Despite a fall in Code compliance, the quality of disclosures around non-compliance has risen. Is this a cause for concern or is it showing companies are embracing the Code's 'comply or explain' spirit? Our research shows that connectivity is missing when it comes to demonstrating accountability, especially in areas such as purpose, culture, and ESG - all areas that are under continual scrutiny from stakeholders.
Sarah Bell outlines the key findings from our latest FTSE 350 Corporate Governance Review, and what they mean for businesses.
Purpose and culture
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There’s a strong increase in companies embracing purpose and culture, especially since the pandemic. The recognition of the link between the two has skyrocketed, almost doubling from last year. However, there’s a lack of follow through on these good intentions, particularly when it comes to measuring them. Is there a challenge with accountability?
Our findings show best practice companies demonstrate clearly defined metrics, develop strong links between purpose and governance and measure progress effectively. How are you measuring your culture and purpose?
ESG
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Despite many companies increasingly discussing their ESG strategy, there’s a lack of balance between the E, and the S, and G – especially when it comes to risk. Are you translating ESG reporting equally into your business models?
TCFD reporting is now mandatory. Our research gives some early indication of adoption and how companies are getting to grips with disclosures. Which industries are leading the way in TCFD reporting?
Risk
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Our research shows greater connectivity between risks and strategy and identification of emerging risks, but many are failing to show how they will mitigate these new risks. Are you evolving your risk reporting to address newer risk areas?
We put the spotlight on human capital risk and what this means for board effectiveness.
Stakeholder engagement
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As companies embrace stakeholder capitalism, different industries lead the way in different stakeholder areas. Where do you sit in stakeholder considerations?
Stakeholders continue to influence board decisions. Engaging with customers and employees via the Code’s approaches results in accurate feedback that boards can respond to. Are you utilising your stakeholder feedback?
For more insight and guidance, get in touch with Sarah Bell.
