New proposals for a code of conduct for board members draw heavily on the Nolan Principles, the standards by which Westminster politicians, civil servants and other public officers operate, according to experts behind the new code.

Paul Hockley, ethics and compliance director at professional services firm BDO, and part of the team assembled by the Institute of Directors (IoD) to develop the new code, said that many alternative codes were used as source material, but that the Nolan Principles were a key influence.

“We adapted those principles to the director’s role. But the challenge for us was to write something as short as possible that added as much value as possible,” said Hockley.

He added: “It had to be strategic enough to apply to all directors and recognise the complex role that they have.”

The proposed IoD code includes six principles: leading by example, integrity, transparency, accountability, fairness, and responsible business.

Hockley made his comments during a recent webinar hosted to discuss the code with more than 100 business leaders. Roger Barker, director of policy and governance at the IoD, made Hockley’s comment public in a blog this week.

Nolan Principles

The Nolan Principles were published in 1995 following the ‘cash for questions’ scandal that saw a number of MPs take money for asking questions in the House of Commons. Aimed at creating an ethical framework for conduct in public life, its seven principles are based on behaviours (as opposed to process) and are: selflessness, integrity, objectivity, accountability, openness, honesty, and leadership. The UK’s ministerial code was written in line with the Nolan Principles.

A public consultation on the IoD’s code was launched in June this year, but it has been at least two years in the making. In a piece Barker wrote for Board Agenda in 2022, he explained that scandals such as Carillion, BHS and Patisserie Valerie had significantly reduced public trust in business and that a code of conduct could help restore this.

“Given that directors are just as important for the economy and society as other professionals,” Barker wrote, “the IoD believes that an important missing element in our current business framework is a code of conduct for directors.”

There is some evidence that trust in business has recently deteriorated. The latest annual survey  from the Institute of Business Ethics (IBE), published in June, found that public trust had fallen to its lowest level in four years. Trust in politicians, the media and charities also declined.

Leading barrister Deshpal Panesar KC told the IoD webinar that there would be risks to directors who fail to adopt the code.

“I think, done right, the code is going to become badge of pride. It’s going to become a quality mark. But if you don’t have it, or if you’re not truly committed to it, it’s going to become blindingly obvious to those who might want to do business with you, to those who might want to work with you,” he said.