REPORT

Transparency, trust and the benefits of good reporting
Corporate governance review 2019

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Simon Lowe

A Simple truth

Good governance drives success. It’s a fact. We can prove it.

Companies that consistently invest in their decision-making infrastructure outperform those that don’t. It’s that simple.

So if you’re still approaching the UK Corporate Governance Code (the Code) as tickbox exercise then two things are true. One, you’re being left behind and two, you need to read this report.

What will you learn from the guide:

  • Why the corporate rate cut is only part of the picture
  • Why the corporate rate cut is only part of the picture
  • Why the corporate rate cut is only part of the picture

Our Corporate Governance Review (CGR), now in its 18th year, identifies key trends in reporting and disclosure for the UK’s biggest companies. Comprised of a comprehensive analysis of the annual reports of the FTSE 350, the CGR showcases best practice in governance reporting.

In turbulent times, trust, whether that’s the trust of stakeholders, potential investors or the wider public, is a hard-won, but essential ingredient for business growth. Your annual report and accounts remain a key means of winning that trust. They are the window into your organisation. Are yours telling the right kind of story about you?

This isn’t just about compliance. Our own research, published earlier this year and based on a decade worth of data, proves strong governance delivers sustainable value. Good reporting is part of that. This is about what you can learn from those getting it right and the practices that can tangibly benefit your business.

The research

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Ten years of data

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Across ten industries

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FTSE 350 businesses

Result

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£8.2 million in growth capital raised

Production

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Increased by 300%

Beyond a 'nice to have'

Far from seeing it as a necessary evil our research shows that the most successful companies are using the corporate governance code as a blueprint to build environments that foster growth. They are aligning resource to clearly articulated goals and the results speak for themselves.

Companies consistently investing in governance best practice:

  • deliver double the total shareholder returns than companies failing to invest in decision making frameworks
  • remain twice as likely to retain a FTSE 350 capitalisation as companies scoring lowest for quality of governance.

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Only 50% clearly articulate their purpose beyond generating profit

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Just 20% see environmental risks as a principal threat to strategy

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Only 15% clearly explain how executive remuneration is linked to strategy and KPIs

Five ways you could see the benefit

  1. Proper purpose
    When it comes to why a company exists, generating revenue is no longer enough. Employees and investors want more. Developing, articulating and then embedding a clear purpose helps stakeholders understand a company’s motivation, can attract investors and breed loyalty in your team. The CGR shows an improvement here, but with 50% still not embracing this challenge there’s still work to be done.


  2. Going green
    Explicitly planning to and reporting on environmental issues will align you with investors and their increasing calls for standardised, rigorous data to support their investment decisions. Worryingly this isn’t happening. Only 30% have an environmental KPI, and only 20% consider environmental risks a principal threat to their strategic goals.


  3. Making a point of difference
    Transparency builds trust, trust breeds optimism and attracts investors. Moreover, rigorous reporting indicates authenticity, where other, more bare minimum approaches could engender scepticism.


  4. Delivering cultural value
    Demonstrating a commitment to cultural investment reflects positively on your company. Establishing diversity and inclusion credentials, environmental commitment, learning and development programmes while promoting ethical practices so people instinctively do the right thing, all create points of difference whilst energising a workforce who believe in the company and its purpose. And yet only 45% of companies clearly articulate what their culture means and how they promote and track it.


  5. Building visions for the future
    Leadership development including succession planning is essential for future-proofing your business; transparency around remuneration is vital for building investor trust. Despite this, nearly 90% of businesses fail to give adequate insight into succession planning with only 15% clearly explaining how executive remuneration is linked to strategy and KPIs.

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Just 32% discuss the application of the Code principles in a meaningful way

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35% of those who report technology as a key risk still have no tech expertise on the board

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87% give little or no insight into the succession planning for their senior management

What you can do

We know that strong governance practices create and retain sustainable value. Download this year’s Corporate Governance Review now to understand even more about the key trends in governance and reporting. And to start think about how these lessons from the FTSE 350 could be applied to your business.

Turnover

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106% growth since 2014/15

Sector

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Leisure and consumer

Team

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Employs 55 people

Have the tax guide delivered to your inbox

The Tax Cuts and Job Act has been a boon to corporations. Our guide details the many ways your business can benefit from tax reform, as well as some surprising pitfalls to avoid.

What will you learn from the guide:

  • Why the corporate rate cut is only part of the picture
  • Why the corporate rate cut is only part of the picture
  • Why the corporate rate cut is only part of the picture

Making the only non-viable course of action ‘business as usual’.

What you can do

Download the report. Not only will it outline the benefits of putting good governance at the heart of your business model, but also the six key areas of investment you should be focussing on to start transforming your business.

Beyond that we are ready to help you in any way we can. From helping get the board on board, to developing a plan, to delivering change, we can assist you every step of the way.

Governance is the key to success. Used correctly the corporate governance code becomes a blueprint for growth. These are proven facts. The only real question is what you will do with them.

"From the disruption of tech innovations to more active shareholder engagement; from analysing risk reporting to executive remuneration download our Corporate Governance Review for an unparalleled snapshot of how businesses do business."

Simon Lowe
Chair, Grant Thornton Corporate Governance Institute

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Related contacts

Partner

Alan Dale

London

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