Technical Briefing July 2024
Thank you for your interest in our updates on the latest regulatory developments. There are a number of issues of interest this month. Do, please, feel free to bring these to the attention of colleagues for whom they might also be relevant.
Peter Swabey FCG,
Policy & Research Director
1 CGIUKI Conference – 3 and 4 July
PROFESSIONAL DEVELOPMENT FOR MEMBERS
Of interest to all members and others working in a governance role
Many thanks to all those who joined us at the Novotel Hammersmith for the annual conference last week. There were some fascinating sessions and we will be publishing extracts from many of them over the coming weeks. In the meantime, here are our top ten takeaways from the annual conference – whether or not you were able to be there.
2 UK General election
Of interest to all members and others working in a governance role
The UK general election on 4 July has given us a new government. The Institute will continue its programme of engagement with the new ministers and more information will be published in Governance and Compliance.
3 CGIUKI Guidance – Director induction
NEW CGIUKI GUIDANCE
Of interest to members involved in the induction and training of directors
The Institute has published a new guidance note on director induction. It covers:
- References to induction in regulation and guidance
- Good practice points and points to consider in induction design and delivery
- Director induction checklists
- Board committee induction
- A specimen induction programme
Providing directors with a comprehensive induction programme is an important element of the UK Corporate Governance Code (the Code), underlined in the Financial Reporting Council’s guidance on Board Effectiveness 2018 in sections 1−3. The Code applies to all companies with a premium listing of equity shares at the London Stock Exchange. However, the good practice principles that it advocates are, in the Institute’s view, applicable across organisations of all kinds in all sectors.
This guidance note is aimed at chairs, other board directors, company secretaries and other governance professionals to help develop a more effective board.
4 CGIUKI Guidance – Charity trustee recruitment
NEW CGIUKI GUIDANCE
Of interest to members involved in charity governance
The Institute has published new and updated guidance on recruiting a diverse and skilled board of trustees. The guidance note covers:
- The benefits of being a trustee
- Legal and governance considerations of recruiting trustees
- The importance of trustee diversity – and how to create a diverse board of trustees
- The recruitment process – from preparation to appointment
- Different recruitment methods (most of them freely available)
- Making trustee induction as useful as possible
The guidance note provides charity governance professionals, existing trustees, and senior management working in charities with the tools they need to establish robust and effective recruitment practices.
Those who attended the panel session on trustee diversity at CGI’s Annual Conference, Governance 2024, will find that this guidance supports that discussion and gives them a variety of helpful tools to put it into practice.
5 Takeover Panel consultation on companies to which the Takeover Code applies
REQUEST FOR SUPPORT FROM MEMBERS
Of interest to all responsible for supporting their boards on corporate actions
The Takeover Panel has published a consultation on Companies to which the Takeover Code applies. The consultation closes on 31 July and the Institute will be responding. We would ask that any member who would be willing to help with the drafting of our response, or with views on the issues raised in the consultation let us know at policy@cgi.org.uk.
6 Consultation on the Charity Governance Code
REQUEST FOR SUPPORT FROM MEMBERS
Of interest to members involved in charity governance
The Charity Governance Code is undergoing public consultation, to shape and inform updates to the Code. The consultation welcomes feedback on the Code from both users and non-users. The consultation survey is open until 11 August 2024.
As a member of the steering group responsible for the Code, the Institute welcomes responses from members involved in the charity sector, whether in a professional or voluntary capacity.
The Code is a voluntary tool to help charities and their trustees develop high standards of governance, and your feedback will ensure that it is as practical and accessible as possible. A new version of the Code is due to be published in the first half of 2025.
We also intend to host focus groups later in the year to refine the updates to the Code. If you would like to be kept updated about the potential to contribute to these, please email Emily Ford at eford@cgi.org.uk.
7 New AI/reporting research project
REQUEST FOR SUPPORT FROM MEMBERS
Of interest to members involved in corporate governance and AI
The Institute is working with reporting consultancy Falcon Windsor and ESG tech company Insig AI, who are conducting a research project, based on a proposal developed with Imperial College London, about the responsible use of AI in reporting. Their overall aim is to publish, in the autumn, some practical recommendations for the market and our regulators for how AI tools can be used thoughtfully and usefully in reporting. The research team is targeting coverage of 25% of FTSE companies, and the major institutional investors, plus key experts in the reporting field, and they are asking for just one hour of your time.
