The Wates Corporate Governance Principles for Large Private Companies have been added to Corporate Governance for subscribers to Financial Reporting.
James Watts CBE writes in his Foreword to the new document:
"I believe that good business, well done, is a force for good in society. While not always recognised for it, business creates the jobs, economic growth, and tax revenue that society so desperately needs. Although most business leaders have an intuitive moral compass that guides them towards delivering this value, these Principles provide them with a framework for ensuring that their companies are well managed and aligned behind a clear purpose.
The Wates Corporate Governance Principles for Large Private Companies provide a tool to help large private companies look themselves in the mirror, to see where they have done well and where they can raise their corporate governance standards to a higher level. This can in turn result in better engagement with their stakeholder base and ultimately build trust.
Many companies are justifiably proud of what they are doing already. They have extensive processes in place to engage with the broad range of stakeholders that are integral to the company’s success, and in particular to ensure that workforce concerns are addressed at board level. The Wates Principles offer a structure for reporting on corporate governance that not only helps them fulfil their legal requirements, but also allows them to shine.
My hope is that a wide range of companies – and not just those included in the new legislative requirement to report on their corporate governance arrangements – will use the Wates Principles. Accordingly, we have kept them flexible and high-level, with guidance provided not as requirements, but to help companies understand how they can apply the Principles. After all, good corporate governance is not about box-ticking. If we are to increase the public’s confidence in business, then surely, we cannot achieve that through a regulatory regime that uses somebody else’s words. It can only be achieved if companies think seriously about why they exist, how they deliver on their purpose, and then explain – in their own words – how they go about implementing the Wates Principles. That is the sort of transparency that can build the trust of stakeholders and the general public.
The Wates Principles and its supporting Guidance are the result of 12 months of concerted effort by a Coalition Group of diverse organisations representing a cross-section of interests related to private business, with secretariat support from the Financial Reporting Council. The Wates Principles draw from a deep pool of experience and insight into what works. This effort was complemented by a consultation process that ran for three months, as well as meetings with an Executive Sounding Board consisting of representatives from privately-owned businesses. These consultations elicited pointed and constructive feedback from numerous organisations and individuals and have strengthened the output considerably.
I am pleased that the Coalition Group and the FRC have signalled their willingness to continue to work as a team to promote the Wates Principles, ensure an appropriate monitoring system is in place, and to adjust them as needed in the future. We will only start seeing the first reporting against these in 2020, and it will take some years to develop an understanding of reporting trends and a body of good practice, so this is a long-term effort, and the release of the Wates Principles is but a start.
I would like to extend my sincere thanks to all the members of the Coalition Group, the Executive Sounding Board and especially the FRC for their efforts in delivering what I feel to be an outstanding body of work."