The Evolution of Transparency in Corporate Disclosure: 2024 Trends & Insights

by Jennifer Cooney

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The Evolution of Transparency in Corporate Disclosure: 2024 Trends and Insights

by Jennifer Cooney

Recent developments in corporate disclosure reveal steady adoption of transparency principles and best practices. While changes more closely mark an evolution rather than a revolution, we can appreciate the thoughtful and bespoke approach to corporate communications that respond to the wide range of stakeholder demands and consider the reader perspective. This movement emphasizes the growing significance of cross-departmental collaboration in improving transparency. Companies recognize that transparency strengthens the brand, builds trust with investors and other stakeholders, and influences company outcomes.

JENNIFER COONEY is the advisory practice director at Labrador U.S., a leading global communications firm focused exclusively on corporate disclosure documents.

Overview of Disclosure Trends in 2024

As we review the 2024 corporate disclosures landscape, companies are making significant strides in ensuring that their communications are not only informative and compelling, but also clear and understandable to a broad audience of stakeholders. Reports and Codes of Conduct include more links that allow readers to easily access additional information on topics of interest and key policies. Organization and usability of investor relations (IR) websites also continue to improve.

Labrador, an independent firm specializing in transparent investor and stakeholder communications, recently completed its annual study of the key disclosure documents of the top 250 companies in the S&P 500 (S&P 250), including proxy statements, 10-Ks, ESG reports, investor relations websites, and Codes of Conduct. The benchmarking evaluated 234 discrete criteria that reflect the five pillars of transparency – accessibility, precision, comparability, availability, and clarity.

Overall, average transparency scores increased from 46% to 49%, reflecting efforts across companies to be more transparent and build trust with stakeholders.

Average scores continued to rise across most documents, including proxy statements (44% to 48%), ESG reports (46% to 48%), IR websites (63% to 71%), and Codes of Conduct (43% to 48%). Form 10-K scores decreased slightly (41% to 38%), impacted primarily by criteria revisions in 2024.

Intel, Dow, and Mastercard were the “Best Overall Transparency” winners in the 2024 U.S. Transparency Awards, reflecting cross-functional effort and company-wide commitment to effective communication strategies. These companies scored high across all documents.

ESG Reporting

Navigating anti-ESG sentiment and legal complexities around DEI caused some trepidation over the past year for reporting companies. Despite the rhetoric, companies, institutional investors, and other stakeholders are still focusing on sustainability and ESG topics, and reporting saw less change than anticipated in both form and substance. In fact, Labrador’s review of 100 S&P 250 companies found only a moderate change in naming conventions for reports. Approximately 26% of companies continued to use "ESG Report" and 28% used "Sustainability Report” this year. Unsurprisingly, with shifting interest in reporting frameworks focused on impact reporting, various iterations of “Impact Report” gained traction.

Notably, there seems to be a growing consensus on the need for stronger disclosure that links business strategy with sustainability goals and initiatives. As sustainability programs mature, the focus is shifting toward greater accountability. Companies are now expected not only to clearly define their goals but also to explain how those goals were set and outline the paths to achieving them.

2024 S&P

250 Highlights –

ESG Report

47% include a letter from leadership discussing integration of ESG with company strategy

49% discuss how material topics were assessed and prioritized

44% present an ESG goal tracker/dashboard

79% disclose emissions reduction targets

80% share how they will meet Scope 1 and 2 goals
55% share how they will meet Scope 3 goals

47% disclose DEI goals

41% disclose progress against goals

Executive Compensation

In recent years, companies have made significant enhancements to their executive compensation disclosures, including linking pay programs to strategic objectives and accountability for performance. Most companies now provide the rationale for metric selection in their incentive plans and explain the connection to strategic and financial priorities. Many include this information under a separate header to draw readers’ attention. Disclosures around the compensation committee’s approach to goal-setting also are highlighted, demonstrating responsiveness to investors who are trying to understand goal rigor as part of their assessment of pay and performance alignment.

