FRC consults on revisions to UK Corporate Governance Code

June 2, 2023

The UK’s Financial Reporting Council (FRC) is consulting on revisions to the country’s Corporate Governance Code, with comments requested by 13 September.

The consultation follows a government response to an FRC white paper on audit reform, which called for specific actions on directors’ responsibilities. The consultation focuses on five areas:

• Revising parts of the Corporate Governance Code that “deal with the need for a framework of prudent and effective controls to provide a stronger basis for reporting on and evidencing their effectiveness”.
• Revising board and audit committee responsibilities to include sustainability and ESG reporting.
• Amendments to incorporate the new Audit Committee Standard.
• Improvements to how the FRC governs “comply-or-explain” areas of the code.
• Alignment with legal and regulatory requirements outlined in the government’s response.

Sir Jon Thompson, CEO of the FRC, said: “Good corporate governance contributes to long-term company performance by helping to build an environment of trust, transparency, and accountability necessary for fostering long-term investment, financial stability, and business integrity.

“Enhancing the Corporate Governance Code will meet the needs of all corporate stakeholders, including investors, employees and suppliers, and boost the resilience of the UK economy, ensuring it continues to attract talent and investment.”

The FRC is hosting a series of events linked to the consultation during June and July, details of which are available on its website.

It comes as the European Parliament is scheduled to vote on strengthening its own rules on stewardship in relation to sustainable investment.

Among the proposals being considered is a plan to bring the financial services sector into the scope of the Corporate Sustainability Due Diligence Directive. This would require investors to be able to demonstrate that they have used their influence in a positive way when engaging with the companies in which they invest.