Revised UK Corporate Governance Code will create the right environment for business growth and foreign investment
Business Minister Margot James writes:
The UK is rightly recognised around the globe as one of the best places to do business, with world-leading responsible business practices and a new company set up every 75 seconds.
But we must continue to build on these strengths to further enhance our business environment – one of the key foundations of productivity identified in our Industrial Strategy.
The Financial Reporting Council’s proposals for its revised UK Corporate Governance Code, as well as our own responsible business reforms, will further enhance our reputation for corporate transparency and accountability by ensuring our largest firms really listen to their workers, suppliers and customers.
These measures will play a crucial role in creating the right conditions for businesses to grow and encourage foreign companies to relocate to the UK.
We’re delighted the FRC is planning to bring forward our recommendations to ensure workers’ views are heard in the boardrooms of our largest companies up and down the country. The proposed Code would require firms to either appoint a director from the workforce, set up a workforce advisory panel or appoint a designated non-executive director to represent workers’ views.
The revised Code is one of many measures set out in our corporate governance reforms package to ensure our largest companies are more transparent and accountable to their employees and shareholders. We’ve been working hard over the last three months to deliver these reforms.
Before the end of the year the Investment Association will publish the world’s first public register of its kind, naming companies where a fifth of investors have objected to executive annual pay packages. This will encourage greater transparency and rigour in how companies address shareholder concerns about executive pay.
Shortly we are expecting to announce the name of a new chairperson to oversee the drafting of new corporate governance principles for all large companies. The new chair will work with the FRC, the business community and the Government on what represents a step-change in these companies’ responsible business practices.
In the last two months we’ve also seen recommendations from business leaders Sir John Parker and Sir Philip Hampton on ways our largest companies can improve diversity at the top of business. More inclusive boards are essential if our companies are to be equipped to succeed in the global economy and I would urge companies to take up their recommendations to reap the social and economic benefits of a diverse and inclusive workforce.
These are just some of the recent developments in the UK’s rapidly evolving corporate governance landscape. The pace of change is a recognition that now, more than ever, our corporate governance framework will play a crucial role in ensuring the UK continues to be known around the world as one of the best places to work, invest and do business.