Announced on 28 November 2019, the winners and highly commended organisations of the 2019 Building Public Trust Awards are showcased below covering Reporting in Corporate Governance, Cyber Security, Financial Services, Remuneration, Strategic, Sustainability, and Tax.
Read comments from the independent judging panel to see how these organisations differentiated themselves.
Last year’s winner claims top spot once again with a consistently strong governance report that tells a clear story about how governance has been applied to run the business and develop the long-term strategy. The judges were particularly impressed by the reporting of the board’s deliberations on culture and employee engagement, with one panellist commenting: “They provide hard evidence for what they’re trying to do with culture ⎯ something that not many companies do.” The issues surrounding the planned demerger of the energy services business — which was ultimately abandoned — are covered openly and in detail, including the impacts on various stakeholders. “The chairman’s statement at the start is excellent, and governance runs throughout the annual report,” said a judge. “In every section, they show how corporate governance supports the business.”
Winner Corporate Governance, SSE. Shown here (left to right) Mary Nightingale, Kate Gill, Iain Wright
M&S is highly commended for the second year running, for its engaging yet comprehensive reporting on how the board and committees contributed to the delivery of the company’s strategy during the year, especially in relation to the Ocado joint venture. The disclosures on diversity at all levels — including the board — are unusually thorough, and the discussion of the firm’s people culture is explicitly linked to the governance reporting and commentary on the 2018 UK Corporate Governance Code. The judges felt M&S’s reporting covered all the necessary bases in a consistent and joined-up way, including a specific focus on stakeholders, complete with disclosures on “board considerations” related to each stakeholder group.
Concise and easily navigable governance reporting that’s set apart by its distinctive disclosures on National Grid’s “culture journey”, and on the central role played by the board in re-establishing and monitoring the company’s purpose, vision and values. “I really like the bullet point-based approach to presenting information — it makes the reporting very readable and accessible,” a judge commented. “And on stakeholder engagement, National Grid doesn’t just describe the engagement itself but also what it led to, including changing the remuneration policy in a positive direction.” Panel members also praised the clear and comprehensive disclosures on diversity, and the table showing the board’s involvement with the delivery of strategy. One judge added that the viability statement was “extraordinarily good — including different scenarios and how they would impact the board’s decision-making.”
Accessible and credible reporting that consistently underlines the company’s commitment to effective cyber security. The judges commented positively on Just Eat’s informative breakdown of the teams involved in managing cyber risks, and the clear explanation of previous security projects and decisions. A judge said: “Their statement that they’re a digital business at the core, and that cyber security is a strategic enabler, represents a powerful demonstration that it’s at the heart of the company’s agenda.” The judges also praised the fact that security is listed as the organisation’s main operational risk, and the use of metrics measuring compliance against the payment card industry’s data security standard. “The resilience section includes suppliers as well as technology,” said another panellist. “The reporting links to what their business is about, and gives you a deeper understanding of the issues.”
Winner Cyber Security, Just Eat. Shown here (left to right) Mary Nightingale, Kevin Fielder, Ben Yeoh
Reporting that tells a clear story about the company’s cyber risks and responses, providing the reader with a comprehensive view of the security controls in place and a vivid description of the organisation’s threat landscape, including specific dependencies. The judges liked the clear evidence of board-level engagement with cyber security, supported by concise summaries of the internal audit function’s role, responsibilities and activities. The disclosures also include a summary of previous projects and improvements to policies and security controls over the past year, together with a description of the enhanced physical security and social engineering controls in use, including measures to mitigate the risks of blackmail or coercion affecting employees.
Detailed yet easily navigable disclosures that are set apart by a compelling exploration of the threat landscape that Sophos faces, and an extensive description of the security products developed for the market that are used by the company in its own business. Operational practices ⎯ such as “synchronised security” ⎯ and their integration into the organisation’s controls are described clearly, together with concise overviews of the company’s active monitoring processes and business continuity plans. The judges felt that the strength of Sophos’s reporting on cyber security fully reflected the company’s position as an established player in the data protection industry
Very clear and easily-navigable reporting that centres on customers throughout, and describes early on how building a strong community aligns with Nationwide’s strategy. The judges were especially impressed with the openness of the disclosures, including the chairman’s frank responses to members’ questions about why savings rates aren’t higher. They also noted the engaging coverage of Nationwide’s charitable efforts, board diversity and customer trust. “There’s an assertion right up front that profit is only one measure of success, alongside customer experience,” commented a member of the judging panel. “And the members’ Q&A feels like genuine questions that are tough to answer.” Another added: “The language is clearly aimed at the lay reader, which makes it especially accessible.”
