Section 172 and stakeholder reporting

Recognising your stakeholders and resources

Building the Section 172 report shouldn’t just be a process or reciting the list of matters noted in Section 172 of the Companies Act 2006. The process of describing the relationships with other stakeholders and considering where they can, or do, contribute to the business, and vice versa, is a key part of describing your business model.

The process of stakeholder mapping should explore where the key relationships are, rather than simply listing every party the business has contact with. Instead identifying those relationships that add value, or depend on it, and consider whether the strength of relationships or extent of resources can be measured even if only in terms of whether they are maintained, strengthened or weakened by the business actions or external environment during the year.

Section 172 reporting

This relatively new requirement (the first year of mandatory application was 2019) is a requirement for all “large” companies, some of which might not feel that they are so large. For listed companies it is another component of the strategic report, but for unlisted companies which don’t already publish their annual reports, the statement has to be published on the company’s website, giving it a higher profile than other parts of the report.

This shouldn’t just be an imposition, but an opportunity to set out the company’s stall to show how it preserves value in relationships and considers the long term. For listed companies, more particularly, it can provide an opportunity to show how the board has considered difficult decisions and demonstrated that stakeholder relationships are not neglected, bolstering the investment case. For unlisted companies, it can be an opportunity to build or reinforce a reputation for meaningful engagement with the workforce or customers.

How we can support you

We can guide you through the challenges and requirements of compliance, support you to meet external expectations for Section 172 reporting and help you use stakeholder mapping as a tool for developing and measuring the health of the business model.

This can include:

• Providing advice on the applicability of the Section 172 requirements to your company or companies within your group;
• Considering common and company specific components of reporting between Section 172 for companies within a group;
• Holding workshops to consider key assets and relationships in the business model and how to describe them; 
• Considering how the company can demonstrate the value of its key relationships or assets where these are not by traditional accounting systems; and 
• Drafting or assistance with drafting sections of the annual report.

Contact us 

If you would like to contact us, please use the link below and a member of the Accounting Technical Services team will be in contact.

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