IBEX 35 trails FTSE 350 in integrated reporting

A new PwC study of the integrated reporting practices of Spain’s top listed companies shows they trail their UK peers in 10 out of 12 key areas of integrated reporting. The survey, Integrated reporting in IBEX 35 entities, assesses how the IBEX 35 companies report on external market drivers, strategy and risks, resources, and performance and compares them with a similar study of FTSE 350 and FTSE 100 reporting practices.

More UK listed companies comment on future market trends than their Spanish counterparts (84% against 71%). However, the PwC analysis shows that three out of four companies in each jurisdiction fail to explain clearly how future scenarios could impact their business.

Most IBEX 35 companies (89%) include information on strategic priorities, which is on a par with the FTSE analysis (94%). But far fewer companies in each jurisdiction effectively align their information with company strategy (IBEX 11%, FTSE 16%). Spain is further behind in its reporting of key risks – 83% against 97%. The proportion of companies that clearly explain the impact of risks and their mitigation approach is again lower in each case – 31% in Spain and 45% in the UK.

Spanish companies lead the UK when it comes to reporting on their resource management (89% against 74%), but fare less well on explaining the impact on their business model. Less than 10% of the IBEX companies link resource management to their business model. 33% of FTSE companies explain their business model, which reflects the new UK corporate governance code requirements.

Only 63% of IBEX 35 companies explicitly identify key performance indicators (KPIs) compared with 93% of FTSE companies. Less than 10% of Spanish listed companies make an effective link between KPIs and business strategy, against 35% in the UK. While sustainability KPIs are more prevalent in Spain – 97% against 74% – companies in both countries struggle to link sustainability with strategy.

“Current financial information looks to the past,” said Javier Lapastora, PwC assurance leader in Spain. “Today’s economic context demands a deep change to the corporate information model in the future, and no entity should be reluctant to make this change if it wants to meet the expectations of its stakeholders.

“Spanish entities are taking big steps forward in trying to integrate the economic, social and environmental information in a context that links risks, strategy, business model and performance indicators, even though they still have a long way to go. Now is the time to lead an innovative change in companies’ current model of financial and non-financial information.”