Ethical and behavioural standards of directors
Insights - What We Think

Practical suggestions to help prevent ethical failures

Company Matters took part in the London Stock Exchange Group's Marketplace webinar on Ethical and Behavioural Standards of Directors.

With panellists examining the subject from different angles and a thoughtful moderator, the webinar surfaced interesting insights and practical suggestions for directors, company secretaries and corporate governance professionals.

If you missed the webinar, you can watch it on demand on the LSEG’s website:

In the meantime, here are some practical steps an organisation can take to try to prevent ethical misconduct:

• Board papers and discussions
  – how well do they consider the matters set out in Section 172 of the Companies Act 2006 and other ethical dimensions?
• Purpose, values and culture
  – are these aligned, and do they promote the desired ethical and behavioural standards? How are these reflected in proposals presented to directors for decision?
• Company code of ethics and conduct
  – does it reflect the company’s purpose, values and culture, the ethical issues the company faces and the current corporate governance framework?
• Board charter / Directors’ code of conduct
  – does / should the company adopt one?
• Board evaluation
  – is this being used as a means of reflecting on and learning from previous decisions and actions (positive and negative). Is the board engaging with a value-adding external evaluator?
• Conflicts of interest policy, procedures and practices
  – are these aligned with the company’s current articles of association, are they well understood and are they working effectively in practice?
• Board engagement
  - do directors have free, unfettered access to management; is there unfiltered, effective engagement with the wider workforce, shareholders and other stakeholders?
• Speak Up / Whistleblowing
  – how well embedded are these processes and are they working effectively in practice?

Useful resources

• FRC Guidance on Board Effectiveness
• IOD Code of Conduct for Directors (under consultation)
• IBE Guidance for Board members on developing an ethical business culture