FRC report on creating positive corporate culture

The Financial Reporting Council (FRC) has published a report on creating positive culture. It aims to promote good practice amongst companies by looking at how companies develop, embed, monitor and assess culture across their organisations.

The report follows the FRC’s 2016 report on corporate culture and the role of boards, the findings of which informed the 2018 UK Corporate Governance Code and the accompanying Guidance on Board Effectiveness. Under the Code, the board is responsible for ensuring that the company’s purpose, values and strategy are aligned (Principle B) and for monitoring and assessing culture (Provision 2).

The report notes that the pandemic has forced some companies to adapt their strategies and business model quickly and has led to an increased emphasis on environmental, social and governance matters amongst investors and stakeholders alike. The report emphasises that positive culture should be attained through honest conversations and by building trust, and that leadership should come from the top.

The FRC also noted in its recent Review of Corporate Governance Reporting (see our blog post here) that disclosures around culture could be improved. The FRC intends to continue monitoring this area and to produce additional guidance for companies in due course.