FTSE 350 Boards Embrace Governance as Compliance Levels Climb
Corporate Governance moves up boards’ agendas, with 69% of the FTSE 350 claiming full compliance with the Corporate Governance Code (the Code), finds Grant Thornton’s 24th Corporate Governance Review .
In 2025, listed companies demonstrated stronger adherence to the Code, the key framework for corporate governance, according to research by Grant Thornton UK.
Findings of the firm’s 24th Corporate Governance Review recorded that 69% of companies claimed they fully comply with the Code, a rise of 4% on the 65% of firms achieving the benchmark in 2024. Of these, FTSE 100 companies accounted for 45%, and FTSE 250 accounted for 55% of the total.
Per sector, real estate (RE) leads the way on technical compliance with 100% of listed RE companies achieving compliance. Financial Services, Telecoms and Industrials also performed well. The energy and basic materials sectors by comparison lagged behind, with only 43% of companies in each sector achieving full technical compliance.
Grant Thornton’s 2025 Corporate Governance Review analysis benchmarks 267 data points per firm from 216 FTSE 350 company reports. Of these 216 companies, 89 were from the FTSE 100 and 127 were FTSE 250. The number of available reports fell to 215 from 253 last year following several market de-listings.
Key takeaways from 2025
The area of the Code which saw the highest compliance levels was Purpose and Culture, with 96% of companies clearly articulating their purpose. Similarly, 91% reported a clear set of values for their organisation. Remuneration reporting also fared well, at 91% compliance, with executive and employee pension alignment now almost universal.
These are closely followed by Diversity reporting at 60%, with gender and ethnic diversity improving but broader diversity remaining underreported. In terms of future areas of focus, succession planning reporting was identified as an improvement area at 40% (2024: 38%).
Playing catch up are the fast-moving areas of Artificial Intelligence (AI) and cyber. Board-level expertise and disclosure remain limited at 7%. Notably, in 2025, 62% of benchmarked companies saw AI as an opportunity (up from 54% in 2024). Yet reporting on AI and cyber risks remains limited, particularly in high-exposure sectors, such as Financial Services (where 72% under-report risks) and Healthcare (where 89% under-report risks).
The top three areas of non-compliance (Provisions 9, 19, and 24 of the UK Corporate Governance Code 2024) relate to Chair independence (either being non-independent on appointment or exceeding the recommended nine-year tenure) and the audit committee construct not meeting requirements.
Provision 29, which came into force for reporting periods commencing on 1 January 2026, introduces a directors’ declaration statement on the effectiveness of internal controls. Only 1% of firms provided the necessary detailed Provision 29 disclosures ahead of the deadline.
Alternatives to compliance
Nearly one in three (31%) companies didn’t comply in full during the year, a slight improvement on 35% in 2024. Of these, 6% (2024: 7%) provide good explanations, detailing which provisions aren’t met and how and when they intend to remedy this, and 23% (2024: 29%) offer strong explanations, including alternative arrangements which deliver a more effective outcomes-focused approach for the company’s reporting. Of those not complying, there is suggestion of a shift to the ‘spirit of the Code’ in place of technical compliance.
Claire Fargeot, Head of Governance and Board Advisory at Grant Thornton UK, said:
“It’s encouraging to see more FTSE 350 companies moving toward full compliance with the Code.
“Last year’s review highlighted agility and future-readiness. This year, boards need to go further – building governance frameworks that don’t just protect but empower organisations to seize opportunities in a fast-changing world.
“Technology disruption is reshaping growth models whilst economic shifts are redefining priorities and talent flows are evolving. Add geopolitical uncertainty and rising environmental and social expectations, and the message is clear: governance isn’t a tick-box exercise. It’s a catalyst for resilience, ethical leadership and bold decision-making.
“Boards must frame governance as a driver of momentum – ensuring oversight supports agility while safeguarding integrity.
“Cyber risk and AI adoption are now mainstream issues, yet our research shows 55% of boards don’t identify AI as a principal risk, and 22% lack members with tech or data expertise. That will need to change quickly. Expect reporting in these areas to accelerate as organisations recognise their critical role in shaping sustainable success.”