Jessica Fino 18 Oct 2017 01:52pm

Corporate governance compliance improves

Compliance with the UK corporate governance code among FTSE 350 companies has improved this year, but governance and reporting remains “patchy”

According to Grant Thornton’s (GT) corporate governance review, 66% of the 350 biggest UK companies declared full compliance, up 4% from last year.

However, only 33% of the FTSE 350 provided informative insights, down from 64% in 2014.

The report found that longer-term viability statements, internal control reporting and gender diversity had seen little improvement since last year, while investor engagement continues to decline.

Moreover, only 12.5% of the FTSE 350 reported that the remuneration chair held face-to-face meetings with shareholders regarding executive remuneration.

Grant Thornton also revealed diversity in the boardroom still lacked improvement, with only 26% of FTSE 100 board roles filled by women and 77% of the FTSE 100 and 85% of the FTSE 250 without a woman in an executive role.

The report also found improvements in culture-related reporting, with 39% of companies now providing a strong overview of the culture of their organisation, up from 20% last year.

But GT said it was “disappointing” that only 29% of CEOs made personal reference to culture in their opening statements despite the Financial Reporting Council (FRC) recently highlighting the role’s importance in setting and embedding a company’s culture.

Simon Lowe, partner and chair of the Governance Institute at GT said, “Corporate scandals and escalating executive pay have increasingly eroded trust in business in recent years and consequently, governance standards have elevated in topicality in boardrooms, media, Whitehall and with the general public.

“A vibrant economy is underpinned by trust in its key markets; thus it’s more important than ever for businesses to continue to improve their corporate governance.”

Lowe said the firm had taken “huge strides” in governance practice but “frauds, miss-statements and failures in governance still continue to arise”.

He added that for the UK economy to thrive post-Brexit then companies needed to ensure they were complying with governance requirements.