FRC: Pandemic has reinforced need for positive corporate culture linked to purpose
Aligning culture with purpose, values and strategy can strengthen a company’s business model, help to better manage resources and be more equipped to face future challenges, according to a new report issued by the Financial Reporting Council (FRC).
Creating positive culture – opportunities and challenges builds on the work the FRC have done to promote corporate culture as an essential element of good governance. It follows on from the report- Corporate Culture and the Role of Boards in 2016, the revised UK Corporate Governance Code and the Guidance on Board Effectiveness.
The report finds that the pandemic has challenged the resilience and agility of companies, with many having to swiftly adapt their strategy, business model and their ways of working. There have been changes in stakeholder and investor priorities.
There is now a strong emphasis on the importance of environmental, social and governance (ESG) matters, particularly for the workforce and investors, but also other stakeholders. Areas such as wellbeing, flexible working and working constructively with stakeholders are now seen as more important than ever.
Sir Jonathan Thompson, FRC CEO, said: “As a regulator, we believe that by putting greater emphasis on creating and maintaining a positive culture, companies will boost their competitiveness, improving their ability to achieve sustainable success.
“More open and insightful reporting in this area will also lead to improved access to both capital and talent. The Government’s proposed reforms set out in the BEIS White Paper, Restoring Trust in Audit and Corporate Governance, is a vital next step in ensuring that all stakeholders have trust in the quality of corporate governance, reporting and audit.”