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Shelving plans to improve corporate governance is wrong call

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By illuminem briefings

· 2 min read

illuminem summarizes for you the essential news of the day. Read the full piece on the Financial Times or enjoy below

🗞️ Driving the news: The UK government is considering postponing reforms vital to the "restoring trust in audit and corporate governance" agenda, which was initiated due to the Carillion failure and other accounting scandals
• This decision has left investors and users of corporate information deeply disappointed

🔭 The context: The reform agenda has been in development for over five years, with the government seeking feedback from investors and other stakeholders 
• The proposed reforms aimed to enhance corporate governance and financial reporting, especially in areas like financial resilience, fraud prevention, and dividend-paying capacity

🌍 Why it matters for the planet: The government's push for better environmental and social reporting contrasts with its potential decision to abandon improvements in governance (the "G" in ESG)

⏭️ What's next: The government's inclination towards deregulation, with the assumption that it will make the UK stock market more appealing, might backfire
• Investors might increase the equity risk premium for shares on the UK stock market, outweighing the costs of implementing the reforms

💬 One quote: "It is ironic that just as the FRC has imposed record fines on KPMG for its failed audits of Carillion, the reforms prompted by that scandal are being neutered" (Sandy Peters, CFA Institute)

Click for more news covering the latest on ESG

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