Manifesto Policy Explainer Corporate governance

Corporate governance is a key issue for the Institute of Directors. Our Royal Charter defines one of our Objects as being “to promote the study, research and development of the law and practice of corporate governance”.

However, most of the political parties have very little to say about it in their 2024 election manifestos.

Labour:

• Ensure a much tougher system of regulation for energy companies.

• Mandate UK-regulated financial institutions and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement.

• Place failing water companies under special measures. Regulators will be given new powers to block the payment of bonuses to water executives who pollute waterways.

Conservatives:

• Take more companies out of the scope of reporting requirements. The employee threshold will be raised, allowing more companies to be considered medium-sized.

• A change in culture at the top of the Post Office.

Liberal Democrats:

• Introduce a 4% tax on the share buyback schemes of FTSE-100 listed companies.

• Introduce a general duty of care for the environment and human rights in business operations and supply chains.

• Promote a public benefit company model for monopoly utility companies.

• Encourage employers to promote employee ownership by giving staff in listed companies with more than 250 employees a right to request shares, to be held in trust for the benefit of employees.

• Reform fiduciary duty and company purpose rules to ensure that all large companies have a formal statement of corporate purpose, including considerations such as employee welfare, environmental standards, community benefit and ethical practice, alongside benefit to shareholders, and that they report formally on the wider impact of the business on society and the environment.

• Extend the scope of the existing ‘public interest’ test when considering approvals for takeovers of large or strategically significant companies by overseas-based owners.

• Require all large companies listed on UK stock exchanges to set targets consistent with achieving the net zero goal, and to report on their progress.

Green Party:

• Bring the railways, water companies and the Big 5 retail energy companies into public ownership.

• Implement a maximum 10:1 pay ratio for all private- and public-sector organisations.

The manifestos from Reform UK, the SNP, Plaid Cymru, the DUP and Sinn Fein contain no explicit references to corporate governance.

Don’t forget, you can take a look at what we’re calling on the next government to prioritise in our Manifesto for Business.