TUESDAY 29 SEP 2020 10:35 AM


Almost two-thirds of FTSE 350 companies are already fully compliant with the new FRC UK Corporate Governance Code. Despite the disruption posed by Covid-19, UK companies have adapted well to a recent overhaul of corporate reporting requirements.

The review, carried out by EY, looked at 100 FTSE-listed companies’ annual reports and found that 61% had complied with all provisions of the new UK Corporate Governance Code, while 80% had complied with all but one provision. The 2019-20 annual reports were the first to be affected by these changes.

“The new code and related regulations place significant new requirements on companies, that have implications not just for reporting but the underlying governance processes too. Covid-19 has been a litmus test, forcing companies into action and bringing purpose, culture and stakeholder engagement – key aspects of the 2018 code – to the fore,” says Mala Shah-Coulon, EY’s head of corporate governance.

However, more work is need to turn intent into action, she stresses.

EY’s analysis, for instance, found that many of the FTSE 350 companies reviewed had weak links between their stated purpose and the strategic objectives outlined in their annual report. “Companies need to report the actions they have taken to put their commitments and stated philosophy into action,” adds Shah-Coulon.

EY’s research also showed FTSE 350 companies have room for improvement when it comes to reporting on ethnic minority diversity, with just 12% of the companies sampled report on the ethnic minority diversity of their board in their annual report.

The code provisions with the highest rate of non-compliance by FTSE 350 companies in 2019-20 related to independence and employee engagement, including non-compliance with pension contribution rates and with chair tenure requirements.