Red side story

The UK governance regulator will review its “enforcement processes” and focus engagement efforts on firms understanding new internal controls reporting guidelines.

The news comes in a new three-year plan for the Financial Reporting Council (FRC) outlining its actions to support growth under the Labour government.

The plan says the FRC will “review, consult on and refresh our end-to-end enforcement processes and procedures…”.

In a nod to the government growth agenda, the plan adds: “The aim is to ensure these continue to be efficient, effective and proportionate (including in terms of offering a graduated range of regulatory responses).”

Elsewhere, the FRC plans to focus engagement on Provision 29 of the UK Corporate Governance Code. The provision introduces the new internal controls regime, which asks board to report on the “effectiveness of the material controls” and describe controls “which have not operated effectively”.

Of the new plans, FRC’s chief executive, Richard Moriarty, says: “If the FRC as a regulator is to encourage economic growth and investment, I believe it is important we support responsible risk-taking, not seek to eliminate it.

“Our strategy puts this principle at its heart whilst ensuring we continue to encourage high standards in corporate governance, reporting and audit, which are vital foundations for business in accessing capital and broader shareholder support to thrive.”

Forgotten planet

A collection of big name companies appear to have cut ‘ESG initiatives’ from their executive pay plans because of what the Financial Times describes as “fierce US opposition and mounting costs”.

The FT reports that mention of ESG goals have gone from UBS’s annual report, likewise that of Standard Chartered. It says that HSBC has “cut the weight” of ESG goals in long-term incentive schemes.

However, the FT also adds: “None of the banks dropped the metrics entirely.” Thank the shrinking glaciers for small mercies.

What’s also clear is that there is a “bifurcation” going on. In the US, ESG-linked executive pay measures are becoming persona non grata under Donald Trump’s second term. Elsewhere in the world, it is a different story.

It is hard to get a full picture of executive pay trends from the FT’s story. The annual report mentions may be cosmetic—or may not be—and it is difficult to say how widespread the issue is. Only time will tell. Sadly though, when it comes to climate change, we don’t have a lot of that to spare.

All aboard the omnibus?

Over in Brussels, the arguments over non-financial reporting continue as officials prepare to pare down new reporting obligations in what is known as the “omnibus” project.

This week, seven campaign groups signed an open letter calling on the EU to avoid changes that would increase reporting and compliance burdens “without a positive impact on workers and the environment”.

The omnibus will delay the introduction of new rules in the so-called CSRD and CSDDD directives, and drastically reduce the number of companies caught in their scope.

The letter says: “We believe the current proposal introduces unintended consequences for risk management through greater unpredictability and complexity, and risk increasing corporate burden and costs while limiting the impact for workers in the supply chain.”

Don’t panic

Board Agenda felt a tremor in its infinite improbability drive this week when we spotted a new paper entitled “A Hitchhiker’s Guide to Comparative Financial Regulation.”

Not excited, you know, because the finer points of financial services rule-making heats our hyperdrive, but because the title seemed to suggest some witty play on Douglas Adams’s masterpiece The Hitch-Hiker’s Guide to the Galaxy.

But no. Turns out the article is about a rather dry sounding new book, entitled Comparative Financial Regulation.

Functional, no doubt, but no mention of an exasperated Arthur Dent confused by his intermediation and cryptos; no Ford Prefect riding roughshod over regulators; no Marvin the Paranoid Android worrying about financial cataclysm. Nary a nod to the answer to all things being 42, bistro maths or dolphins.

If you’re going to allude to one of the greatest books ever written in a paper about financial regulation, some lazy puns are the very least you can do. So long and thanks for all the pish.