On 22 November 2019, the Institute of Directors (IoD) published a manifesto on corporate governance. It contains ten policy initiatives to reinforce the UK's pre-eminent position in the global corporate governance space. The IoD believes high standards of corporate governance to be an essential part of public trust in UK businesses. The report sets out the three main objectives of its policy proposals, listing which policy proposals correspond to the relevant objective.
The following policy proposals aim to increase the accountability of the UK corporate governance system:
- Supporting the development of an industry-led Code of Conduct for Directors, applying to members of significant corporate entities (i.e. companies exceeding a certain size threshold or level of importance for stakeholders and the wider UK economy).
- Delivering reforms proposed to regulate auditors, such as those recommended in the Kingman Review.
- Establishing an independent Corporate Governance Commission to oversee the corporate governance and stewardship code framework.
- Transforming the operation and function of Companies House, such as with regards to better scrutiny of information so as to improve data accuracy.
The second objective, increasing the competence and professionalism of UK board members, would be achieved by the following policy proposals:
- Introducing minimum requirements for director training to ensure directors have a full and clear understanding of their responsibilities.
- Encouraging the adoption of a Code of Practice for Board Evaluation to increase consistency and improve the value of evaluations for stakeholders.
The final objective is to encourage a longer-term, sustainable approach to business behaviour and would be met by the following policy proposals:
- Creating a framework through which companies can project their business purpose, e.g. having clearly defined objects or a "business purpose" statement, allowing companies to communicate their expected social impact beyond merely maximising profits.
- Encouraging a consistent approach to climate-related corporate disclosures.
- Exploring opportunities to establish an ESG-oriented sovereign wealth fund to invest in green and sustainable companies of the future, thereby embedding the highest standards of corporate governance across the economy.
- Establishing a newly-defined corporate form—the Public Service Corporation, through which the outsourcing of public services and related activities could be delivered.
The full manifesto can be found here.
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