FRC report looks at "Materiality Mindset" for better corporate reporting
Published: 30 October 2023
The Financial Reporting Council (FRC) has today published a report looking at how companies can improve their corporate reporting by taking a more focused, strategic approach to assessing materiality.
Following interviews with companies, investors, advisors and other stakeholders, the new report, "Materiality in practice: applying a materiality mindset," encourages companies to think holistically about what information is material to their stakeholders when preparing annual reports. It provides practical suggestions and examples for identifying material issues, where reporting could be streamlined and prioritising key messages.
Key elements in the report include:
- Taking a holistic approach that connects quantitative, qualitative and sustainability-related factors across strategy, operations, and finances.
- Focusing on the key issues that management and the board are prioritising across the short, medium and long-term.
FRC Executive Director of Regulatory Standards, Mark Babington
“Given the complexity of some corporate reporting, companies should look holistically when deciding what information to give their stakeholders.
"The suggestions in this report are a starting point for an ongoing dialogue on materiality and we look forward to continuing to engage with companies and the investor community on this important issue."
Read more from Mark Babington about the FRC’s commitment to working with stakeholders on this topic in his statement on the FRC’s approach to materiality.
Applying a holistic mindset is also essential for sustainability-related reporting, as highlighted by two previous FRC reports on ESG data practices. The recommendations for companies from those reports on collecting, using, and effectively reporting material ESG data to investors have now been brought together in one summary.