London, 26 September 2017 – ICSA: The Governance Institute and The Investment Association have today launched guidance to help company boards ensure they understand and weigh up the interests of their stakeholders when making strategic decisions.
The guidance, which was welcomed by the Government in its recent announcement on corporate governance reform, identifies ten principles to guide the way boards approach these issues. They cover: identifying key stakeholders; the composition of the board and development of directors; the way in which boards receive and process information; designing appropriate engagement mechanisms; and reporting and feedback to shareholders and stakeholders.
Business Minister Margot James said: “We have long been admired as one of the best places in the world to work, invest and do business, and last month’s corporate governance reforms will continue to enhance that reputation.
“A crucial part of those reforms is making sure companies listen to their workers and customers. This new industry-led guidance will help companies to choose how best to ensure those voices are heard in boardrooms up and down the country.
“This is an important piece of work and I would urge companies to draw on this guidance to help ensure their long-term success.”
Chris Cummings, CEO, Investment Association, commented: “Investors want companies to take decisions which will generate the best long-term value to their shareholders. To make such decisions, boards need to hear and take account of the views of their stakeholders. Failure to do so, could impact on the future success of the company.
“The guidance launched today, provides practical steps for UK companies to consider how they ensure their stakeholder voice is represented in the boardroom. It is also outlines how companies report on their stakeholder engagement activities and the impact engagement has had on the board’s decision making.”
Stephen Haddrill, CEO of the Financial Reporting Council said: “Businesses which are successful in the long term support our economy and society by providing employment and contributing to economic growth and prosperity. In doing so, it’s increasingly important that companies’ develop and sustain meaningful relationships with a wider range of stakeholders. This clear and practical guide will be of great help to companies and promote good strategic and governance reporting.”
Simon Osborne, Chief Executive of ICSA: The Governance Institute concluded: “If taken seriously, stakeholder engagement will strengthen the business and promote its long-term success, to the benefit of stakeholders and shareholders alike. Paying lip service to engagement is of limited value to anyone and I would urge the boards of all companies, whether listed or privately owned, to carefully consider the principles laid out in the new guidance.”
The guidance, the ten core principles of which are listed in the below Appendix, is available on the ICSA website at www.icsa.org.uk/stakeholdervoice and on The Investment Association website at www.theinvestmentassociation.org/assets/files/press/2017/2017-09TheStakeholderVoiceinBoardDecisionMaking.pdf
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For further information, please contact:
Maria Brookes, Media Relations Manager, ICSA: The Governance Institute
+44 (0)20 7612 7072
+44 (0)7890 649 143
Linsey White, Head of Media Relations, The Investment Association: Linsey.White@theia.org
T +44 (0)20 7269 4635; M +44 (0)7508 724 022
Helen Ayres, Media Relations Manager, The Investment Association: Helen.Ayres@theia.org
T +44 (0)20 7269 4620; M +44 (0)7508 724 066
THE STAKEHOLDER VOICE IN BOARD DECISION MAKING