Tags: Corporate governance
Directors need to embrace the benefits of new reporting requirements, advises new report by Institute of Business Ethics.
A new Board Briefing published today by the Institute of Business Ethics (IBE) offers practical guidance to help directors reflect on how they are fulfilling their duty under Section 172 and how they might report on this in their new Section 172(1) Statement. All qualifying UK large companies under the Companies Act 2006 must include the statement in their strategic report for a financial year due in 2020.
Ethics and Section 172 unpicks the key elements of S172 and presents a dozen key questions for a director to consider, as well as a practical framework for good decision-making, based on ethical values.
The IBE sees the additional focus on S172 as an opportunity for all companies to review how directors have discharged their duties having had regard to their broader stakeholder community. The reporting requirements will also help to build transparency and authenticity, and encourage meaningful reporting. By answering key questions, it is intended that boards can be well informed in their decision-making, for the benefit of both their business and the societies in which they operate.
Stephanie Bates, author of the report, said: “New reporting requirements are seldom welcomed by those that have to do the reporting! Many companies that meet the criteria will have been thinking about the contents of their first S172 Statement and how they will demonstrate the regard they have had to the interests of stakeholders in their decision-making. In response to these understandable concerns, this Board Briefing provides directors with an easy to follow guide to the factors within the S172 duty- which will be familiar to many having now been with us for well over a decade- and guidance on a practical decision-making framework for compliance with the new reporting requirement.”
Philippa Foster Back CBE, IBE’s Director said: “This Board Briefing addresses the ethical dimension and what directors, individually and collectively, need to think about and report on. Linking company values to decision-making and S172 considerations helps businesses to become more successful and durable, while having a more positive impact on society.”