By Kirsty McManus, National Director, IoD Northern Ireland
“Good business, well done, is a force for good in society”. Those are the words of Sir James Wates as he reflected on his set of corporate governance principles that he said would ultimately help companies improve the way they do business.
Known as the Wates Principles, they are considered among the gold standard when it comes to codes for good corporate governance, providing organisations with a structure to help them fulfil their legal requirements while also achieving long term business success.
As an organisation, the IoD seeks to encourage companies to adopt key behaviours that secure trust and confidence among their stakeholders, in turn proving beneficial for the economy and society as a whole.
We have the privilege of delving deeper into the Wates Principles as we host Sir James at an event later this month.
His principles, there are six of them covering purpose and leadership, board composition, board responsibilities, opportunity and risk, remuneration, and stakeholder relationships and engagement. “provide a tool to help large private companies look themselves in the mirror, to see what they have done well and where they can raise their corporate governance standards to a higher level.”
However, they are just as applicable to any size of organisation and I believe provide a solid framework for family businesses also.
Sir James says that using an “apply and explain” approach, boards should be able to explain in their own words, how they have addressed each of the principles in their governance practices.
Key to this, it’s not about ticking boxes, but having a thought-provoking and engaged involvement with our organisation’s governance practices.
It’s a legal requirement too. When Sir James, who had been invited by the government to lead the development of corporate principles for large corporate companies, the Wates Group of which he is a fourth generation chair, became the first company to embed the principles in its financial reporting, as part of its 2018 Annual Review. As of 2019, all private companies are obligated to do the same demonstrating how they have adopted the principles.
Promoting good governance is a fundamental aspect of the IoD’s mission as we continue to encourage companies to think about why they exist and how they deliver on their purpose.
We recognise that business transparency is key to building the trust of all stakeholders, our clients, customers and wider society.
The optimal function of boards is imperative and as we know, better directors make for better companies, in turn creating a better economy for all. The Wates Principles provide a strong foundation from which to build.
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