ICAS supports Corporate Governance update but stresses need for flexibility
ICAS responds to proposals to revise the UK Corporate Governance Code
ICAS has submitted its response to the Financial Reporting Council (FRC) consultation on revisions to the UK Corporate Governance Code (The Code). The FRC’s proposed revisions reflect a changing business environment and are intended to help UK companies achieve the highest levels of governance. The Code is shorter and sharper and builds on the findings from the FRC’s Culture Report published in 2016.
The revised Code focuses on the importance of long-term success and sustainability, addresses issues of public trust in business and aims to ensure the attractiveness of the UK capital market to global investors through Brexit and beyond.
Overall, ICAS is supportive of the proposed changes to the Code and direction of travel making suggestions on where forward-looking practice could be introduced within the supporting guidance.
ICAS suggests that more flexibility is needed in the proposals to strengthen workforce engagement. Greater emphasis should be given to the need for a combination of approaches to achieve the intention, not how to do it. The onus should be on the company to choose what is most suitable and explain it.
We are not convinced that an external board evaluation should be a requirement for companies below the FTSE 350 but would support it as suggested or recommended good practice.
We agree that greater focus on the pipeline to supply boards and achieve diversity is needed. We suggest that companies should be encouraged to explain how they ensure that there is diversity in its broadest sense across their organisation. The more people think about this for their individual teams within an organisation (not just at Board level) the better companies are likely to perform.