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UK institute pushes ethical code after corporate scandals -Breaking


© Reuters. FILE PHOTO – A view of Canary Wharf, London’s business district, on October 14, 2020. REUTERS/Matthew Childs

Huw Jones

LONDON, (Reuters) – Britain’s directors of companies should agree to a code to help improve their behaviour after corporate failures such as those at Carillion and BHS. This industry body was proposed Sunday.

A voluntary code of nine points was proposed by the Institute of Directors. It covers ethics, diversity and competence, as well as lawfulness. The code would include the commitment to reduce a company’s carbon footprint within a reasonable amount of time.

This plan will supplement existing code of corporate governance administered by the Financial Reporting Council (FRC) and other general legal obligations under UK company law.

Roger Barker (director of governance and policy at the IoD), stated that there is “a risk” that every new scandal or corporate collapse will increase government pressure to impose regulatory requirements relating to directorship.

“The IoD’s members are strongly supportive of the introduction of a code of conduct for directors – either on a mandatory or voluntary basis.”

FRC and business ministers have been asked to assist in the creation of the new code by the IoD.

The FRC plans to improve its corporate governance code, based on U.S. SarbanesOxley standards, following the fall of Carillion.

All company directors must sign up for the IoD’s proposed code. It would be managed by industry and not government regulators.

The IoD suggested that directors agree to participate in any accountability process related to the code. Signatories might be added to a registry.

A whistleblowing procedure could be created to permit the disclosure of bad conduct. The IoD stated that appropriate sanctions and investigations would need to also be established.