Corporate governance code forces businesses to change with the times
There will no doubt be some whingeing today as the Financial Reporting Council unveils the new corporate governance code for UK companies.
The Confederation of British Industry, for one, is already voicing concern over the new requirement for directors of FTSE 350 companies to submit themselves for re-election each year.
It is worth remembering what prompted the latest review of the code, that being the failure of the boards of so many of our largest financial institutions to properly scrutinise the decisions being made by their managements, let alone to get to grips with the scale of the risks being taken on behalf of shareholders.
In that context, the revisions to the code that emphasise issues of accountability, competence, and diversity are all welcome.
So too is the introduction, for the first time, of a requirement to consider gender when thinking about the composition of the board.
But will this oh-so-gentle provision be sufficient to provide a speedy remedy to the chronic under-representation of women on the boards of UK plc? Among FTSE 100 companies, for example, women account for just 12 per cent of all directors, while a quarter of the index's constituents do not have a single female board member.
Lynne Featherstone, the Equalities minister, describes the new code as “an important step” in encouraging gender diversity. But it will be interesting to see whether her colleagues in the Cabinet want to do more