- 6 March 2025
Thank you for your interest in our updates on the latest regulatory developments. There are a number of issues of interest this month. Do, please, feel free to bring these to the attention of colleagues for whom they might also be relevant.
Peter Swabey FCG,
Policy & Research Director
Of interest to members involved in boards of large or regulated organisations
REQUEST FOR SUPPORT FROM MEMBERS
The Institute is collaborating with Loretto Leavy FCG and Professor Ruth Sealy of the University of Exeter Business School and Henley Business School to understand board behavioural dynamics within large and regulated organisations.
Our Handbook aims to deliver ‘how to’ guidance and recommendations, which highlight how boards come together effectively as a collective decision-making body. The Handbook is a result of analysis of 50 FTSE boards and 14 workshops with members.
The Handbook was launched on 3 February for consultation until 3 April. Please do let us know your thoughts on this important area of practice. We are very grateful for those who have participated in the research to date.
We aim to launch the final Guidance at the Institute’s conference in July.
The Institute is delighted to support this research, which will provide a framework for maintaining relationships that can be used by boards and chairs to improve effectiveness, and will provide additional practical ‘how to’ advice for company secretaries and governance professionals assisting boards. Please download your copy of the Handbook and register your interest or contact Loretto Leavy.
Of interest to all members in companies
REQUEST FOR SUPPORT FROM MEMBERS
We have surveyed the opinions of governance professionals in FTSE companies for many years. In 2025 we want to expand the survey and include insights from those of you working in private companies too.
Our annual Boardroom Bellwether report has achieved extensive coverage in UK and overseas media. We use the findings in our briefings to parliamentarians and stakeholder, helping to inform and influence on the issues and trends which matter to profession and to boards in the UK.
The survey gives us unique insight into how the profession and the board are managing emerging and ongoing issues, adapting to changing expectations of corporate culture and meeting the demands of changing legislation and regulation. This work helps the Institute to influence government and regulators on the issues which matter to the profession and boards more broadly.
If you would like to be involved in supporting this year’s survey do get in touch with our Head of External Affairs, David Mortimer.
Of interest to all those working in corporate governance
FEEDBACK TO MEMBERS
Thank you to all those members who have contributed to our response to the Financial Reporting Council’s consultation on proposed changes to the UK Stewardship Code, especially those who joined us at our virtual member roundtable on 29 January.
We submitted our response before the deadline on 19 February. This was a particularly interesting consultation which attracted a variety of views, but our principal points were:
- We agree with many of the proposed changes to the Stewardship Code. These have clearly been the outcome of a lot of thought and, as the consultation paper makes clear, feedback from many stakeholders.
- We do not agree with the new definition of stewardship. The proposed definition is a very good definition of one element of stewardship, but its focus on the fiduciary stewardship of client monies disregards the other element: the stewardship responsibilities to wider society as owner of a company. It is on this element of the definition of stewardship that much UK corporate law is based, particularly the concept that owners have a responsibility to step in where their agents, the directors, are mismanaging the company. There are some very strong sections in the proposed Code dealing with engagement and the reporting of engagement. However, under the proposed definition, disinvestment rather than engagement may be the appropriate step. This undermines a core purpose of effective stewardship and risks diluting its important role in our economy and society.
- The Code as proposed lacks ‘teeth’. There is little disadvantage to those investors who chose not to become signatories, or even to those who did become signatories but did not pay more than lip service to the requirements of the Code.
- The opportunity has been missed to require proxy advisers to report on how they have engaged with issuers to ensure that their research and voting recommendations are as accurate as possible; how they have taken issuer explanations for deviation from the UK Corporate Governance Code into account; and how they deal with inaccuracies reported to them.
Of interest to all those working in corporate governance
FEEDBACK TO MEMBERS
Thank you to all those members who have contributed to our response to the Financial Conduct Authority’s consultation on a proposal to improve market transparency and to publicise its ongoing enforcement commitments.
We submitted our response before the deadline on 17 February. In general, we supported the FCA’s proposals, but recommended the introduction of clearer guidelines on the criteria for making public announcements at each stage, with more specific examples of what constitutes ‘public interest’. We also emphasised the need for proportionality.
Of interest to all those working in corporate governance
Companies House has postponed the launch of the Authorised Corporate Service Providers (ACSP) Registration Service, originally planned for 25 February 2025.
This service allows third-party providers to register as authorised agents to conduct identity checks for Companies House. The delay is due to ongoing work to update technology systems for new ECCT Act measures. Companies House is ensuring the system is fully operational before the legal requirements take effect and will provide updates as progress is made. Read more on GOV.UK website.
Of interest to all those working in corporate governance
The European Commission has published the “Omnibus Simplification Package”. Announced by Ursula von der Leyen after the Budapest meeting on 8 November 2024, the package aims to reduce red tape, focusing on the intersection of the EU Taxonomy Regulation, the CSRD and the CSDDD. You can read more details on the European Commission website.
For a helpful summary, read the article by Politico.
Of interest to all those working in corporate governance
In January 2025, the European Banking Authority (EBA) published its Final Report outlining guidelines for managing ESG risks. These guidelines specify the internal processes and risk management arrangements that financial institutions must implement.
The EBA developed the guidelines under its mandate in Article 87a (5) of the Capital Requirements Directive VI (CRD VI) and aligned them with its sustainable finance roadmap.
The report highlights the growing importance of ESG risks, which can threaten institutions’ safety and soundness and impact credit, market, operational and reputational risk categories. Addressing these risks is the guidelines’ primary focus.
