FTSE 350 companies beef up corporate governance

Corporate governance is creeping up the management agenda of the UK’s largest companies. As the topic turns into extra distinguished, virtually seven-in-ten boards of the FTSE 350 imagine they’re absolutely compliant with the Corporate Governance Code, in line with Grant Thornton analysis.

Claire Fargeot, head of governance and board advisory at Grant Thornton UK, stated of the findings, “It’s encouraging to see extra FTSE 350 companies shifting towards full compliance with the Code. Final yr’s evaluation highlighted agility and future-readiness. This yr, boards must go additional – constructing governance frameworks that don’t simply defend however empower organisations to grab alternatives in a fast-changing world.”

The UK Corporate Governance Code (previously often known as the Mixed Code) units out requirements of fine apply for listed companies on board composition and improvement, remuneration, shareholder relations, accountability and audit. Revealed by the Monetary Reporting Council in 2024, following a session with the broader skilled companies sector, the primary change is the requirement for a board declaration of the effectiveness of fabric controls, together with reporting controls, within the annual report.

Supply: Grant Thornton

Amid an vital transition, Grant Thornton’s twenty fourth ‘Corporate Governance Evaluation’ recorded that 69% of companies claimed they absolutely adjust to the Code, an increase of 4% on the 65% of corporations attaining the benchmark in 2024. Of those, FTSE 100 companies accounted for 45%, and FTSE 250 accounted for 55% of the entire.

The world of the Code which noticed the best compliance ranges was function and tradition, with 96% of companies clearly articulating their function. Equally, 91% reported a transparent set of values for his or her organisation. Remuneration reporting additionally fared nicely, at 91% compliance, with govt and worker pension alignment now virtually common.

Nonetheless, charges declined in a number of areas the place key discussions are happening – and this will trigger hassle for corporations sooner or later. For instance, simply 60% discovered they had been compliant on variety reporting, with gender and ethnic variety enhancing however broader variety remaining underreported. In the meantime, whilst companies reportedly press forward with AI transformations, compliance on AI and cyber safety stay an aspiration moderately than a actuality – and with many companies adopting a fail-fast strategy in these areas, the very fact 62% of benchmarked companies nonetheless solely see AI as an “alternative” might come again to hang-out them – particularly in essential sectors like monetary companies, the place 72% under-report dangers, and healthcare, the place 89% under-report dangers.

Fargeot added, “Expertise disruption is reshaping development fashions while financial shifts are redefining priorities and expertise flows are evolving… Cyber threat and AI adoption at the moment are mainstream points, but our analysis exhibits 55% of boards don’t determine AI as a principal threat, and 22% lack members with tech or information experience. That can must change rapidly. Anticipate reporting in these areas to speed up as organisations recognise their vital function in shaping sustainable success.”