Research Report: Corporate Governance: Why it matters for your business

What is corporate governance supposed to achieve? Is it something you do to appease existing investors or to attract new ones? Does it encourage a tick box culture or is it a guiding star for responsible management supportive of performance and growth? Is it a way of hedging against reputational damage or a way of enhancing your company’s image among investors and the wider public?

PARC produced a report on Corporate Governance in 2018 and on Stewardship in 2019. Since then, we have revisited aspects of both in our Performance Trilogy (2022), Getting to Net Zero (2024) and Remuneration Committee Effectiveness (2024) reports. This discussion will revisit some our previous content and consolidate it with a more global perspective and in the context of recent and rapidly changing political developments. As we will show, corporate governance is very much a product of its times and of the political, economic and social forces that shape the context in which companies and investors must operate.

For the purposes of this report we are using the term ‘corporate governance’ to cover both the governance of the company and the stewardship obligations placed on investors. In the UK, both codes are governed by the Financial Reporting Council and the OECD’s Corporate Governance Factbook covers both. We have adopted the same approach on the grounds that, because of the increasing coverage and interdependency of company governance and investor stewardship, it is becoming increasingly difficult to discuss one without the other and practically we needed to create some boundaries for this discussion paper.