Many big private firms not up to scratch on transparency, survey suggests

Many large private firms are disclosing little more than the legal minimum in their annual reports, according to a study by Citypress into reporting requirements of the 50 largest privately owned companies.

13 firms offered a level of disclosure in their annual reports that was little more than the legal minimum (©GettyImages)
13 firms offered a level of disclosure in their annual reports that was little more than the legal minimum (©GettyImages)

A new voluntary code - the Wates Principles - for these companies was introduced in the wake of the BHS pensions scandal. It advocates for much greater disclosure in annual reports and accounts and involves areas such as stakeholder engagement, board composition, purpose and leadership.

Reputation of businesses improves but firms must communicate 'purpose', survey suggests

Citypress found only a dozen were ‘early adopters’ of the new code, with just as many still providing little more than the bare legal minimum of detail.

A large privately-owned company is described as having 2,000 or more employees globally, a global turnover of more than £200m, and/or a balance sheet of more than £2bn.

The agency scored each company against the six guiding principles of Wates: purpose and leadership, board composition, director responsibilities, opportunity and risk, remuneration, and stakeholder relationships and engagement. In addition, Citypress looked at boardroom pay disclosure and gender diversity.

The agency gave 13 companies the highest ‘green’ rating – including household names like John Lewis, Virgin Atlantic and Thames Water. Another 13 were in the ‘red’ zone, where the level of disclosure was little more than the legal minimum, with the rest falling into the ‘amber’ or ‘room for improvement’ category.

The new code was introduced after the collapse of BHS in 2015, which resulted in the loss of 11,000 jobs, and put the pensions of some 19,000 current and past employees of the retail chain under severe threat.

The Pensions Regulator said Sir Philip Green sold the BHS business to dodge responsibility for its insolvent pension schemes if the firm should go bust. In 2017, Green agreed to pay £363m back into the BHS pension schemes.

Citypress director Patrick Tooher described Wates as the biggest shake-up in corporate reporting in a generation. He said the annual report and accounts should be the ‘shop window’ for any company, as they contain vital information for investors, employees, customers and policymakers.

"All this matters because as scrutiny on big companies increases, communicators have an important role to play to ensure their business speaks authentically about its purpose. Rather than adopting a tick-box approach, agencies should encourage their clients to embrace the Wates code to really bring to life what their company stands for."

He added: "We’ll continue to monitor the performance of the biggest private companies, starting this month, when many of them are due to file their latest report and accounts at Companies House."

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