Skip to main content

How can companies best report on performance?

This can be a tricky question even when performance has been good, let alone when it has been bad or indifferent. In addition to a company’s own decision-making about how to present and explain its performance, companies have had a lot of regulatory and market change regarding the reporting of performance to think about in the last few years: the European Securities and Markets Authority’s Guidelines on Alternative Performance Measures, the European Commission’s Non-financial reporting Directive and other market initiatives such as the Task Force on Climate-related Financial Disclosure are just some examples of the reporting challenges companies have faced.

Given all of this change, the Financial Reporting Council’s Financial Reporting Lab undertook a project to get an investor view on the current state of reporting of performance metrics.

The project has so far gathered predominantly an investor perspective on reporting of performance metrics, although a number of companies have also been involved in the project either individually or through roundtables.

All of these discussions have culminated in the recently published ‘Performance metrics – an investor perspective’, which forms the first output of the Lab’s project on performance metrics. This document also includes high-level principles outlining the attributes investors want to see when companies are presenting their performance and performance metrics.

Throughout the investor interviews, participants referred to the impact the reporting of performance has on their assessment of management credibility. The metrics chosen, how they are reported and whether or not investors consider the reporting to be fair, balanced and understandable are central to this assessment.

Depending on an investor’s investment style, position in the investment chain, place in the market and personal approach there will always be some differences in approach. However, the Lab’s interviews identified a great deal of consistency in the attributes investors seek in the reporting of performance metrics. To assist companies, the Lab has developed a framework and set of questions for companies and their boards.

The framework notes that investors’ performance metrics disclosures which are:

  • Aligned to strategy;
  • Transparent;
  • In context;
  • Reliable; and
  • Consistent.

The questions flow from these investor principles, and cover items like the materiality of disclosure, the disclosure of oversight of the reliability of metrics, the level of balance in the reporting of metrics and how consistently metrics are presented. These reflect a consolidated investor view, and the Lab encourages companies and their boards to consider the principles and questions as they review their reporting and investor expectations of fair, balanced and understandable reporting.

The second phase of the project will begin shortly and culminate in a report in the autumn. This phase will identify and discuss examples of how companies have put the investor principles into practice, but in the meantime the Lab encourages companies to consider the investor questions and where they may be able to make improvements to their reporting and better meet the needs of investors.

If you are a company representative interested in discussing your views on the reporting of performance metrics we would be very pleased to have you get involved in the second phase pf the project. If you would like to take part please contact

This article was written by Hannah Armitage, Project Manager at the Financial Reporting Council's Financial Reporting Lab.

Powered By MemberPress WooCommerce Plus Integration