The latest FRC Lab report, Virtual and Augmented Reality in corporate reporting, considers how virtual and augmented reality can be used to expand the scope and audience for corporate reporting
The research was timely as a result of the covid-19 pandemic which accelerated the adoption of new technologies as companies were forced to move to virtual annual general meetings (AGMs) as repeated lockdowns saw the banning of live events.
Virtual and augmented reality (VR & AR) is the application of various technologies (including motion tracking, sound engineering, animation, simulation and video) to create an immersive experience for a user that mimics or seeks to enhance the same physical experience in the real world.
The market for VR & AR, whilst currently small, is expected to reach $95bn in 2025, according to growth predictions by Goldman Sachs.
The current use of VR & AR in corporate reporting is limited and experimental, the FRC Lab reported. However, the examples considered as part of this project suggest that VR & AR does have a place in corporate reporting (albeit, over the longer term). In most instances the companies using the new technology tend to use it for marketing and promotional purposes, rather than as a corporate reporting tool.
The ability for VR & AR to bridge between the physical and the digital gives it a useful role in supporting and building understanding about a company, its business model and its operations.
A number of companies are already experimenting with the technology, and innovative ways of reporting provide the potential to improve corporate communications, particularly in a world that has had to rapidly adapt to new ways of communicating during the Covid-19 pandemic, the FRC Lab report stated.
While the current limitations on the physical (caused by the need to social distance) may soon disappear, a reduction in physical interaction plays into several wider trends accelerated by the pandemic, including:
- reduction in office working;
- further internationalisation of shareholder bases; and
- reduced business travel to meet economic and climate targets.
VR & AR is designed to bridge the physical and digital world by augmenting it, or completely recreating and replacing it (virtual). This blending of physical and digital has value in a world where physical interaction and communication are reducing.
Despite the market potential, many companies are reticent to us this type of medium for their reporting requirements, citing cost and complexity; lack of a user base; and a lack of user interest.
In the longer term the UK regulatory framework around company reporting is expected to evolve to reflect changes in communication technology. The FRC's Future of Corporate Reporting Project, which went out for consultation in late 2020, aims to create a blueprint for the corporate reporting framework of 2030.
This framework envisages replacing paper documents with fully digital disclosure packages. These packages might be traditional PDF, structured data reporting or other media like videos, VR & AR or podcasts.
The report includes examples of current practice and highlights some possible future uses. The report is the final deep dive from the Lab’s Digital Future series.