More needs to be done to make corporate governance principles simpler and globally relevant.
ACCA, led by its Global Forum for Governance, Risk and Performance, responded to a public consultation by the OECD on its Principles of Corporate Governance, supporting the overarching aim to 'contribute to economic efficiency, sustainable growth and financial stability'.
The Principles have a significant influence on the development of countries' requirements and codes. The latest review, however, misses the rare opportunity to restructure into fewer high-level principles which are globally applicable and have a longer shelf life. These could be supported by more detailed and more regularly updated guidance on implementation relevant to different markets.
Adrian Berendt, chair of ACCA’s Global Forum for Governance, Risk and Performance and co-author of the consultation response, said: 'We believe the overarching purpose of corporate governance is to ensure that an enterprise achieves its specified objectives, often creating long-term, sustainable value – for society and environmentally as well as economically. This statement could be made stronger in the revised Principles.
'ACCA expected this revision to take into consideration corporate culture and was surprised that there were so few references to behaviours, ethics and public interest. These areas are challenging but should be addressed by the principles. They are part of leading thinking on corporate governance in light of recent crises and their importance is paramount' he said.
'There is increasing emphasis on ethical behaviour and culture in financial services, but OECD has missed the opportunity to address these issues in the guidance.'
The consultation response also details other areas for consideration:
Risk governance, board diversity, disclosures across a number of governance aspects and accountabilities at board, board committee and senior management levels
Business’s tax contribution
The relationship with shareholders and the quality of information going to investors
The role of audit committees
Replacing ‘Comply or Explain’ with ‘Apply and Explain’
Investor responsibilities and combining the Stewardship and Corporate Governance codes.
© ACCA - Association of Chartered Certified Accountants
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