DISCUSSION Press release: Tomorrow’s Company responds to the FRC’s new Corporate Governance Code

The Financial Reporting Council released its new UK Corporate Governance Code on Monday July 16th 2018.

According to the FRC, it ‘puts the relationships between companies, shareholders and stakeholders at the heart of long-term sustainable growth in the UK economy’.

The aim is to help build greater trust between companies and key stakeholders via the following: new provision to enable greater board engagement with the workforce; cultures aligning company values with strategy to preserve long-term value; an emphasis on the need to refresh boards and undertake succession planning to ensure they have the right mix of skills, experience, constructive challenge and diversity.

In response, Dr Scarlett Brown, Head of Research and Policy at Tomorrow’s Company said:

“We welcome today’s FRC announcement of the launch of the revised Corporate Governance Code (The Code). The new Code reflects themes Tomorrow’s Company has been proud to champion for many years: a need for companies to focus on long-term value and resist short termism, prioritise purpose, culture, wider stakeholders and a real emphasis on succession planning and refreshing the board as a way to promote diversity.

“We particularly welcome the embedding of the section 172 into the code. We believe a major gap has opened between shareholder and stakeholder expectations, but stakeholder engagement can risk becoming a buzzword. It needs to be done meaningfully and boards will need to be innovative about how to engage. ‘Stakeholders’ are broad, and we must resist relying solely on employee, shareholder or supplier surveys and calling it ‘engagement’.

“The Code changes overall are to be welcomed, and we hope to see it drive standards of governance and board practice across the market. We hope to see it connected to wider government industrial strategy, so that we can move towards a joined-up approach to long-term wealth creation.”