Is governance growing in the right places?
Guardrails to growth: governance framed for momentum
While compliance is up, confidence isn’t, especially in board skills, risks, and AI. Culture counts, so why aren’t boards measuring it long term?
Our latest Corporate Governance Review shows how companies are starting to frame governance for momentum, and how boards must also move from compliance to competence to get the most out of reporting and give confidence to stakeholders.
Our analysis reveals how companies are excelling in the here and now, but need to start thinking long term. It benchmarks how the updated Code and Provision 29 are being approached in the market, and where action is needed.
FTSE 350: A year of reporting evolution and governance shifts
Ahead of the curve by...
Including a statement that the board monitors the group’s internal controls and risk management framework (2025: 99%, 2024: 100%)
Separating the roles of the CEO and Chair for all companies (2025: 97%, 2024: 100%)
Disclosing the circumstances where malus and clawback would apply (2025: 85%, 2024: 83%)
Closing the gap by…
Increasing reporting on a direct linkage of culture, purpose, and values to the output of employees, remuneration etc (2025: 65%, 2024: 63%)
Recognising succession planning as a strategic priority (2025: 40%, 2024: 38%)
Using a ‘basket’ of metrics to measure culture (2025: 63%, 2024: 50%)
Behind the curve by…
Recognising only the opportunity of AI, as 56% do without recognising a related emerging or principal risk (2024: 44%)
Allowing CEOs to focus only on the operational, as only 55% of them discuss the culture and values of their company in their ‘CEO’s letter’ (2024: 60%)
Providing only compliant explanations, instead providing competent, good and strong explanations, like 29% of those who don’t comply. This hasn’t improved since last year (2024: 29%)
Governance under scrutiny: The Chair, the code, and the clock
This improved Code-compliance comes at a time where boards have been urged to move beyond box-ticking and embrace governance as a strategic opportunity. While last year there was an increased need to refresh governance approaches, this year there’s a clear need to have adaptive governance frameworks which can work as a strategic driver to generate clarity, momentum, and confidence. Governance is no longer a compliance exercise; but a catalyst for resilience, ethical leadership, and bold decision making, and should be framed as such on board agendas.
Do you have robust systems in place to monitor, review and report on material controls?
Even though our research shows boards are adapting well to the bulk of the latest changes in the revised Code, they’re tripped up by Provisions 9, 19 and 24: where Chairs aren’t independent upon appointment; are over their recommended nine-year term; or aren’t meeting audit- committee composition criteria. However, only 3% of FTSE 350 companies have a combined Chair and CEO role, supporting clear division of responsibilities for effective leadership and accountability. Moreover, the countdown to Provision 29 is making boards move into less transparent and accountable disclosures, reflecting a struggle to declare effectiveness and get systems into place in the short timeframe – especially where there’s a December year end.
Have you considered where you need to act to meet requirements of new provisions?
2025 Corporate Governance Review
Culture is finally on the radar — now boards need to catch up
The combination of UK regulators calling for boards to treat culture as a strategic asset, and the Code’s encouragement of companies to assess whether their approach is enabling good governance, puts culture higher up the priority list, with +13% more companies using three or more metrics for culture in 2025. However, our analysis shows boards aren’t acting as much as they should. Just 65% directly link culture, purpose and values to the output of employees, remuneration, business model and strategy specifically.
Is your culture being monitored and embedded in a way that links directly to strategic priorities and employee outcomes?
Diverse boards, narrow reporting: the inclusion disconnect
While common diversity-characteristic reporting (gender, ethnicity, senior roles) remains high and stable, the breadth of characteristics being underreported show a continued decline in transparency about progress on policies.
Does your board have sufficient diversity of thought and challenge to avoid groupthink in decision making?
Sector experience is increasing in board roles, but finance, risk management and ESG-related skills are considered to be in decline. Is this showing that sector experience is significantly more important today and there’s a shift in required board-skills, or is there a lack of strategic focus and succession planning, with too much emphasis on the here and now?
Are your board evaluations leading to tangible actions and improvements in board dynamics and performance?
AI is everyone’s risk — except the boards?
AI is a talking point for boards, especially around ethics, but it’s not shown as a priority and the practical oversight is lagging. Too often, it seems a crisis happens before time and effective skill integration is given to managing AI, as well as allocating accountability. This reactive approach leaves organisations exposed and open to more risks. A forward thinking, proactive view of AI is needed: to signal opportunities, manage tools, and mitigate risks, taking ownership equally across the board instead of reactively hiring in expertise after disaster.
Is your risk oversight forward-looking, with sufficient attention to emerging risks such as AI?
Beyond pay: linking rewards to purpose
While renumeration is a scrutinised issue with improved reporting taking place, linking it to strategic outcomes and integrating reward frameworks needs some focus. Remuneration committees are increasingly transparent about their rationale, shareholder engagement, and use of external consultants. Yet, fewer companies explain how remuneration supports purpose in a meaningful way.
Is your executive remuneration aligned with long-term strategy, purpose, and culture, and how is this evidenced?
2025 Corporate Governance Review
Priorities for boards
The following priorities are suggested to help boards continue to adapt, moving from a compliance lens to clear directorship:
