The FRC has found a lack of meaningful disclosures across corporate reporting, with companies struggling to define their purpose or values.

An over-reliance on generic, 'boilerplate' language has replaced company-specific contextual information in corporate reports, according to the Financial Reporting Council (FRC). 

Large private companies are struggling to provide meaningful disclosures around key areas such as company purpose, culture and values, and how stakeholder engagement impacts board decision-making. The report, published in August, found high levels of similarity in the corporate governance statements of different companies, as well as in reports by the same company across different years.

Mark Babington, FRC’s executive director of regulatory standards, said: “The research highlights the need for increased transparency and accountability among large private companies, particularly as they are a driver of growth in the UK and have a significant impact on the economy and on wider stakeholders."

The research, conducted by the University of Essex, found the Wates Corporate Governance Principles continue to be the most popular corporate governance code among large private companies, used by 30% of companies with a combined annual turnover of £850 billion in 2021 and 2022.   

Sir James Wates CBE emphasises the need to move away from boilerplate reporting. “I’m once again encouraged to see that more large private companies are choosing to report against the Wates Principles than any other option.

“The improvement in the reporting quality we’ve seen in today’s report, while good news, shouldn’t distract companies from the need to reduce boilerplate reporting, which remains a primary concern,” Wates continues. “I urge boards to reflect on today’s report with open minds ahead of their next reporting cycles.”

The research also highlighted the importance of informative governance disclosures to stakeholders. Suggestions for improved reporting include more outcomes-based reporting, clearer rationales and more signposting.