This year's Annual Report on Annual Reports – AR on AR 2021 – is based on an evaluation of more than 500 annual reports in 25 criteria.
The evaluation criteria have consistently been based on a well-balanced perspective blending financial and operational analysis, strategy and operations, visual and textual elements, share- and broader stakeholders’ issues, and information content and communication style – whether in print or online. It is both about the content of the reports and how this information is presented.
Report assessment criteria have to cope with trends, challenges, investors, and other stakeholders’ expectations. Therefore, they have evolved and are updated and upgraded regularly. This year, we have also asked what professional users of annual reports – analysts, investors, and business journalists – find important in annual reports as part of our 2021 Capital Market survey. ESG has gotten a higher focus in terms of expecting more information on sustainability strategy, goals and achievements. Online reports have also increased in importance.
Average score per country
The companies were selected based on market cap, starting with the 350 largest companies in Europe, the 100 largest in Sweden and the UK and around 60 from outside of Europe.
The Nordic countries are well represented in the top with similar scores – slightly higher for Norway, although they only had 7 companies on the list.
|Country||Average score||Number of companies|
* Max score = 100
Average score per sector
The Real Estate sector – with 14 of the 24 companies from Sweden and the rest from UK, Germany and Switzerland – had the highest average score.
|Sector||Average score*||Number of companies|
|Personal Care, Drug and Grocery Stores ||68.7||16|
|Travel and Leisure||66.0||18|
|Construction and Materials||64.9||22|
|Food, Beverage and Tobacco ||63.7||21|
|Consumer Products and Services||62.1||25|
|Automobiles and Parts||61.1||14|
|Industrial Goods and Services||59.6||74|
* Max score = 100
Highest average criteria
The criteria that were given the highest average score in this year's review were:
- Financial review
- Risks and risk management
- Review of operations
- Sustainability strategy
This indicates that in addition to mandatory information, companies are keen to highlight their sustainability efforts and approaches. The top 10 companies were also strong in presenting their environmental targets and data, as well as strategy.
Lowest average criteria
The criteria that would need more attention to improve were:
- Financial targets and achievements
- Historical data (Multi-year summary)
Only three companies got a full score in the financial targets and achievements criterion, which also included a financial outlook. The low score for usability is somewhat surprising. Around 40% of the annual reports in PDF provided relevant bookmarks, and 25% presented navigation links to make it easier for readers to go between sections in the reports. This would give a better overview of the content of the report. With links within the report, duplicate or repeated content could be skipped making it possible to slim down the reports. The average length of the annual reports this year – including sustainability reports and related documents – was 270 pages. The equivalent for the top 10 performers was 201 pages.
32% of the companies provided some kind of online report. Many of these offered online summaries, with links to the PDF. This is unfortunate as companies are missing out on reaching more readers in other target groups. See some examples of good online annual reports in the Best practices section.