Code Reform Readiness: Trends in UK Corporate Governance Conformance
New reforms to the UK Corporate Governance Code will go into effect on 1 January 2025, and readiness is critical: 88% of professionals state that conformance with the reforms is a high priority in 2024. Organisations across industries are racing to ensure compliance while also aligning teams, implementing new tech, getting stakeholder buy-in, and enacting key internal changes. To understand the sweeping impact the Code revisions have had, AuditBoard and Ascend2 Research conducted a survey of 265 audit, risk, and internal controls professionals. Their research reveals how organisations plan to implement changes and underscores the challenges and strategic opportunities that the reforms represent.
Download the full report, UK Corporate Governance: Turning Compliance Into a Strategic Advantage, and read on for an overview of common trends in conformance efforts among UK enterprise companies.
Four Trends in UK Corporate Governance Conformance
1. Compliance Is a High Priority Across Industries
The importance of the Corporate Governance Code reform is widely recognised across all industries. Nearly nine in ten (88%) professionals surveyed feel that conformance with the reform is a high priority for their organisation in 2024. Sectors like technology, industrial, and financial, where regulatory scrutiny is particularly intense, are even more likely to feel this urgency, with 94% of industrial and technology professionals and 87% of finance professionals recognising the reform as a high priority.
Early planning and implementation are essential to achieving compliance and unlocking the associated benefits by the 2025 deadline. This aligns with the principles of effective risk management, which advocate for early risk identification and mitigation strategies to avoid last-minute compliance pressures.
2. Timelines to Conform Vary by Industry — But Conformance Is Expected
While 40% of respondents reported that their organisations already comply with the Corporate Governance Code reform, another 41% expect to comply by the end of 2024, and 18% expect to conform in 2025 or 2026.
Timelines for conformance vary by industry, with some sectors expecting to meet the 2024 deadline, while others, particularly in the public sector, foresee delays until 2025 or 2026. This reflects differing levels of regulatory pressure and organisational readiness.
3. Importance of Senior Leadership Buy-In
Senior leadership, especially the CEO and CFO, were identified as by respondents critical to the success of conformance efforts and are the most commonly reported senior stakeholders needed for buy-in of risk and controls programmes, according to those surveyed. This highlights the need for strong, top-down support to drive governance reforms effectively.
Leadership buy-in is essential for embedding governance principles throughout the organisation. The FRC’s revisions, which reinforce the board’s central role in governance, make leadership involvement even more crucial for aligning teams and resources with governance objectives.
4. Investment in Risk and Controls Technology
A significant majority (85%) of organisations expect their investment in risk and controls management technology to increase in the next two years. This expected increase underscores the growing recognition of the need for robust systems to support governance efforts.
Investing in technology enables organisations to develop cohesive risk management systems that provide a holistic view of risks, facilitating more informed decision-making and enhancing overall governance capabilities. The upcoming UK Corporate Governance Code changes will increase reporting and monitoring demands and further justify this investment in advanced technology.
Turn Compliance Into a Competitive Advantage
https://www.auditboard.com/resources/ebook/uk-corporate-governance-turning-compliance-into-a-strategic-advantage/By aligning leadership, investing in risk and controls technology, and planning strategically, organisations can turn compliance with the UK Corporate Governance Code reform into a competitive advantage. For a deeper dive into how companies are navigating these changes and preparing for success, download the report, UK Corporate Governance: Turning Compliance Into a Strategic Advantage.
Jason Sechrist is the Director of Compliance Solutions at AuditBoard, where he works with CIOs, CISOs, and IT compliance teams to help automate the administrative tasks of governance, risk, and compliance activities. He previously was the Global Head of Internal Audit and IT Compliance at Rackspace Managed Cloud Company, and started his GRC career with PwC in Silicon Valley. Connect with Jason on LinkedIn.
Chris is a Certified Internal Auditor and currently works as a Product Solutions Manager (EMEA) at AuditBoard. Prior to joining AuditBoard, Chris spent 8 years working in risk, internal audit, and internal controls roles within the eCommerce, retail, and manufacturing industries. Connect with Chris on LinkedIn.
Adam Rajah is an Implementation Manager at AuditBoard who helps clients implement AuditBoard at their organisations. Previously a Manager at EY UK, Adam has significant experience in controls implementations and SOX testing. Connect with Adam on LinkedIn.
