Guidance on the Strategic Report

Published: 18 September 2023

2 minute read

Document
Name Guidance on the Strategic Report (June 2022)
Publication date 16 June 2022
Type Guidance
Format PDF, 895.2 KB

Introduction

In 2014, at the request of the Department for Business, Energy and Industrial Strategy (BEIS – formerly BIS) the FRC developed and published non-mandatory guidance on the application of the strategic report requirements introduced into The Companies Act 2006 by The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 (SI 2013/1970) (the Regulations).

The FRC’s Guidance on the Strategic Report (the Guidance) was revised in 2018 to incorporate the non-financial reporting Regulations which were effective for financial years beginning on or after 1 January 2017; and the reporting requirements relating to the director’s section 172 duty to promote the success of the company, which were effective for financial years beginning on or after 1 January 2019.

In 2022 the Guidance was updated to incorporate the following matters:

  • climate-related financial risks and opportunities, in line with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations;
  • the need for traded limited liability partnerships (LLPs) and banking LLPs to publish a strategic report;
  • clarifying the scope and definitions of the requirements with regard to public interest entities (PIEs); and
  • the government’s Streamlined Energy and Carbon Reporting (SECR) requirements.

The Guidance on the Strategic Report is set in the context of the annual report as a whole to recognise that the strategic report does not exist in isolation from other aspects of corporate reporting.

The Guidance includes communication principles that emphasise the qualities of good corporate reporting. It encourages companies to focus on the application of materiality to disclosures and to be innovative in the structuring of information to improve the clarity and conciseness of information.

The strategic report should provide a company’s shareholders with a holistic and meaningful picture of a company’s business model, strategy, risks, development, performance, position and future prospects including relevant non-financial information.

Communication principles

The strategic report and the annual report are a communication between companies and their stakeholders. We encourage companies to use the following communication principles to enhance the quality of their corporate reporting.

The Communication Principles infographic

Clarifications of the Regulations

  1. While developing the Guidance, the FRC worked closely with the Department for Business, Innovation and Skills (BIS), now the Department for Business, Energy and Industrial Strategy (BEIS). During the consultation process the FRC received a number of queries on legal matters related to the Regulations. BIS has provided clarifications on these matters in a letter to the FRC (PDF).
  2. In respect of The Companies (Miscellaneous Reporting) Regulations 2018, BEIS has issued some frequently asked questions (PDF) to support the legislative requirements. Guidance on the application of the section 172 duty is provided by the GC100.

Guidance in the form of non-binding Q&A to support companies and LLPs in their application of the climate-related financial requirements has been prepared by BEIS.

Further Information

Documents
Name Strategic Report Editorial amendments
Publication date 30 June 2020
Format PDF, 102.0 KB
Name Guidance on the Strategic Report – Appendix II and Appendix III
Publication date 31 May 2020
Format PDF, 99.5 KB
Name Guidance on the Strategic Report
Publication date 31 July 2018
Type Guidance
Format PDF, 1.4 MB
Name Feedback Statement: Amendments to the Guidance on the Strategic Report
Publication date 31 July 2018
Type Feedback paper
Format PDF, 425.3 KB
Name Invitation to comment: Draft Amendments to Strategic Report
Publication date 17 August 2017
Format PDF, 460.3 KB
Name Non-Financial Reporting Directive Factsheet
Publication date 26 July 2017
Type Information sheet
Format PDF, 161.9 KB
Name 2014 Guidance on the Strategic Report
Publication date 30 June 2014
Format PDF, 674.7 KB
Name Feedback Statement: Guidance on the Strategic Report
Publication date 9 June 2014
Type Guidance
Format PDF, 680.1 KB
Name Exposure Draft - Guidance on the Strategic Report 2013
Publication date 31 August 2013
Format PDF, 463.4 KB
Name FRC Staff Guidance Note - Strategic Report Regulations
Publication date 15 August 2013
Type Guidance
Format PDF, 151.1 KB