Winner Financial Services, Nationwide. Shown here (left to right) Mary Nightingale, Anne Obey, Iain Wright
A visually engaging and highly readable annual report built around the company’s values and “4C” priorities — customers, colleagues, company and community. The judges felt the disclosures were very clear, exhibiting a strong understanding of the business’s corporate purpose and customer perspective. They also noted the close attention to detail in areas ranging from the whistleblower policy to the external audit process and the company’s approach to regulation. One of the judges commented: “The fact that Hastings integrates the UN Sustainable Development Goal (SDG) criteria into its investments scores highly with me.” Another said: “I like the 4C’s framework, and it connects up nicely with the strategy. And the business’s rationale is very clear, which brings credibility. Having read this report, I would actually quite like to work there!”
LV’s reporting is balanced and well laid-out, exhibiting a consistent focus on customers, shareholders and the wider community. The company stresses that it puts members at the heart of what its does, supporting them with “Green Heart experiences” at “unexpected moments in their lives”. This focus on people is supported by KPIs based on employees and customers, and brought to life through engaging use of imagery and case studies. “The KPIs are very clear, and include trust measures, which I like,” said a member of the judging panel. “The reporting on employee engagement is also very strong.” The panellists noted that tough issues such as the company’s gender pay gap are discussed openly. A judge summed up: “This is an honest appraisal of the company’s performance during the year.”
Open and accessible remuneration reporting that includes an at-a-glance comparison of CEO single figure and worker pay with total shareholder return over ten years. The judges especially liked the clear disclosure of executive directors’ shareholdings, including a diagram showing the extent to which the minimum shareholding requirement has been met, and a table setting out the impact of share price movements. There’s also comprehensive disclosure of annual bonus outcomes for both financial and non-financial targets. “Workspace’s reporting is a really great example of how remuneration committees are looking beyond the CEO’s and top executives’ pay, and thinking about the employees as a whole and the governance framework,” commented a judge. “The company signposts this wider focus through various sections ⎯ which is a simple but very clever way of tackling and discussing this complex topic.”
Winner Remuneration, Workspace. Shown here (left to right) Mary Nightingale, Carmelina Carfora, Dr Maria Maloney, Dame Julia Cleverdon DCVO, CBE
The transparent tone of Mitchells & Butlers’ reporting on remuneration is set from the start, with a clear statement from the remuneration committee chairman explaining the business context and why the remco believes the remuneration outcomes are appropriate. The disclosures also include an easily-readable table summarising the company’s strategic priorities and explaining how these align to executive remuneration. The judges particularly liked the detail provided on employee engagement during the year. “The CEO pay ratio is explained very clearly, and the chairman’s statement demonstrates how the remco has gone beyond business-as-usual to think about employees,” commented a panellist. Another added: “The reporting creates very clear alignment between employee engagement, customer satisfaction and remuneration ⎯ and links all of these to the strategy.”
Honest and frank disclosures characterised by a strong focus on fairness, with reference to the company’s societal purpose and ranking within the Social Mobility Employer Index. There’s a clear explanation of why the current year and prior year single figure outcomes are consistent with the remuneration policy scenarios. And the reporting on the broader employee context is detailed and comprehensive, including the cascade of remuneration across the organisation and very granular gender pay information. “I really like the disclosures around employees,” said a member of the judging panel. Another commented: “The reporting on engagement with investors and employees is very clear, as well as on financial performance and outcomes ⎯ and there’s an easily-readable chart linking everything back to the strategy.”
Following a close vote, United Utilities wins the award with comprehensive yet compelling reporting that has strategy at its heart and is especially strong on the linkage between the company’s strategic priorities and purpose. The judges singled out the clear account of how the strategy is driven by value creation for stakeholders, with one commenting: “They’ve done a great job of evidencing their relationship with stakeholders, and really proving how that relationship works.” The panel also commented positively on the measurement of performance against strategy and the linkage to executive remuneration. The business model, key resources and relationships, and plans for the future are also discussed in detail. A panellist added: “The company’s reporting is really interesting on who its competitors are and where it gets its advantage from, which you don’t see in many annual reports.”
Winner Strategic, United Utilities. Shown here (left to right) Mary Nightingale, John Hardy, Sabrina Curry, Simon Gardiner, Iain Wright
Strong and engaging reporting built around the central strategic themes of stakeholders and sustainability. Anticipating the new reporting requirements, the company sets out its stakeholder engagement process in detail and explains how this feeds into its strategy. “The linkage between strategy and corporate culture comes across especially strongly — it’s clear the board puts a lot of emphasis on building the right culture across the business,” said a member of the judging panel. “And the integration of sustainability data into the strategic report is handled well.” Other judges praised the useful summary of industry trends and the “digestible” account of the company’s business model. One explained: “I really like the description of how they create value for themselves and their customers at the same time.”
