Last month the Government issued its package of corporate governance reforms. Included within those reforms were measures to strengthen boardroom engagement with a broader group of stakeholders. The Government has committed to issuing secondary legislation that will require companies to explain how their directors have regard to employee and other stakeholder interests.

To help boards meet this new requirement, ICSA and the Investment Association has issued guidance on practical ways in which companies can engage with their employees and other stakeholders at board level.

The aim of the guidance is to help company boards think about how to ensure they understand and weigh up the interests of their key stakeholders when taking strategic decisions. After reminding directors of their statutory duties under sections 171 – 181 of the Companies Act 2006, the guidance sets out the different elements involved in understanding and assessing the impact on key stakeholders and provides a set of principles and considerations for each of the following:

• Stakeholder identification
• Board composition
• Induction and training
• Board discussion
• Engagement mechanisms
• Reporting and feedback

The guidance includes a number of examples of mechanisms for stakeholder engagement already being used in the largest UK companies.

The press release and guidance are available at ICSA website.  Our related Governance in brief publication is available here.