News October 2016 Aligning the interests of business and society

Aligning the interests of business and society

05 October 2016

PN 54/16

The Financial Reporting Council (FRC) supports the need for change in the relationship between business and society. As the guardian of the UK Corporate Governance and Stewardship Codes, the FRC is keen to explore how it can ensure governance and investment are more closely aligned with the broad public interest.

Commenting after the Prime Minister’s speech, Stephen Haddrill, Chief Executive of the Financial Reporting Council said,

“We share the objective of wider stakeholder engagement by companies and are considering how corporate governance principles can best meet the demands of all stakeholders or be amended to do so. We look forward to responding to the Government’s consultation later this year and will propose measures to realign the interests of business and society.

Tackling important issues such as diversity in boardroom representation and executive pay is in the interests of society and business. In particular we need to look at how Boards set pay, respond to votes at annual general meetings on remuneration and align pay and culture. We should also look wider at other issues including how directors are held to account in relation to their obligations to all stakeholders.

The success of business is essential to our prosperity and wellbeing. The UK is home to many high-performing companies with excellent reputations, products, services and working environments. But there has been a loss of confidence in business – particularly big business. If we ignore this, damage will be done to our economy and prosperity. There are no simple solutions. We need the right balance of reform of governance requirements and focus on corporate culture to improve the relationship between business, wider stakeholders and society.”

The FRC consults on changes to the Corporate Governance Code to test and build support for proposals and will do so if the Government’s own consultation suggests a role for the Code in the absence of legislation.

Notes to editors:

  1. The FRC is responsible for promoting high quality corporate governance and reporting to foster investment.  We are the UK competent authority for audit and set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work.  We represent UK interests in international standard-setting.  We also monitor and take action to promote the quality of corporate reporting and auditing.  We operate independent enforcement arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.