Tomorrow’s Corporate Reporting: A critical system at risk focuses on the systems architecture and the behaviours and values of its stakeholders. Not on the content of the ‘ideal corporate report’. By corporate reporting we mean all the mechanisms by which companies communicate their performance and activity to their stakeholders, with a particular emphasis on the flow of information into the investment community.The study looked at:What aspects of the system are preventing or supporting the effective development of corporate reporting? And what changes are needed to make the system fit for purpose for the future? During the research, 145 individuals provided evidence, were interviewed or engaged through roundtable discussions, representing 118 organisations from 22 countries across five continents. The report explains the components of the current system and highlights that very few, if any, stakeholders see it as a system – rather they see particular pieces of the jigsaw. The...

The financial crises of the last decade have demonstrated serious shortcomings in the understanding of corporate business models, the alignment of incentives, and the management of risk. The current corporate reporting model has not highlighted where these shortcomings exist. This failing is exacerbated by the pace of change of business today, with a plethora of new challenges impacting long-term success, including a shift in the global balance of power, resource constraints and climate change.

It will not have escaped many of your attention that I have been vocal of late about the importance of good governance. Indeed this is my second speech on the topic for our hosts today in the space of a week!So whilst I make a small apology to those who may be experiencing a slight feeling of déjà vu at this point, I make no apology for reiterating the point. Well-run companies are founded on sound governance. If the global banking crisis has taught us anything, it is that poor decisions were made. Decisions went unchallenged.Decisions were allowed to stand.Good decision-making requires three things.It requires excellent judgement to identify opportunities and spot emerging risks.It requires robust governance to ensure that those judgements are in the long-term interest of the company, and to ensure that when judgement fails, there is a back-stop.And it requires owners to care. It requires shareholders and those who act on behalf of shareholders to take an active role in holding...

Bonds are a set of financial products ideally suited to both the financing of long-payback period energy projects and to providing institutional investors with security of returns over the longer term. Climate Bonds are intended to unlock ‘patient capital’: taking savings which require secure returns over long periods of time, such as those held by pension funds, and investing them in low-carbon projects that have high up-front costs but good payback rates over the long term. Climate Bonds need not differ greatly from existing government and corporate bonds, save for their central purpose: the funds they attract are underpinned by real and verifiable energy efficiency and renewable energy projects that in some certifiable manner contribute to the mitigation of climate change. At a minimum this has marketing benefits, allowing investors to report to their members on how their secure investments are also making a contribution to addressing climate change. At a maximum, investors...

The Black-Scholes model provides an important foundation for mathematicalmodels used for pricing options. Myron Scholes won a Nobel prize for this and related work. It has always been recognised that blindly following models exposes the user to unexpectedrisks since they are often at odds with reality. For some, such modelssymbolise the absurdity of much of modern financial structuring. Nicholas Taleb’s Black Swan theoryrefers to a large impact event beyond the realm of normal expectations, andhas come to represent an event, like the credit crunch, that conventional wisdom said could not happen.A White Swan is different.