Blog : BOARD TALK
|Posted on January 13, 2017 at 11:20 AM|
This looks interesting: UK business and investment governance leaders are launching a joint project to ensure UK PLC boards understand the views of their employees and other stakeholders and - with luck - then factor them into their decision making.
A joint project by ICSA: The Governance Institute and the Investment Association aims to tackle concerns that the voices of key groups such as employees, customers and suppliers are not being heard at the highest levels of British business, according to a statement.
The two bodies say they "will identify existing best practice and produce practical guidance to enhance understanding of the interests of employees and other stakeholders, in accordance with board duties under Section 172 of the Companies Act 2006."
The guidance will identify different approaches to stakeholder engagement for companies to consider, summarising the issues to be addressed and the practical steps to be taken. These will include the different approaches identified in the Government’s Green Paper on corporate governance reform.
It will be ppublished in the secodn quarter of 2017 and will cover:
The ways in which companies can identify non-executive directors with relevant stakeholder experience
The processes by which boards can receive the views of their key stakeholders; and
How training and induction can be used to enhance directors’ understanding of their duties and the interests of, and impact on, different stakeholders.
It will also offer a set of options for companies to appropriately report how they have fulfilled their duties in this area.
“We agree with the Government that the views of stakeholders need to be heard by boards. Companies benefit from having constructive engagement with their employees, customers and other stakeholders, and from having a broad range of perspectives around the boardroom table. Many companies already do this effectively, but our guidance is intended to assist those boards that feel the need to act now to improve their engagement with and understanding of the views of their stakeholders, rather than waiting for the Government or the FRC to complete any actions they might take as a result of the current consultation" said Peter Swabey, Policy and Research Director at ICSA.
You can read about some of those intended actions here on Forbes - Putting Teeth Into 'Comply or Explain': UK Regulator Asks For More Powers'
“We believe that market-led reform is more likely to create effective solutions and, by bringing together the perspectives of company secretaries and investors, with input from stakeholders and other experts, that we will be able to draw on the existing best practice and develop new guidance which will be practical to implement for companies” added Mr Swabey.
Andrew Ninian, Director of Corporate Governance at the Investment Association, said:
“The investment industry stands fully behind the Government’s efforts to create a corporate Britain that is built for the long-term, and this initiative illustrates that the asset management industry is at the forefront of improving corporate governance in the UK.
“Boards have a collective responsibility to make better long-term decisions for all their stakeholders. Our joint guidance will be designed to ensure that the broadest range of views and perspectives are heard around the boardroom table.”
Notes to Editors:
ICSA: The Governance Institute is the professional body for governance. We have members in all sectors and are required by our Royal Charter to lead ‘effective governance and efficient administration of commerce, industry and public affairs’. With 125 years’ experience, we work with regulators and policy makers to champion high standards of governance and provide qualifications, training and guidance.
About the Investment Association:
The Investment Association is the trade body that represents UK investment managers who manage over £5.7 trillion on behalf of clients.
Our purpose is to ensure investment managers are in the best possible position to:
· Build people’s resilience to financial adversity
· Help people achieve their financial aspirations
· Enable people to maintain a decent standard of living as they grow older
· Contribute to economic growth through the efficient allocation of capital
The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
The UK is the second largest investment management centre in the world, after the US and manages 37% of all assets managed in Europe.