Large private companies continue to favour Wates Principles
Today the Financial Reporting Council published its second assessment of the quality of reporting from private companies who have chosen to follow the Wates Principles.
The research, conducted by the University of Essex, shows that the Wates Principles continue to be the most widely adopted corporate governance code among large private companies.
Of the 1,815 large private companies in scope of the research, 547 (30%) chose to apply the Wates Corporate Governance Principles in 2021/22, with a combined annual turnover totalling more than £850 billion.
Sir James Wates CBE, said:
“I’m once again encouraged to see that more large private companies are choosing to report against the Wates Principles than any other option.”
“The improvement in the reporting quality we’ve seen in today’s report, while good news, shouldn’t distract companies from the need to reduce boilerplate reporting, which remains a primary concern. I urge boards to reflect on today’s report with open minds ahead of their next reporting cycles.”
Mark Babington, FRC’s Executive Director of Regulatory Standards, said:
“The popularity of the Wates Principles continues amongst private companies, who I hope put this report to good use in their efforts to produce meaningful and company specific reports.
“The research highlights the need for increased transparency and accountability among large private companies, particularly as they are a driver of growth in the UK and have a significant impact on the economy and on wider stakeholders.”
While there were some improvements in certain disclosure areas compared to 2019/20, companies continue to struggle with providing meaningful disclosures around key areas. These include defining company purpose, connecting that purpose to strategy, culture and values, and explaining how stakeholder engagement impacts board decision-making.
The report also suggests there is an over-reliance on “boilerplate” disclosures being used rather than disclosures that provide company-specific context. High levels of similarity were found between the corporate governance statements of different companies, and also between reports by the same company in different years.
Click here to download and read the full FRC report and FRC Press Release: “Large private companies continue to favour Wates Principles”.
Listen to the FRC’s “In Conversation” Podcast
The FRC’s latest In Conversation podcast episode features Sir James Wates OBE, Chair of Family Business UK, Kate O’Neill, Director of Stakeholder Engagement & Corporate Affairs, and Maureen Beresford, Acting Director of Corporate Governance and Stewardship at the FRC.
Join the panel as they explore today’s report and discuss the Wates Principles’ flexibility, challenges in meaningful disclosure, and the importance of stakeholder engagement.
Click here to access and listen to the Podcast.