IoD policy paper A Voluntary Code of Conduct for Directors
The Institute of Directors has today published a new policy paper, ‘A voluntary code of conduct for directors’, calling for government to commission the development of a voluntary code to reflect and embed the expectations of society with regards to the business community.
The proposal for a code of conduct for the director community is strongly supported by business leaders. In a members’ survey conducted in May 2022, 78% of respondents agreed that directors should be subject to a code of conduct.
The IoD is calling on the UK Government to commission a high-level working group which would draft a voluntary code of conduct for directors. All UK directors would be encouraged to become signatories to the Code, and voluntarily commit themselves to its principles.
As the UK’s leading professional organisation for directors, the IoD would be willing to coordinate this process whilst also drawing on the input and involvement of a wide range of stakeholders.
Dr Roger Barker, Director of Policy and Governance at the IoD, said:
“In the wake of the recent corporate scandals at Carillion, P&O Ferries, BHS and other significant enterprises, there is an understandable demand for business to be held more accountable to wider society. There is a risk that each new corporate scandal or collapse will renew pressure on government to impose prescriptive regulatory obligations relating to directorship.
“However, a heavily regulated regime for directors runs the risk of inducing a counterproductive focus on compliance which detracts from the capacity of boards to be strategic and innovative. Our paper proposes an alternative, more flexible approach which emphasises individual responsibility and the importance of a business-led solution.
“The IoD’s members are strongly supportive of the introduction of a code of conduct for directors – either on a mandatory or voluntary basis. In our view, a voluntary code – albeit one that is recognised and supported by government – would be the right way to articulate standards for directors without adding to the overall burden of business regulation”.
The IoD’s policy paper, ‘A voluntary code of conduct for directors: A proposal for the UK government’, can be downloaded here.
The IoD has written to the Business Secretary and the Chairman of the Financial Reporting Council, calling on Government to support this initiative.
Full survey results
598 responses, conducted between 13th-27th May 2022
Unlike other professional groups, directors are not subject to a code of professional conduct. Do you think that a director code of conduct should be established, against which directors would be held accountable?