Big private companies have much to do to meet new reporting challenges
Most of Britain’s biggest private companies still have a way to go in order to comply with a new corporate governance reporting code that came into effect earlier this year.
And that should be a matter of some interest — and even concern — for communicators.
The new, Government-mandated rules were introduced following a series of well-publicised governance controversies involving private companies, most notably the demise of department store chain BHS.
Known as the Wates Principles, the voluntary code advocates much greater disclosure in annual reporting in areas such as stakeholder engagement, board composition and purpose and leadership.
The new rules apply to large private companies — defined as having at least 2,000 employees or turnover of £200m and balance sheet of £2bn — for financial years starting on or after 1 January 2019.
At Citypress we recently analysed the latest report and accounts of the 50 biggest companies who will be subject to these new guidelines in order to gauge compliance levels.
The analysis also took in into account additional disclosures about boardroom diversity and remuneration.
As it can take up to nine months from the financial year-end for accounts to be filed at Companies House, most companies surveyed were under no obligation to meet the code’s requirements.
Nevertheless, our analysis found a minority of ‘early adopters’ who have already embraced the new code. They include household names such as John Lewis and Virgin Atlantic.
But most firms surveyed either had more work to do, or in the worst cases, were still providing the bare minimum of information to meet legal reporting requirements.
Even the author of the new guidelines, James Wates, admits more work needs to be done at his family-owned construction company, although it was also among the top-ranked in our survey.
For example, its latest annual report shows Wates Construction Services has just one woman on its 11-strong board. The company acknowledges this “relative lack of diversity” and promises to show its commitment to increase diversity at senior levels by publishing an inclusion strategy later this year.
We’ll have more of an idea of how firms are progressing when many private companies file their latest accounts in the autumn.
But as scrutiny on them grows, the best-prepared businesses will be those — like Wates — who seek to get ahead of this new reporting challenge now. At the very least, a purely tick-box approach is to be avoided.
Communicators clearly have an important role to play here.
They need to grab the opportunity that Wates and other recent governance developments present to ensure their business speaks authentically about its purpose, and not just about how much profit it makes.
To discuss our findings in more detail, or how we might be able to help your business make the most of the opportunity the Wates principles provide, please email Rory Fletcher.