London, 16 February 2017 – The Chartered Governance Institute UK & Ireland has produced the first in a series of thought leadership papers looking at governance in the UK. Launched at a House of Lords event last night by Chris Hodge, Policy Adviser to CGIUKI, the paper considers the continuing suitability of the UK’s governance framework.
Following introductory remarks by Sir Winfried Bischoff, Chairman of the Financial Reporting Council and Peter Swabey, Policy and Research Director of CGIUKI about the current debate on corporate governance reform, Chris commented:
‘The regulatory framework for corporate governance has not fundamentally changed since it was established 25 years ago, but our expectations of what it should be able to achieve have. The perceived purpose of governance has gone from being “better oversight” to “saving capitalism”.
While the framework is still well suited for its original task, it is not capable of preventing or effectively sanctioning bad behaviour by boards or directors or – on its own – of delivering public policy objectives. Encouraging good business practices, punishing bad business behaviour and promoting the public interest are interrelated objectives, but they are not the same and cannot all be achieved through the same mechanisms.’
Chris argues that we need to untangle the different components of corporate governance if we are to address each of them effectively. In particular he suggests that we:
- Rethink our policy approach to issues such as income inequality, tackling them across the economy as a whole using tools better suited to the purpose
- Promote good governance standards in all sectors, and in other investment asset classes that receive a significant amount of money from UK investors
- Improve the effectiveness of the various mechanisms by which listed companies are held to account
- Introduce effective legal sanctions to punish bad business behaviour.
‘The purpose of this series of papers is to encourage reflection; to consider the issues dispassionately; and then to look at what really needs to be done to address them. We are asking our authors to think radically about governance, looking at what we are seeking to achieve and how best that may be done; rather than at how the current model can be improved. Reviewing these complex issues may give us the opportunity to make a fresh start in governance and that can only be a good thing when we are considering the Future of Governance,’ says Simon Osborne, Chief Executive of The Chartered Governance Institute UK & Ireland.
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Peter Swabey
+44 (0)20 7612 7014
Notes to Editors:
- The Chartered Governance Institute UK & Ireland is the professional body for governance. We have members in all sectors and are required by our Royal Charter to lead ‘effective governance and efficient administration of commerce, industry and public affairs’. With over 125 years’ experience, we work with regulators and policy makers to champion high standards of governance and provide qualifications, training and guidance.
Website: cgi.org.uk
