Grant Thornton UK’s latest research into corporate governance reveals only a minority of firms are joining up the dots of governance to create sustainable value.

For almost 20 years, the Corporate Governance Review has examined how the reporting of applied governance practices has evolved among UK FTSE 350 companies. With the new UK Corporate Governance Code (the Code) starting to bed in and COVID-19 acting as a catalyst, this year’s review captures a snapshot of a changing world.

UK Corporate Governance Review 2020

This year's Corporate Governance Review shows that the best-performing companies are embracing governance activities, not as separate compliance needs, but as business essentials that are fundamentally linked; risks to strategy, strategy to purpose, and reward to what really matters to all.

These companies succeed by using governance as a dynamic framework to sharpen operational agility, build present and future resilience and, ultimately, to create and sustain value. Yet, still, it seems many see the Code as a box to be ticked. This is a mistake.

Madeleine Mattera round.pngMadeleine Mattera, Partner & national head of financial services, Grant Thornton Australia, said “this report provides salient insights for Boards around the world including Australia, as despite having a different Code in place that we report against, the key themes resonate with what we’re seeing here – purpose, culture, emerging risk management, stakeholder engagement, board effectiveness, remuneration, ESG, diversity and succession planning. It is also a strong indicator of what companies should be focusing on in the coming year. In addition, we have highlighted the importance of cyber and IT risk for Boards here in Australia. Businesses are under increasing scrutiny over their privacy policies and practices, with hefty financial penalties in place for breaches. For Financial Services organisations in particular, our industry regulator APRA has cracked down on reporting and compliance, calling on boards to undertake an external audient review to review their compliance in 2021.”

The UK Code is a guide; a distillation of governance best practice and reporting that can be used as a blueprint to build and develop your own governance strategy. It encourages an approach that recognises and embraces the interconnectivity of its parts: Purpose; Culture; Board effectiveness; Diversity and inclusion; Risk mitigation; and more.

This helps set the principles on which a business is run. Good reporting then demonstrates the underlying application of those principles, creating transparency and building trust.

We know it works

The extensive research by Grant Thornton UK proves a correlation between good governance practice and long-term sustained value creation. As we continue to map a new way of working, understanding how the most-effective companies are using good governance, and how you measure up, could help you plan for the future.

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