The Institute of Directors’ latest Good Governance Report has ranked governance standards at the UK’s largest listed companies.
Aside from Diageo, who moved up two places to take number one spot, the remainder of 2016’s ten best performers all found themselves replaced by new entrants in 2017’s edition.
This year’s report, which was compiled by Cass Business School, also saw 11 companies score more than 80% – a mark missed by all companies in 2016’s index.
Measuring good governance
The Good Governance Index (GGI), which is now in its third year, aims to encourage the study of good governance across UK businesses and a wider public debate about the role of strong corporate governance.
It ranks businesses using 47 indicators (including whistleblowing policy/employee protection) spanning five categories:
- Board Effectiveness
- Audit and Risk/External Accountability
- Remuneration & Reward
- Shareholder Relations
- Stakeholder Relations
Each business is then given an GGI score out of 1,000. This year the number one ranked business (Diageo PLC) scored 837, while the index’s lowest-ranked (GlaxoSmithKline PLC) scored 627.
Top 10 UK businesses
View full index
We’re delighted to see many of our clients well-represented in the Good Governance Index, with their businesses comprising more than one-third of those featured among the top 50.
Energy and utilities score well
Although there appears to be little obvious correlation between company size and index score, some industry sectors appear to have performed better than others.
In particular, businesses from the utilities, energy and telecom services sectors scored well above the overall mean, with information technology businesses well below. While caution should be applied to these results in light of the restricted sample, there are signals that certain sectors are still falling short.
“Society’s views of what constitutes good governance change over time,” says Estelle Clark, Executive Director or Policy at the Chartered Quality Institute who sponsored this year’s study.
“It is what companies do that matters and it is rightly how they are judged by society. A culture which supports good governance is a long time in the making and mere moments in the unmaking.”