While details are important, they also contribute to lengthy and dense Compensation Discussion and Analysis (CD&A) sections. Transparent disclosures embrace summaries and visual elements to aid the reader. For example, an overview of compensation elements in the proxy or CD&A summary that includes key terms of incentive programs can consolidate text, allow for comparability (year to year, company to company, etc.), and steer investors to CD&A sections for further review. While many companies include a table that identifies key pay components, the content and placement of these summaries vary, which dilutes the effectiveness. On the other hand, companies consistently alert readers to prior say-on-pay concerns by sharing previous results at the outset of CD&A.

2024 S&P

250 Highlights –

Proxy Statement

87% explain rationale for selection of performance metrics in annual incentives

79% explain rationale for selection of performance metrics in long-term incentives

75% explain goal-setting for annual bonus plan

In the proxy summary or CD&A summary:

28% include an overview of pay elements including metrics, weightings, performance periods, and vesting terms
66% include prior year say-on-pay results

Board Skill and Diversity

Another area of continued focus is on board skills and attributes, with an increasing number of organizations offering detailed skill matrices and director diversity disclosures in the proxy statement. Governance practices also are becoming more transparent, particularly around board succession planning. Together, these disclosures begin to address investor inquiries into how the board is suited to support the company’s current and long-term strategy. An opportunity for improvement is to better connect the board skillset and director qualifications to the business – many companies define the skills sought, but do not expressly link to the company’s business and strategy.

2024 S&P 250 Highlights – Proxy Statement

81%

present a director skill matrix with qualifications by individual director

53%

define the skills and qualifications sought of board members

28%

link the prioritized skills and qualifications to the company’s business or strategy

69%

include a section or callout about board refreshment or succession planning

Tangible Outcomes of Transparent Corporate Disclosure

Transparency isn't just about regulatory compliance—in fact, it treats compliance as the starting point. The effort to prepare communications that meet readers’ needs in terms of both content development and clarity of content is rewarded. Transparent disclosure contributes to real-world outcomes, such as:

Enhanced investor confidence: Clear and detailed disclosures provide stakeholders with a deeper understanding of how risks and opportunities are managed, leading to more informed investment decisions.
Improved voting outcomes: Transparent disclosures, particularly in proxy statements, can directly influence shareholder votes on key issues, including board elections and executive compensation, and also garner company support in the context of shareholder proposals.
Stronger stakeholder relationships: When companies are transparent about their goals and progress, they build trust, leading to stronger relationships with investors, employees, and customers.

Looking Ahead: AI in Corporate Disclosures

While talk of AI and its impact in the corporate world dominates many conversations, disclosure on this topic is still in early stages – but it is evolving. As companies increasingly integrate artificial intelligence into their operations, there will be demand for transparency in corporate disclosure documents to reflect its growing role and use. While a few forward-thinking companies already address AI in their reporting, the next decade is likely to see a shift where investors and other stakeholders will expect this information to be included.

As disclosure expectations evolve, companies should begin assessing disclosure considerations around AI risks, including human capital, data privacy, cybersecurity, and sustainability. Because AI presents both risks and opportunities, it is likely that AI oversight and governance disclosures (similar to cybersecurity) will be expected. By taking proactive steps now, companies can position themselves as leaders in AI governance and usage, laying the groundwork for comprehensive, responsible AI disclosures that will meet stakeholder expectations.

Across the five pillars of transparency, corporate disclosures continue to evolve. Increased compliance demands and more integrated reporting approaches require cross-departmental efforts to ensure information is accessible, consistent, and timely. New challenges, such as AI risk and responsible use, also will shape future corporate transparency efforts.

Overall, the trend is clear: companies are actively working to simplify their disclosures and improve stakeholder engagement by leveraging clearer narratives. The result is greater trust from investors, employees, and other key audiences. ■

To view the full study of the S&P 250 companies’ disclosures, click here. To learn more about the U.S. Transparency Awards, click here.