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The 2017 Good Governance Report

09 Oct 2017

Graphic of City of London landscapeThe Good Governance Report is the IoD’s flagship corporate governance publication which ranks the UK's largest listed companies based on their corporate governance performance.

This report sets out the findings from extensive research into the measurement of corporate governance in UK-listed companies. Its purpose is to encourage the study of good governance among UK companies and stimulates public debate on the importance of corporate governance in rebuilding the reputation of the UK business community.

The purpose of this project is to reignite the governance debate by leading it away from the compliance approach to corporate governance that has become widespread in recent years. Our novel approach is to combine traditional governance indicators with a measure of the quality of corporate governance as perceived by stakeholders. We follow two different approaches to measuring the corporate governance of a given firm:

We select a list of objective, measurable factors drawn from public sources

  • We conduct a survey of stakeholders perceptions of corporate governance
  • The combination of these two components allows us to understand the relative importance of different governance factors as perceived by stakeholders. We then use the estimated model to build an index of corporate governance

Now in its third year, the 2017 Good Governance Report was compiled for the IoD by Cass Business School, and examines a range of factors relating to how companies are run, including board diversity, directors’ pay, how long the business has been with an auditor and whether they have a whistleblowing policy.

The number of measures examined has been expanded this year to give an even more comprehensive view of how well the company performs for its shareholders, employees and customers. Uniquely among indices of this type, the IoD’s report combines publically-available data with over 2,000 rankings of the companies given by individuals with knowledge of what good governance looks like, including members of the IoD and the CQI, company secretaries and accountants. The final ranking is weighted based on the perceptions of the different measures, with audit and risk being seen by governance experts as the most important.

The size of the company seems to have no effect on the position in the 100 companies studied, and the top-ranked business come from a range of different sectors, with the insurer Aviva and the engineering firm GKN coming in second and third place respectively. Overall, energy companies outperformed compared to the average score, while IT companies underperformed. The IoD’s intention in producing the report is to encourage companies to consider a wide range of factors when doing a health check of how well their board and executive are functioning.

Read full report here


2017 Good Governance Index scores

Rank Company GGI score

1

Diageo PLC

837

2

Aviva PLC

835

3

GKN PLC

824

4

Barclays PLC

815

5

Smiths Group PLC

813

6=

Prudential PLC

808

6=

RSA Insurance Group PLC

808

8

International Consolidated Airlines Group SA

807

9=

InterContinental Hotels Group PLC

805

9=

Compass Group PLC

805

11

Kingfisher PLC

802

12=

Smurfit Kappa Group PLC

798

12=

Randgold Resources Ltd

798

14

TUI AG

795

15=

Unilever PLC

791

15=

Associated British Foods PLC

791

17=

Hikma Pharmaceuticals PLC

786

17=

Rentokil Initial PLC

786

19

British American Tobacco PLC

784

20=

Polymetal International PLC

780

20=

Shire PLC

780

20=

Centrica PLC

780

20=

Royal Mail PLC

780

20=

Direct Line Insurance Group PLC

780

25

Persimmon PLC

779

26

DCC PLC

778

27

Relx PLC

776

28

Smith & Nephew PLC

774

29=

Lloyds Banking Group PLC

773

29=

Provident Financial PLC

773

31

Coca Cola HBC AG

771

32

Merlin Entertainments PLC

769

33=

Sage Group PLC

768

33=

Weir Group PLC

768

35=

Admiral Group PLC

767

35=

Antofagasta Group PLC

767

37

BHP Billiton PLC

766

38=

Wolseley PLC

765

38=

Informa PLC

765

40

Berkeley Group Holdings PLC

764

41=

Legal & General Group PLC

763

41=

Standard Life PLC

763

43=

BP PLC

762

43=

Croda International PLC

762

45

Vodafone Group PLC

761

46

Bunzl PLC

760

47=

Mediclinic International PLC

759

47=

Sky PLC

759

49=

Melrose Industries PLC

758

49=

Babcock International Group PLC

758

49=

J Sainsbury PLC

758

52=

Micro Focus International PLC

756

52=

AstraZeneca PLC

756

54

Imperial Brands PLC

755

55=

National Grid PLC

754

55=

3i Group PLC

754

57

WPP PLC

752

58=

BT Group PLC

751

58=

Intertek Group PLC

751

60=

Ashtead Group PLC

749

60=

Johnson Matthey PLC

749

62=

DS Smith PLC

748

62=

Royal Bank of Scotland Group PLC

748

64=

easyJet PLC

747

64=

Severn Trent PLC

747

66=

Mondi PLC

746

66=

Paddy Power Betfair PLC

746

68

St James's Place PLC

742

69

ConvaTec Group PLC

741

70

Tesco PLC

739

71

Worldpay Group PLC

738

72

Old Mutual PLC

737

73

Hargreaves Lansdown PLC

736

74

Barratt Developments PLC

735

75

SSE PLC

734

76=

Schroders PLC

731

76=

London Stock Exchange Group PLC

731

76=

Rio Tinto PLC

731

79=

Next PLC

728

79=

Fresnillo PLC

728

81

Glencore PLC

727

82

ITV PLC

724

83

Marks and Spencer Group PLC

723

84

Taylor Wimpey PLC

722

85

Experian PLC

719

86

HSBC Holdings PLC

717

87

CRH PLC

713

88

Investec PLC

709

89

Pearson PLC

708

90=

WM Morrison Supermarkets PLC

707

90=

Royal Dutch Shell PLC

707

92

Reckitt Benckiser Group PLC

706

93

United Utilities Group PLC

702

94

Rolls-Royce Holdings PLC

701

95

Whitbread PLC

700

96

Burberry Group PLC

694

97

BAE Systems PLC

693

98

Standard Chartered PLC

690

99

ASOS PLC

680

100

Anglo American PLC

673

101

G4S PLC

665

102

Carnival PLC

658

103

GlaxoSmithKline PLC

627

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