The introduction of the OFR has been announced by the government. It is likely it will will achieve a step change in the way most companies engage at the highest levels with these wider social, community and environmental issues that can impact long term shareholder value creation.
And so OFR is finally with us, for reporting periods starting on or after April fools day. Will it have been worth the wait, or has it just been a long drawn-out process of fooling those who hoped New Labour’s company law review in 1997 would herald a new dawn for stakeholder capitalism? Well, revolution it isn’t (but then “revolutions ‘r’ us” was never this government’s approach). Coupled with the proposed new directors’ duties, however, we believe it will achieve a step change in the way all except the most Neanderthal companies engage at the highest levels with these wider social, community and environmental issues that can impact long term shareholder value creation. The crucial thing now is to focus on getting the right KPIs into the OFR and on trying to avoid generalist waffle. The time to start is with next year’s annual report, even though for most the first statutory OFR won’t be until a year later. Already the same companies are planning to adopt a cautious ‘wait and see’ approach. As the standard is based on principles and without much prescription, the danger is that a minimalist approach becomes the norm. So the first round is crucial in establishing expectations – a real opportunity for CSR reporting leaders to set the pace.
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