British Groups Plot Out New Corporate Governance Guidance
With U.K. officials—including Prime Minister Theresa May—giving extra scrutiny to corporate governance issues, two trade groups are working on guidelines of their own to help company boards better represent their stakeholders' interests.
A new initiative by two British business groups that aims to close the gap between corporate boards and their stakeholders could bring some takeaways for association governance.
The initiative, announced Friday, is a joint effort of ICSA: The Governance Group, which bills itself as “the professional body for governance” in the U.K., and the Investment Association (IA), which represents fund managers. It will create guidelines for building lines of communication between corporate boards of directors and company stakeholders.
“[T]the project aims to tackle concerns that the voices of key groups such as employees, customers, and suppliers are not being heard at the highest levels of British business,” according to an ISCA statement.
The groups’ guidance, expected to be released later this year, will cover issues such as governance training, identifying board members who know how to work with employees and other stakeholders, and establishing processes for gathering employee viewpoints.
The effort comes as the British government focuses on corporate governance reform, an issue pressed by Prime Minister Theresa May. ICSA Policy and Research Director Peter Swabey said the industry groups are moving now to help companies make improvements as soon as possible. The government is expected to issue its own guidelines after completion of a “consultation” in which public comments are being collected on a reform proposal published by the Department for Business, Energy, and Industrial Strategy in November.
“We agree with the government that the views of stakeholders need to be heard by boards. Companies benefit from having constructive engagement with their employees, customers, and other stakeholders and from having a broad range of perspectives around the boardroom table,” Swabey said in a news release. “Many companies already do this effectively, but our guidance is intended to assist those boards that feel the need to act now to improve their engagement with and understanding of the views of their stakeholders, rather than waiting for the government or the [Financial Reporting Council] to complete any actions they might take as a result of the current consultation.”
IA says it has joined the effort to highlight that “the asset management industry is at the forefront of improving corporate governance in the U.K.”
“Boards have a collective responsibility to make better long-term decisions for all their stakeholders,” IA Director of Corporate Governance Andrew Ninian noted in the news release. “Our joint guidance will be designed to ensure that the broadest range of views and perspectives are heard around the boardroom table.”