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Is it possible for a European company to discuss the past year’s operating environment without mentioning “Russia,” “Ukraine,” or “war”?
One might assume it’s impossible, but that assumption would be incorrect.
In its 2022 annual report, Swiss insurer Helvetia managed to navigate the aftermath of the Ukrainian invasion without explicitly referring to the conflict. This is despite the invasion causing inflation, an energy crisis, and disruptions to various supplies. While the war was briefly mentioned in their 2021 accounts and 2022 first-half results, the fact that it was not addressed in the annual report raises eyebrows.
Helvetia’s approach to 2022 is just one of many unexpected stances European companies have taken in their recent annual reports. For instance, Swedish online bank Avanza, which is led by chair and founder Sven Hagströmer, forcefully urges action against Russia and describes the invading country as “evil and unreliable power.”
Even Europe’s largest stock exchange group, Euronext, has opted for a less diplomatic approach in its annual report. Stéphane Boujnah, the exchange’s chair and CEO, emphasizes the need for reinforced European cooperation and a stronger European Union in the wake of Russia’s invasion of Ukraine.
German metals group Aurubis warns about Russia’s energy weaponization, while Swedish property developer Fabege describes the war’s impact as blurring the line between reality and fiction in a disturbing way.
Given the extraordinary events of recent years, the emotional intensity of these reports is understandable. However, it raises the question of whether companies are now feeling compelled to take political positions in their documents.
Annual reports are more than just financial summaries; they are strategic documents intended to address a company’s accountability to stakeholders. According to Hendrik Vollmer, an associate professor of accounting at Warwick Business School, companies used to shy away from appearing biased. But as the definition of accountability has expanded to include environmental commitments, a shift has occurred.
Hagströmer believes that companies should be more outspoken politically and recognizes their role in society. This viewpoint has become more prevalent as companies embrace corporate social responsibility and understand that it involves speaking up, which may sometimes offend customers, employees, or investors.
This shift can have its benefits. A recent study found that companies with the clearest positions on LGBTQ policies, either the highest or lowest, received share price increases from investors compared to those in the middle. It’s not about having the most inclusive policies, but about taking a clear stand.
“Not taking a position will make both sides hate you,” says Aharon Cohen-Mohliver, assistant professor at London Business School and co-author of a study on the subject. Taking a strong and clear stance is necessary for sincerity and differentiation. Although there are risks associated with public positions, Cohen-Mohliver believes more companies will be willing to take a stand to set themselves apart from competitors.
Hagströmer of Avanza has no plans to hold back and argues that world events have a significant impact on markets. He sees no reason why the elephant in the room should not be addressed in annual reports when everyone is affected.
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