London, 1 December 2014 – confidence in both the global and UK economy has come to a juddering halt, but the gloom is not stopping companies from engaging with their shareholders. So finds the sixth FT-ICSA Boardroom Bellwether, a twice-yearly survey which shows how boards are positioning themselves to address the challenges of the economy and the wider business and social climate in which they operate.
The main findings of the survey are as follows:
- Global economy: Only 33% of respondents anticipate an improvement in global economic conditions over the coming 12 months, a very significant decrease from 81% in July and 69% in December 2013. 33% believe that global economic conditions will decline – a substantial increase from 4% in July and 5% in December 2013.
- UK economy: Optimism is also in much shorter supply about the UK economy and companies’ views about the outlook for their own sectors. Just 45% anticipate an improvement in the UK economy in the next 12 months, down from 84% in July and 80% in December 2013. 16% predict a decline, which no-one at all did in July. In terms of companies’ own specific industries, 35% predict improvement and 29% a decline – a worsening in confidence from July (63% and 12%) and December (56% and 13%). There is also less confidence that capital expenditure will rise.
- Boardroom diversity: 69% of boards now consider themselves to be gender diverse, up from 51% in December 2013 and a marked improvement on March 2012 when only 19% considered their board to be diverse. Over half (53%) expect to meet Lord Davies’ target, unchanged from July, but the pipeline of future female boardroom candidates continues to be a worry. Only 13% believe that their company’s executive pipeline will be sufficient to support a sustainable pool of talented, board-ready women in the future – a 50% drop since December 2013. In terms of wider diversity, there is greater confidence in business experience and geographical diversity, but less in educational background.
- Shareholder engagement: Virtually everyone now has an engagement plan – a huge step forward from July 2013, less than 18 months ago, when only 60% of companies had such a plan.
“This Bellwether survey shows good levels of engagement by boards with shareholders and we encourage engagement plans to be put into action. As indicated in the preface to the 2014 UK Corporate Governance Code diversity is as much about differences in approach and experience, and so we are pleased to see questions around how diverse boards are in terms of business experience, geographical area and the newly introduced aspect of educational background. Diverse boards bring about improved leadership and governance, and can contribute to better company performance.” (David Styles, Financial Reporting Council).
Other findings of note are as follows:
- The UK Government is still perceived as being more business friendly than the Opposition with just 2% regarding the Opposition as business friendly, and 71% regarding at is unfriendly to business.
- EU membership is seen as beneficial, despite the increasing political support for UKIP and the slight contradiction here between the view of the Government as business friendly and current Government policy with regard to the EU. The strength of sterling is not widely seen as a problem.
- Cybersecurity and reputational risk are both regarded as significant risks. However, despite the reputational risks linked with social media, relatively few boards are looking at social media policy.
Speaking on the subject of risk, Alex Chisholm, CMA Chief Executive says: “This Bellwether analysis shows that competition law is not given the attention that it deserves given the importance of competition to the economy and the damaging consequences of law-breaking. I would like to see competition taken as seriously by business managers as fraud, anti-bribery and corruption.”
Peter Swabey, ICSA Policy & Research Director also voices some concerns: “Companies should be looking at social media risk in more detail as social media can take an issue and very rapidly send it spiralling out of the control of those involved.
We also believe that greater activity on the part of the nomination committee should be a focus for a number of companies given the concerns expressed about some aspects of boardroom diversity and, in particular, the dearth of the female pipeline. One might have expected the nomination committee to be active in planning the future of the board, but only 51% of respondents reported a written succession plan for their board. This may grow now that the FRC is now looking at this area.”
- Ends -
For further information, please contact Maria Brookes, Media Relations Manager:
mbrookes@icsa.org.uk
+44 (0)20 7612 7072
+44 (0)7890 649 143
Notes to Editors:
- The FT-ICSA Boardroom Bellwether is a twice-yearly survey which seeks to gauge the sentiment inside UK boardrooms. The findings show how boards are positioning themselves to address the challenges of the economy, and the wider business and social climate in which they operate. Current and past Boardroom Bellwethers can be viewed here: www.icsa.org.uk/bellwether
- ICSA (Institute of Chartered Secretaries and Administrators) is the chartered membership and qualifying body for professionals working in governance, risk and compliance, including company secretaries. Our members work in all sectors and at every level of seniority. With over 120 years of experience, we champion high governance standards by providing qualifications, training, high-quality guidance and support (including technical resources, publications and software), and through our work with regulators and policy makers.
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