London, 26 August 2018 – ICSA: The Governance Institute has today welcomed the Business, Energy and Industrial Strategy Committee invitation to convene a group to review the quality and effectiveness of board evaluations.
The Government has announced new measures to protect workers and small suppliers from a minority of reckless directors who profit from dissolving businesses, and to further raise standards of corporate governance.
One of those measures is to invite ICSA to convene a group including representatives from the investment community and companies to identify further ways of improving the quality and effectiveness of board evaluations. One aspect of this will be the development of a code of practice for external board evaluations.
Effective boards are vital in ensuring well run, sustainable companies and board evaluations should have an important part to play in identifying and correcting weaknesses and optimising performance. The UK Corporate Governance Code already requires a company within its scope to undertake an annual assessment of its board’s effectiveness and for an independent evaluation to be undertaken at least once every three years. The recently revised Code also contains new requirements for transparency around the evaluator’s contact with the board and its individual directors, the outcomes and actions taken, and how it has or will influence board composition. However, the Government has heard suggestions, particularly from the investment community, that there is scope to improve the quality of these evaluations.
Simon Osborne, CEO of ICSA commented:
“We are delighted to accept the Government’s invitation to convene a group of investors and companies to develop a code of practice for external board evaluations. We firmly believe that a high-quality independent board evaluation or board effectiveness review is valuable for companies, indeed organisations, of all sizes and in all sectors. The services offered by providers are not the same, nor should they be, as the needs of a company and its board will differ from others and also change over time.
“But regardless of the format chosen, a rigorous and reported board evaluation can also provide comfort for investors and the market as a whole that the board has the necessary skills and tools to run the organisation as effectively as possible. In order that all parties have confidence in the quality of the evaluation provided, we believe that both companies and board evaluation providers should be clear about the scope and nature of the review being undertaken and about the experience and independence of those conducting it. A code of practice for all parties to the review will be an important step towards achieving that.”
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For further information, please contact:
Maria Brookes, Media Relations Manager:
mbrookes@icsa.org.uk
+44 (0)20 7612 7072
+44 (0)7890 649 143
Peter Swabey, Policy and Research Director
pswabey@icsa.org.uk
+44 (0)207 612 7014
+44 (0)7850 584552
Notes to Editors:
- ICSA: The Governance Institute is the professional body for governance. We have members in all sectors and are required by our Royal Charter to lead ‘effective governance and efficient administration of commerce, industry and public affairs’. With over 125 years’ experience, we work with regulators and policy makers to champion high standards of governance and provide qualifications, training and guidance. Website: www.icsa.org.uk