsibility.
What advice would you give to communications departments to prepare effectively for the entry into force of the CSRD directive in 2024?
C.L. : The CSRD will provide corporate communications departments with new data to strengthen their sustainability discourse. Companies that practice integrated reporting already produce perfectly structured materials to accommodate the requirements of the CSRD, presenting the macro-trends that impact the strategy, value creation models, materiality matrices, infographics with figures on performance financial and extra-financial… For these companies, the CSRD will help improve the precision and transparency of extra-financial information. But they will also have to rethink the way in which they promote the integration of ESG issues into their strategy or even the management of their risks. I am thinking in particular of the dual materiality matrix which takes into account the impact of the company’s strategy on society and the environment.
The CSRD requires transparency in the short, medium and long term. It will also offer communicators the opportunity to work on new data presentations, new formats that allow them to put data into perspective and play with it over time. Companies have every interest in working more with digital technology to present data in a dynamic and interactive way and thus better promote commitments over time. The CSRD directive could signal the end of the one-shot annual report, to become a system designed for the long term, which would only require updates of key figures from one year to the next.
On an organizational level, I think that the communications departments will have to work more closely with the CSR and financial departments as well as with consulting firms. This has been our approach with Orange to ensure reporting complies with sustainability reporting requirements, end to end.
Many communications departments consider that the operational usefulness of the annual report for analysts is low. Do you share this observation? Why?
C.L. : I cannot provide a scientific answer, because I do not have consolidated data on audiences for the annual report. But in fact, analysts tend to turn to regulatory publications such as the DEU for questions of completeness of the data. This is also the only document filed with the AMF. This is not the case for the annual report, whose objective, let us remember, is not only financial and extra-financial reporting, but also to convey the group’s vision and strategy. He therefore has a duty of pedagogy and selection of data in the service of the story.
However, certain annual reports, particularly integrated ones, intended for a broader and less expert audience, are sometimes much more readable and understandable than the DEU with regard to the strategy or business model. Analysts have every interest in consulting them. Even more so, with the entry into force of the CSRD which will raise their standards in terms of transparency and responsibility.
Do you think that the CSRD encourages companies to favor other, more appropriate forms of corporate communication and if so, which ones?
C.L. : Some companies find the right balance between storytelling and data reporting to continue to convey the company’s vision in communicative reports while remaining transparent and responsible in reporting their performance.
For companies that produce very technical annual reports, they must ensure that they integrate into their corporate communication system more communicative supports and formats capable of conveying the vision and engaging larger audiences.
Have you noticed a change in the way companies communicate on these subjects, a trend perhaps?
C.L. : It is still too early to discuss the impact of the CSRD on the subject of the “annual report”. Few companies have integrated the expectations of the CSRD, such as dual materiality, into their integrated annual report, for example. What is certain is that today the landscape of annual reports is very fragmented in terms of system and approach. Each company adapts its system to its more or less expert audience. And this is the right approach.
But, overall, this year we are seeing a trend towards more synthetic reports, which favor reporting over storytelling, often in landscape format. A digital-first support that is easily reusable internally and viewable on screen, with a clear and concise presentation.
The trend is also towards reducing the number of printed copies, often reserved for the General Meeting, reception at headquarters and in certain subsidiaries and the internal audience.
Can you cite examples of companies that have already implemented best practices in ESG reporting in accordance with CSRD requirements?
C.L. : DEU, DPEF, sustainable development reports, impact reports… There are now a number of media on which sustainability reporting can be done. But if I stick to the integrated annual report, I will mention Orange which, as I mentioned earlier, worked hand in hand with a consulting firm to control sustainability reporting across the entire report, from the strategic pages to the promotion of the Group’s contributions. Orange also redesigned the presentation of its business model this year to promote the full integration of ESG issues, and is one of the first groups to publish its dual materiality matrix in its integrated annual report.
The production of annual reports requires a significant investment despite confidential distribution and a limited lifespan. How can companies optimize their resources in this context?
C.L. : Yes, and that’s a shame. The production of annual reports remains a significant investment, but essential, because it is the key moment of the year when management and the business lines come together to collect data and major advances, but also to tell the strategy and vision of the group. We do not suspect the submerged part of the iceberg, that is to say all the value that this document can produce. It is not calculated just by clicking or downloading the report.
Exactly, how is this value and this “return on investment” calculated?
C.L. : The annual report is a reference document that summarizes the company’s vision and strategy. It contains elements of evidence and elements of language validated by all professions and management. It is therefore crucial to ensure that this content lives beyond the strict annual report system, in other corporate and internal communication channels, to reach different audiences over time.
This involves significant work on meshing content and extending reading within the company’s communications ecosystem, promoting content on social networks or even major thematic campaigns to enhance and extend the work carried out… This is what we have done for years for CITEO by capitalizing on the wealth of content in the annual report to animate conversations around the themes addressed through live events on Linkedin and Instagram. The relaying of content by the company’s internal and external stakeholders is also a key way to give credibility to the company’s story and increase the impact of the annual report tenfold.
It is essential to plan the distribution and activation of content well in advance of the production process to maximize its impact.
