FRIDAY 27 MAR 2009 10:09 AM


Analysts find social and environmental disclosures in UK banks’ annual reports “useless” in helping them with forecasting and investment decisions.

That’s according to new research from the Newcastle Business School at Northumbria University.

The research took the form of interviews with 19 London-based analysts in the banking sector between late 2004 and mid-2006. It found “cynicism to complete dismissal” of all voluntary narrative reporting including social and environmental reports, the chairman's statement, corporate governance and risk disclosures.

“Our findings show that analysts are dismissive of anything other than financial metrics, and they deem large sections of voluntary narrative reporting as useless or worse,” said the study’s author Richard Slack. “Analysts have been shown up to be narrow in their approach, often formulaic and rules-driven, and highly unlikely to be a source of change in respect of social and environmental issues. Social and environmental reporting was universally considered irrelevant and incapable of influencing a financial forecast.”

The research focused on the banking sector only as it is one of the four main 'volume' trading sectors in London, along with technology, pharmaceutical and oil and gas, and strategically important to the UK economy.