Of interest to all working in charity
The National Council for Voluntary Organisations (NCVO) has released guidance on inclusive language and communication. The guidance aims to help organisations ensure that their language is respectful and inclusive, and reflects diverse communities. It provides practical advice on how charities can adapt their communication to avoid exclusionary or harmful language, promoting inclusivity and respect for all.
Of interest to all working in charity
The Charity Finance Group (CFG) has launched a new Turnaround Group designed to support charity finance leaders facing financial challenges or navigating organisational change. This initiative aims to offer guidance and peer support to help leaders steer their organisations through difficult periods. The group provides resources and a platform for sharing best practices among charity finance professionals.
Of interest to all working in charity
Advance HE has published a Framework for Leading in Higher Education, designed to guide leadership practices within the sector. The framework focuses on three key dimensions: knowledge and understanding, values and mindsets, and applications and skills. It serves as a resource for self-development, preparing for promotion, and supporting team and organisational development.
Advance HE is currently seeking feedback before finalising the document in September. The Institute will be responding to the consultation. If you would be willing to help with the drafting of that response, please contact Valentina Dotto.
Of interest to all working in charity
The Charity Finance Group (CFG) will hold a consultation on the Statement of Recommended Practice (SORP) 2025 in March. The consultation will seek feedback from charities, auditors and finance professionals on proposed updates to the charity accounting framework.
For more details and to access the consultation, visit the CFG news page. The Institute will be responding to the consultation. If you would be willing to help with the drafting of that response, please contact Valentina Dotto.
Of interest to all
As we enter 2025, the debate surrounding diversity, equity, and inclusion (DEI) has become more polarised, particularly in the wake of recent political changes in the US. After the appointment of President Trump, several significant executive actions have impacted DEI initiatives, creating a complex landscape for businesses to navigate US Legislative Changes on DEI.
On 21 January 2025, President Trump issued an Executive Order ‘Ending Illegal Discrimination and Restoring Merit-Based Opportunity’. This order revokes President Clinton’s landmark Executive Order No. 12898 on environmental justice, which had directed federal agencies to prioritise environmental justice in their operations. This move marks a shift in federal policy, undermining the previous focus on incorporating environmental justice into government actions.
Another Executive Order ‘Ending Radical and Wasteful Government DEI Programs and Preferencing’ terminates all DEI-related programmes within the federal government. This includes the cessation of ‘environmental justice’ offices and related positions. These actions reflect a broader political movement against DEI initiatives in both the public and private sectors, raising questions about the future direction of such programmes.
Just as the US has seen major shifts in DEI policy, businesses in the UK must contend with the growing challenge of managing conflicting beliefs within the workplace. With the public debate surrounding DEI intensifying, businesses must balance the need to uphold cultural and societal expectations with potential legal and reputational risks.
Considering these changes, businesses face a difficult decision: to continue with their DEI initiatives despite mounting opposition, or to halt them entirely?
Ethical values and principles have never been more critical. As DEI programmes face increasing challenges, it is important for organisations to maintain a commitment to fairness, inclusion, and equity. The following three pieces of reading may be helpful:
- The IBE blog Anti-Corruption and Ethical Leadership in Uncertain Times, where they discuss how businesses can safeguard their integrity and ethical culture in an environment where DEI policies are under increasing scrutiny.
- An article in the Financial Times written by Harvard professors Iris Bohnet and Siri Chilazi, which emphasises the need to preserve fairness in the workplace.
- The Institute report on Conflict and Tension in the Boardroom which discusses how managing boardroom conflict can lead to enhanced organisational success and examines strategies for chairs and company secretaries to transform inevitable tension into healthy, productive dynamics.
Of interest to all involved in investor engagement
Building on the success of their first Investor Showcase, the Investor Forum has asked us to invite members to their second showcase, which will take place on 12 March.
In this “reverse roadshow” you will have an opportunity to hear directly from three large global active investment firms. These Investor Forum members will share insights on their structure, their investment approaches (relevant to UK issuers), and their key stewardship priorities.
Agenda: 12 March 2025
12.30 – 12.55 – Capital Group International (Richard Whitaker – ESG Senior Stewardship Manager)
12.55 – 13.20 – Fidelity International (Matthew Roberts – Associate Director, Stewardship)
13.20 – 13.45 – T. Rowe Price (Maria Drew – Director of RI Research & Yijiang Wang - Corporate Governance Analyst)
Key Highlights:
- Overarching Insights: Each institution will host a 20 minute session to showcase their priorities, including ESG integration, voting policies, diversity goals, and net zero targets, followed by 5 minutes of curated Q&A.
- Flexible Access: Companies can sign up for the most relevant sessions and access recordings for future reference.
- Improved Dialogue: Opportunity to gain a clearer understanding of investor expectations to make your future interactions more effective and impactful
Register to attend.
And finally, a couple of articles that passed across my desk and struck me as being of interest to members:
Fraudsters at Companies House? A reason to dig a little deeper: Stevens and Bolton have published an interesting article looking at a case study of what they suggest may be one of those companies that ECCTA is trying to remove from the companies register.
The Future of Governance – Why the Boards of Tomorrow Need to Embrace Change Today: An article from The Independent explores the evolving landscape of governance and why boards must adapt to remain effective in the future. It highlights the need for boards to embrace change now, focusing on leadership, diversity and new governance models to meet the challenges ahead. Similar issues are covered in our most recent Boardroom Bellwether report.
On the subject of further reading, it would be remiss of me not to mention the CGIUKI blogs published in February:
10 February - The FRC's First Thematic Review of Mandatory Climate-Related Financial Disclosures prepared by AIM-Listed and Large Private Companies
20 February - Updated approach from the CRO on changing a financial year end date