Wealth creation is “disproportionately favouring the few”, with the position aggravated by examples of companies failing to maintain high standards of behaviour, according to one of the UK’s highest-ranking governance chiefs.
Speaking at the first ICGN/IIRC joint conference on governance and corporate reporting, Financial Reporting Council (FRC) chairman Sir Win Bischoff said that values, behaviour and good governance were integral to business success.
“[They must] create an environment in which all stakeholders can thrive,” he told an audience of 400 business experts.
He pointed to prime minister Theresa May’s focus on reforming governance, and her questions about its effectiveness. The government recently set out its thoughts on reform in a green paper.
A key governance agenda concern, that of remuneration, required “broadening”, Bischoff suggested. Remuneration committees, currently focused on aligning company performance with executive pay, should look at the issue in context of the whole company.
He also called on the UK accounting and auditing profession, which he described as “world-leading”, to maintain its lofty position by developing in a way that gives society “more confidence in their behaviour”.
He summarised by saying that boards have a responsibility to both act appropriately, and report to their stakeholders. “The board’s role is to demonstrate leadership, set the culture, be open and accountable. Investors are asking questions about culture—it’s clearly an area where more can be done.”
On Tuesday the FRC released its “top tips” for reporting business models, based on the investor requirements.
The final session at the ICGN/IIRC conference heard strong messages about the future of capital markets and the reporting agenda.
In an impassioned speech, Saker Nusseibeh, CEO of Hermes Investment Management, said that investors did not act as “owners” of shares; instead they treat them as “gambling chips”. He called on businesses and investors to stop acting as if they were “separate” from the wider world.
Gilly Lord, head of regulatory affairs and audit strategy & transformation at PwC UK, said that the future of corporate reporting must be one in which different stakeholders can easily access the information they require.
Current hard-copy annual report filing requirements, for example, are outdated, Lord added.