The wheels are now turning to update familiar issues and introduce new topics into corporate governance communication.
Examining the FRC’s announcements in the reversed order of release, starting with the 2025–2028 strategy and working backwards, sheds new light on their consistency, credibility, and implications for the future.
The FRC aims to expand its scope and use its standards to support the UK economy’s growth further. Considering the FRC’s new purpose and strategic objectives, two perspectives emerge regarding how governance for reporters might evolve.
Breadth – the FRC has updated its purpose to clarify how it collaborates with a broader range of professions. Importantly, it also suggests that the criteria currently used for reporting may expand
In Objective 3, the FRC notes several significant developments on the horizon that align with its overall strategy, including advancements in AI, technology, digital reporting, and sustainability. This raises the question: Will these topics, which are currently limited, begin to be included in the coming years?
Supporting Economic Growth – the UK is acknowledged for its high governance standards, contributing to its competitive advantage. The FRC’s Objective 1 highlights two focus areas: improving the quality of corporate information and reducing unnecessary burdens and costs associated with preparing that information. Both areas indicate upcoming changes, some of which are already underway.
The announcement can be found here.
Using the above prism, let’s examine the updates and changes to the governance reporting landscape over the past six months.
The FRC will take over the Wates Principles. This aligns with the regulator’s draft strategy 2025–28, with the principles bringing more private companies into the focus of the FRC. With new ownership, these principles may be revisited, as they will turn 10 years old during the current strategy timeframe.
The announcement can be found here.
There is an open consultation regarding the next revision of the Stewardship Code. It is organised around five themes. In four of these five themes, the connection to a strategy for supporting UK economic growth through competitive governance is evident. The FRC aims to advance its strategic goals by implementing a new approach focused on practical and effective stewardship. This approach includes key principles to support these goals and seeks to reduce the reporting burden by minimising duplication, including through collaboration with other regulators.
The themes and agenda for the consultation can be found here.
Released at the beginning of 2024, almost a full year before the 2025–28 strategy, the updates to the UK CGC are linked to the two components of the FRC’s draft strategy 2025–28. These changes broaden the scope by requiring companies to engage more with culture and enhance the UK’s competitiveness by demonstrating how governance is increasingly integrated into UK companies’ strategies.
The changes can be found here.
These three updates indicate that the FRC’s strategy should be taken seriously, as they demonstrate that its actions align with its stated goals. Therefore, what is in the strategy that might give us a clue to what the next steps might be?
The FRC has hinted at more topics to come, such as AI and digital reporting. However, given the recent update to the UK Corporate Governance Code and the ongoing consultation on the Stewardship Code, we don’t foresee these being introduced until the end of the 2025–28 strategy period unless an additional set of standards is introduced.
Introducing more sustainability requirements into governance could happen sooner, as they already exist in current requirements. Possibilities include mandatory Board oversight of sustainability through a committee, whether new or existing, or deciding to incorporate elements from CSRD requirements that start applying to EU companies this year to keep the UK competitive in the international landscape.
If you’d like to discuss this, or any other subject, please get in touch with Richard Costa, Consultancy Director, at richardc@gather.london
We’d love to know what you think.