We are delighted to support this work which aligns well with the wider research we are doing on AI and corporate governance. To take part, please contact project co-ordinator, Miti Ampoma: miti@falconwindsor.com.
8 MEMBER-ONLY INVITATION: FRC roundtable about sustainability assurance services
REQUEST FOR SUPPORT FROM MEMBERS
Of interest to those involved in reporting arrangements and assurance
The Institute invites members to a roundtable discussion jointly hosted with the FRC. This roundtable will discuss the FRC’s recent market study on the assurance of sustainability reporting. Key themes include:
- The functioning of the UK’s sustainability assurance market
- Interplays between the sustainability assurance market and the audit market
- Choice and competition in the sustainability assurance market
- Capacity issues and barriers to entry in the market
- International and UK-specific regulatory and policy developments which impact the market
The roundtable will take place virtually, on the afternoon of Wednesday 28 August, for one hour (exact timing to be confirmed). The FRC is keen to hear from a range of companies, including those who provide sustainability assurance and those who currently procure it or who will procure it in future.
If you are interested in participating, please contact Emily Ford on eford@cgi.org.uk, with a brief explanation of your interest and involvement in sustainability reporting and / or reporting assurance.
CGI has already responded to the FRC’s invitation to comment, which closed in June. You can read CGI’s response on our consultations page.
9 Consultation: Scottish Government review of charity regulation
REQUEST FOR SUPPORT FROM MEMBERS
Of interest to members involved in charity governance in Scotland
The Scottish Government has launched a consultation regarding a future review of charity regulation. The consultation aims to establish what the purpose and parameters of a potential review of Scottish charity regulation should be.
The consultation looks at:
- The need for and purpose of a review
- The parameters for a review - What should it cover and not cover?
- Technical areas for review
The Institute will be responding – if you would like your comments to be included in our response, please email Emily Ford at eford@cgi.org.uk. Any time spent doing so will count towards CPD targets.
10 Public attitudes to business ethics increasingly pessimistic
Of interest to all members
New research from the Institute of Business Ethics (IBE) shows that the British public’s view of whether business, charities, politicians and the media behave ethically has continued to decrease. Corporate tax avoidance and bribery and corruption remain the top two most important ethical issues to the British public.
IBE’s research shows that the public’s trust in businesses to behave ethically is at its lowest level in four years. Governance has a key role to play in rebuilding that trust, as our CEO Sara Drake highlighted during her keynote speech at this year’s highly successful Annual Conference last week.
11 The future charity chair – Report from the Centre for Charity Effectiveness at Bayes
Of interest to members involved in charity governance
A new report from the Centre for Charity Effectiveness at Bayes Business School sets out the essential attributes that charity chairs of the future will need to embrace. The report emphasises that the charity sector needs to open up charity boards to ensure a sustainable pipeline of future chairs, and highlighted existing skills gaps around artificial intelligence, leadership development, and diversity, equity and inclusion.
12 Transition Plan Taskforce materials adopted by the ISSB
Of interest to members involved in sustainability reporting
The sustainability-focused arm of the IFRS Foundation, the ISSB, has announced that it is assuming responsibility for the disclosure-specific materials developed by the Transition Plan Taskforce. These materials were developed by a UK-specific Taskforce to support companies in creating robust and effective disclosures about the plans to transition to net zero. The ISSB now intends to tailor these materials to ensure they are fully compatible with the global baseline and the requirements of sustainability standard IFRS S2.
The ISSB has a detailed write-up of this and other efforts it is making to harmonise the global sustainability reporting landscape.
13 Further reading
And finally, some articles that passed across my desk and struck me as being of interest to members:
The Charity Commission’s inquiry into the Captain Tom Foundation has resulted in Captain Tom’s daughter and son-in-law being disqualified as charity trustees. The Charity Commission has published a statement, and Third Sector has coverage.
The Charity Commission has a write-up of outgoing CEO Helen Stephenson’s final speech in the role.
On the subject of further reading, it would be remiss of me not to mention the CGIUKI blogs published in June:
4 June – Seven tips for board effectiveness
6 June – The truth is not enough − how to interrogate information effectively
12 June – Four things you need to know about the UK Corporate Governance Code 2024
20 June – Top tips for excellence at work