Post #46
May 5, 2021
Claire Bodanis
Claire muses on the temptation of reporting facts without their proper context in this pandemic year.
If you’re one of our reporting clients, you’ll no doubt be utterly sick of the question: ‘what impact did covid have on that?’. I must confess, I’m pretty sick of it myself. And at times it elicits, quite understandably, a rather tetchy response: ‘not everything’s about covid, you know’.
No indeed. But ask the question we must, because one of the big challenges in reporting this year has been to pull apart what ‘everything’ is, and work out what covid has had a significant impact on and what it hasn’t. And, given how covid has affected pretty much every corner of everyone’s lives, all round the world, it’s a reasonable question to ask about everything, even if the answer is ‘not much really’.
This is particularly important for the annual report when it comes to non-financial data. To a large extent, the financials are already taken care of. It’s not just reporting advisors and writers like ourselves who’ve been asking the covid impact question of financial performance. All year, companies’ performance has been heavily scrutinised, and companies themselves have been issuing far more frequent trading statements and market updates than in a normal year. For most companies, working out the impact of covid on financial performance has therefore been an ongoing exercise, and so there are, one hopes, few surprises when it comes to the year end. Not least because the temptation to use covid as the catch-all excuse for things not going so well has already been interrogated out by more questioning shareholders.
For non-financial reporting, it’s a different story. Many companies don’t report non-financial information except at the year end, and so there hasn’t been the same constant internal questioning of the figures as they emerge. There also hasn’t been the continuous external scrutiny and questioning that the financials have received. And so the temptation to find covid reasons for numbers going in the wrong direction is greater. For example, ‘we were unable to complete 100% of supplier audits as planned due to covid restrictions’. Who’s going to challenge that? And the temptation may also be there when covid has contributed to a positive result – safety, for example, where fewer people on site may have led to better results. Leave out the covid context of those better numbers, and readers may instead give the company’s own actions the credit.
Then, of course, there is the hazy area in between. You can probably get away with some careful wording that suggests a little bit of covid impact, but isn’t entirely clear – and isn’t entirely untrue either – but at least might get most readers to give you the benefit of the doubt. And so you’ll have bought yourself another year to deal with whatever the issue is and get things back on track.
What can I say to that? It’s simple. Please don’t. First, while there may well be grey areas, if you use that greyness deliberately to conceal the truth in your reporting, then you may as well be lying. For sure, you’ll probably get away with it, but it’s still the wrong thing to do. And if that in itself isn’t enough to persuade you (although I’m sure this applies to none of you lovely blog readers!), then consider this: if you claim a covid impact that isn’t there, it may well come back to bite you later, when you no longer have the covid cloak to hide under. Using covid to make your figures look better now will only make them look worse in comparison with a future year when the explanation no longer holds.
Virtue truly can be its own reward.