Derwent London’s strategic report goes further than most towards addressing the new reporting requirements, setting out clearly how the business has made decisions during the year and has considered stakeholders in the process. The reporting includes detailed disclosures on the London property market, drilling down into the specific geographies and types of property in which the company invests. “It’s a pleasure to read,” commented a judge. “I’ve learned a lot about different neighbourhoods and who lives in them.” Forward-looking insights are integrated into the wider strategic report, and progress against priorities during the year is tracked through case studies and dedicated content. A panellist added: “There’s clear linkage between stakeholders, strategic priorities and KPIs.”
SSE’s sustainability reporting is set apart by its consistent and compelling focus on global trends ⎯ particularly climate change and technology ⎯ as core themes throughout its annual and sustainability reports, and by its detailed discussion of climate-related physical and transitional risks and opportunities. The judging panel were impressed by the company’s close integration of the UN Sustainable Development Goals (SDGs) into its reporting, and its use of the SDGs in developing its sustainable business model, KPIs and planned future actions. “The disclosures on the impacts of the SDGs are outstanding,” commented a panellist. Another added: “SSE has moved a long way forward in providing detailed sustainability data.” The judges also commented positively on SSE’s comprehensive assessment of the sustainability issues for its six key stakeholder groups, brought to life by lively case studies on its engagement with them.
Winner Sustainability, SSE. Shown here (left to right) Mary Nightingale, Bethan May Freire, Dame Julia Cleverdon DCVO, CBE, Rachel McEwan
Comprehensive yet highly readable reporting that describes clearly how Anglian water has drawn on materiality assessments and stakeholder engagement to pinpoint 10 short-and medium-term sustainability objectives, and has then integrated these objectives into its business model. The longer-term view is also covered, with discussion of the company’s strategy up to 2045 and climate impacts up to 2065, along with projections of the investment required to meet resulting shifts in demand. The judges were impressed by the detailed nature of the disclosures ⎯ especially for an unlisted privately-owned company ⎯ and by the clear linkage between sustainability performance and executive remuneration. A panellist commented: “The long-term perspective and strategy disclosures are very good, and the business’s intersection with the climate is described well.”
ConvaTec’s reporting is easily navigable and well structured, telling a clear story about how the company conducted a materiality assessment that included engagement with 40 external stakeholders categorised into six groups, and then used the outputs to frame its sustainability strategy, KPIs and reporting. ConvaTec has also gone further than most other FTSE 250 companies by integrating the UN Sustainable Development Goals (SDGs) into its business strategy, while also conducting a risk assessment under Task Force on Climate-related Financial Disclosures (TCFD) guidelines, including potential supply chain impacts. A member of the judging panel commented that ConvaTec has “raised its game significantly in the past year ⎯ enabling it to join the leading group of sustainability reporters in not just the FTSE 250.”
Vodafone maintains its strong reputation in tax reporting, with a set of highly insightful disclosures that clearly explain its tax affairs and total economic contribution in a way that’s accessible to the non-expert reader. This year the company breaks new ground in terms of transparency by publishing and explaining the country-by-country tax report that it is required to file with tax authorities under the OECD’s Base Erosion and Profit Shifting (BEPS) programme. Alongside this, the judging panel were also impressed by the company’s frank explanation of the background to the “digital services tax”, including a discussion of its own position complete with recommendations. “Vodafone strives to inform the reader about the big issues in tax,” commented a panellist. “From reading its report, I’ve learned a lot about areas like transfer pricing.” Another summed up: “This is great effort in transparency.”
Winner Tax, Vodafone. Shown here (left to right) Mary Nightingale, Andy Cale, Ben Yeoh
Clear and well-presented reporting that provides an in-depth explanation of BHP’s global tax strategy, and includes a discussion of the company’s own views on tax competitiveness. The company makes strong use of graphics up-front to communicate its total economic contribution and the points where value is created, before going on to discuss in plain terms why it would invest more in Australia if the country’s corporate tax rate were lower. The judges liked the frank account of BHP’s current transfer pricing dispute with the Australian Taxation Office, as well as the more general insights into the thinking of different tax authorities across the world. “There’s a lot of helpful information here, particularly about countries on watchlists,” said a judge. “It gives you a sense of where tax and jurisdictions are heading.”
Highly commended last year, Lloyds repeats the achievement with a strong set of tax disclosures aimed explicitly at educating and informing the non-specialist reader. With this in mind, the reporting includes a clear and detailed explanation of the bank’s deferred tax assets and liabilities, simplified to help non-tax experts gain a better understanding. Similarly, an easily-readable waterfall chart is used to illustrate the link between the tax expense and Total Tax Contribution, and there is a detailed explanation of why the tax expense differs from the statutory rate. “The cross-referencing between the tax disclosures and financial statements is a positive step,” commented a member of the judging panel. “It shows a good level of integration.” Another added: “I like the connection between tax and ‘Helping Britain Prosper’: that’s part of the business’s strategy, and helps to clarify the choices it makes.”