Trends to Watch: What CFOs and IROs Must Know about Increased Reporting Standards under Dodd-Frank
By Casey Boggs
, LT Public Relations
Communicating corporate social responsibility is one of the biggest trends for CFOs and businesses to tackle right now. In 2010, Dodd-Frank was the most substantial overhaul to the financial services industry since the Great Depression, requiring greater accountability and transparency to investors.
In essence, Dodd-Frank was intended to transform the financial services sector by requiring, on a federal level, increased accountability to investors. Almost two years later, the public is beginning to see the noticeable efforts companies are now making to meet and exceed the requirements, including greater accountability that is now being demanded on a more granular level.
IR Trend #1: The audience for communicating corporate social responsibility is growing
The audience for investor relations has already gone far beyond the initially well-defined audience of shareholders in publicly traded companies. In May 2012, three cities, New York, Los Angeles and Portland, Ore., voted in ordinances requiring banks who receive city deposits (in New York, that equals $7 billion) to communicate how they are reinvesting in the local community. This type of legislation can be argued both directions. Specifically what it means for public relations professionals supporting investor relations is that the demand for accountability and transparency has already started to exceed the measures included in Dodd-Frank. It is time to be proactive about communicating with a broad audience, or risk losing business, value and growth opportunities.
“The truth is that Dodd-Frank is neither an abject failure nor an unqualified success, and it’s time to stop thinking in such absolute terms,” said Frank Keating, President and CEO of the American Bankers Association to The Wall Street Journal, which reports many American bankers support Dodd-Frank reforms.
“Government and private industry must work in concert to achieve economic success. That means giving thoughtful consideration to constructive criticism and setting aside hyperbole that villanizes those who find fault with Dodd-Frank provisions,” said Keating.
LT Public Relations handles communication management for the financial services sector, so all of this recent legislation demanding increased accountability and transparency is a topic of keen interest with our clients. One of the ways we are addressing the requirement for more communication is to take a look at the traditional annual reports (Form 10-K) and quarterly reports (Form 10-Q) and even proxy letters sent to shareholders as potential vehicles for communication—not only to investors, but to community leaders, the public, media and other target audiences.
IR Trend #2: Using financial reports as a vehicle for communication to a broad audience
For example, some of the narrative elements of the annual report where we can include meaningful storytelling are the mission statement, corporate message, letter from the Chairman/CEO, history of the company, the management report, community involvement, philanthropic reports, significant events of the year, trends, new products/services, research and initiatives, among others.
We are seeing some forward-thinking clients take the lead in creating consumer-focused reports that share unprecedented access to the data the company uses to inform its reporting. We are excited about this trend and what it means for the future, which is greater engagement and communication through investor relations.
IR Trend #3: Integration of finance, public relations, marketing and securities law compliance
IR is a strategic management responsibility that integrates finance, communication, public relations, marketing and securities law compliance. Public relations IR services complement and assist CFOs, marketing and communications directors, legal counsel and CEOs to ensure all target audiences are receiving a full picture of the firm and understand the stories behind the numbers, and ultimately, that the stock is fairly valued. It’s also important to note that because IR covers financial reporting obligations, there is always an emphasis on accuracy, consistency and expediency in addition to descriptive narrative. Our goal is to ease this burden for our clients while adding value through meaningful communications to key audiences.
Ultimately, the story the public wants to hear is the business, not necessarily just the numbers. Investor relations is just one part of an overall strategy for perception and reputation management that includes multi-faceted communications to both internal and external stakeholders.
LT Public Relations, LLC is a full-service communications firm specializing in financial institutions, professional services and non-profits. Based in Portland, Ore., the firm serves clients throughout the United States.
- Crain’s, May 15, 2012: http://www.crainsnewyork.com/article/20120515/POLITICS/120519926
- Credit Union Journal, Sept. 12, 2011: http://www.barackobama.com/om-dinner-with-barack-june-signon?source=om2012_lb_NYT_disptest_0412dwb-signup-air2_728x90&utm_medium=om2012&utm_source=NYT&utm_campaign=lb_disptest&utm_content=0412dwb-signup-air2_728x90
- Los Angeles Times, May 16, 2012: http://articles.latimes.com/2012/may/16/local/la-me-0516-banking-ordinance-20120516
- Portland Business Journal, May 16, 2012: http://www.bizjournals.com/portland/news/2012/05/16/responsible-banking-proposal-passes.html?ana=twt
- The New York Times: May 14, 2012: http://www.nytimes.com/2012/05/15/nyregion/council-wants-banks-to-describe-efforts-made-in-poor-areas.html?smid=tw-share
- The Wall Street Journal: Mar 16, 2012: http://online.wsj.com/article/SB10001424052702304692804577283512784932648.html