The Wates Principles are a flexible, high-level set of six guidelines designed to be applied to the corporate governance arrangements of a diverse range of private companies with different types of ownership and structures. According to the FRC, “companies that are well governed are better positioned to build stakeholder trust, raise capital and investment, and deliver value for wider society.”
Large private companies that choose to adhere to this ‘comply or explain’ based framework should provide a clear, principle-by-principle narrative in their annual reports, explaining how the board has applied each principle in practice over the year and outlining the resulting outcomes.
With the publication of this report, the FRC encourages private companies to be transparent and bold in their reporting, daring to move beyond boilerplate statements and more towards meaningful reporting, which will build trust with their stakeholders and lead to more successful organisations.
Here is a summary of the six areas of focus:
Boards should articulate the company’s purpose in plain language and demonstrate how it guided strategy, culture and key board decisions, with a few concrete outcomes (for example, staff or culture improvements)
Effective reporting on Principle Two requires describing who is on the Board, the role of the Chair, the mix of skills and diversity, and how any gaps are being addressed (eg: recruitment, training, succession)
The Board and individual directors should make lines of accountability clear, explain how decisions are made and briefly describe the role and remit of any key committees, such as Audit, Risk or Remuneration.
Companies applying the Wates Principles should show how the Board identifies and reviews their main opportunities and risks, define roles and responsibilities for risk management, and illustrate how this supports long-term, sustainable success, using cross-references to the strategic and risks reports.
An effective Board should explain the structure and rationale for executive pay (short and long-term incentives), how it links to performance and strategy, and how workforce pay and fairness are taken into account, without needing to disclose every number.
Companies should identify key stakeholders, describe how the Board engaged with them, what issues were raised and what the Board actually did or changed as a result, linking to the section 172 statement where helpful.
In summary, good reporting under the Wates Principles should be transparent, bold, avoid boilerplate wording, be concise but outcome-focused and ensure consistency across sections.
At Black Sun, we see great reporting under the Wates Principles as an opportunity to communicate a concise, specific and outcome-focused narrative. More than just a compliance framework, the Principles provide large private companies with the guidance to turn their annual report into a strategic tool, a chance to show how governance supports long-term value creation, strengthens stakeholder relationships and drives better decision-making.
Get in touch with Bob Crosbie-Dawson, Senior Growth Manager, BCrosbie-Dawson@blacksun-global.com to explore how we can help you to apply the Wates Principles to your reporting.
Black Sun Global is a stakeholder advisory and engagement agency that's been driving transformation and positive change for ambitious brands for more than 20 years. With deep expertise in disclosure and reporting, ESG, sustainability, and digital engagement, we reshape how organisations connect with customers, investors, employees, and the wider world.
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