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

Download our 2020 Corporate Governance Review

Covering the first full year of adoption of the 2018 UK Corporate Governance Code, our 19th Corporate Governance Review captures a period of disruption, risk and opportunity.

This year's review saw the COVID-19 situation demand a great deal from businesses, proving to be a catalyst for change.

To help you strengthen your governance practices, we've analysed the FTSE 350's annual reports from this turbulent period and uncovered the trends for best-practice governance reporting.

What you can do now

Strong governance helps create sustainable value. It builds resilience, agility and trust. Effective reporting, that emphasises quality and clarity over quantity is the best way to nurture robust relationships with your stakeholders and help you set the agenda in an emerging world.

Download this year's review to see how strong governance practices can help 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.

Turnover

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106% growth since 2014/15

Turnover

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106% growth since 2014/15

Sector

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Leisure and consumer

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Just 6% measure the impact of their corporate purpose

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49% give good or detailed accounts of company culture

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30% state how they mitigate emerging risks

Our review explains how to turn talk into action across these six areas

1. The impact of purpose

Companies are beginning to embrace their purpose with 82% clearly articulating a reason for their existence beyond profit. However, only 6% are measuring the impact of their purpose. Businesses must now tie their purpose statements back to real action.

2. Not just talking culture

As the conversation around how culture contributes to value creation continues to grow, we see the number of companies providing good or detailed accounts of their company culture rise to 49%. Yet less than half explain how they assess culture and only 3% use three or more metrics to assess how embedded it is into the heart of the business.

3. Don't get complacent about risk

Eighty-nine percent of companies now report assessing emerging risks, coupled with the 84% providing high-quality risk disclosures paints a promising picture. However, if this year has proved anything it's that we can’t afford to get complacent. There's more work to be done with only a quarter of companies identifying a COVID-like event as a threat to business, and just 30% talking about how they mitigate emerging risks.

4. Business playing a role beyond section 172

Driven by section 172 and the wider societal pressures COVID-19 has provoked, there is a growing emphasis on the role business plays with regard to the individual, society, and government. Seventy-seven percent provide section 172 statements of varying detail and yet only 4% indicate how such considerations impact long-term decision-making.

5. Green for go - but is it really?

Reporting on environmental, social and governance issues is growing, but. there’s a misalignment between the risks identified, the metrics set and long-term incentive plans. A good example is climate change. Despite 18% identifying it as a principal threat, only 4% use climate change metrics in executive bonus planning, signalling a disconnect between what companies say they value and what they believe drives value.

6. Board effectiveness - how does it all connect?

Boards need to understand how these various elements of governance connect, not just in the way a board functions but how they assess their own effectiveness for the future. And yet 63% of companies still give little or no indication of the skills and experience on board and 83% no insight as to their succession plans below executive board level.

Strong governance practices can help your business in these six areas:

Turnover

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106% growth since 2014/15

Turnover

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106% growth since 2014/15

Sector

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Leisure and consumer

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Just 38% provide detailed section 172 statements

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18% consider climate change a principal risk to their strategy

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83% no insight as to their succession plans below executive board level

What you can do now

Strong governance helps create sustainable value. It builds resilience, agility and trust. Effective reporting, that emphasises quality and clarity over quantity is the best way to nurture robust relationships with your stakeholders and help you set the agenda in an emerging world.

Turnover

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106% growth since 2014/15

Turnover

Card image cap

106% growth since 2014/15

Sector

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Leisure and consumer

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.

"Learning how others are using good governance practice to successfully create sustainable value couldn’t be more important. Our 19th Corporate Governance Review will give you the insights you need to learn from the best today in preparation for a new tomorrow"

Simon Lowe
Chair, Grant Thornton Corporate Governance Institute

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Related contacts

Partner

Alan Dale

London

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