Sir Win Bischoff highlighted that the framework for corporate governance should “create an environment that not only fosters investment in the UK economy but promotes trust in business to benefit all of society” and that the demands on the framework were “growing”.
Sir Win Bischoff cited a recent annual Trust Barometer, released by Edelman, which shows that there is a continuing decline in trust in business. He highlighted the actions that the FRC had taken to “improve confidence in the ways companies are governed” including longer-term viability statements, improved risk reporting and greater focus on boardroom diversity.
He also discussed corporate culture; highlighting that “reporting on culture, while currently limited, is clearly an area of increasing importance”. He pointed to a recent report by the FRC on corporate culture which highlighted the important roles of boards in “shaping, embedding and assessing corporate behaviours and culture” and identified that there was still more to do.
Sir Win Bischoff indicated that the FRC will conduct a review of the UK Corporate Governance Code prior to a public consultation later in 2017. He indicated that the review would consider “as appropriate balance between the Code’s principles, provisions and guidance”. Sir Win Bischoff also mentioned that whilst pursuing changes, “the current strengths of UK governance, the unitary board, strong shareholder rights, the role of stewardship and the “comply of explain” approach must be preserved”.
He mentioned that any changes would be “done carefully” and “through full consultation with a range of stakeholders” and that the Stakeholder Advisory Panel would be used to inform decisions.
Closing, Sir Win Bischoff commented:
Values, behaviours and corporate culture are central to the way an organisation achieves its objectives and embeds an effective governance structure. By weaving these attributes into a business model, companies are not just contributing to the overall success of their business but, creating an environment on which all stakeholders can depend. And in that way they create sustained growth for the long-term.
The speech was made at an event to launch the first in a series of thought leadership papers, prepared by the Institute of Chartered Secretaries and Administrators (ISCA), to look at corporate governance in the UK. The first paper considers the continuing suitability of the UK's governance framework focusing on the current UK corporate governance model, its strengths and weaknesses and whether it achieves what it is intended to achieve.
The full speech is available on the FRC website. The ISCA press release and paper are available on the ISCA website.