IoD Supports Flexibility of UK Corporate Governance Reforms

The Institute of Directors (IoD) has refuted claims that the UK Corporate Governance Code dissuades companies from listing in the UK, asserting that it should instead emphasise the Code’s flexibility and discourage a ‘tick-box’ mentality in assessing governance standards. Dr Roger Barker, IoD Director of Policy and Governance, said: The effectiveness of the UK’s ‘comply or explain’ approach to governance is dependent on the willingness of investors and other stakeholders to thoughtfully consider possible deviations from the Code. If businesses feel that they must comply, then the Code risks becoming seen as a regulatory ‘burden’ rather than a repository of good governance practices. Further, the IoD advocated against excessive prescriptiveness in the Code’s directives concerning how boards organise their activities, asserting that boards, not regulators, are best positioned to determine the optimal course for their companies. The IoD also expressed member concerns regarding the excessive reporting requirements imposed by the Code and other regulations. The organisation called for the Code to minimise reporting burdens and encourage companies to adopt a more selective and precise approach when assessing risk management and internal control systems. Additionally, the IoD supported the FRC’s efforts to enhance the Code’s provisions on executive pay, emphasising the importance of transparency in areas such as malus and clawback, and their inclusion in employment contracts.

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

Copyright © 2024 ESG Investor Ltd. Company No. 12893343. ESG Investor Ltd, Fox Court, 14 Grays Inn Road, London, WC1X 8HN

To Top