The Financial Reporting Council (FRC) has published a report encouraging more transparency when reporting against the UK Corporate Governance Code. A summary of its guidance is outlined below:
"For companies to offer an honest appraisal of their governance, they should offer transparency in terms of both their application of the principles and reporting against the Provisions. This can only be effective if the report avoids boilerplate language and individual companies apply the code to their individual circumstances, which will require companies to offer a full and honest explanation, which should be welcomed by investors, service providers, regulators and wider stakeholders.
When a company departs from a Provision of the Code, the annual report should clearly demonstrate:
1) The action taken by the company: What Provision it has departed from and what alternative approach it has chosen.
and
2) The outcome: How is that alternative approach more efficient and appropriate than that prescribed by the Code, and how is it helping the company to achieve good governance?"
Read the full report on 'Improving the quality of 'comply or explain' reporting'.