Shareholders are ‘hungry’ for new and greater insights on culture

20 July 2016

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Hywel Ball, EY’s Managing Partner of Assurance, UK & Ireland, comments on a new report from the Financial Reporting Council, ‘Corporate Culture and the Role of Boards’:

“Culture is fundamental to the business performance of UK PLCs. A strong cohesive culture helps organisations to deliver long term growth and reduce risk. Yet the majority of boards still need to take greater responsibility for defining, shaping and monitoring culture in their organisation. According to a recent EY survey of FTSE 350 companies, only 19% of respondents felt that primary accountability for culture sat with the board and 47% said there is little or partial consensus at board level on what company culture should be.

“This ‘intangible asset’ is also increasingly part of how businesses are valued by investors. Shareholders are hungry for new and greater insights on a much wider range of non-financial matters and are increasingly factoring organisational culture into their investment decisions.

“Companies that seek to close this expectation gap, and ensure that culture is given the focus it deserves in corporate reporting, are likely to be at an advantage particularly when it comes to attracting investment. And since shareholders and investors may be seeking proxy information on organisations’ cultures from other sources, businesses may wish to regain some control over how their company is perceived.”