Nearly nine in 10 (88 per cent) senior business decision makers believe the UK risks losing its 'market-leading' reputation for corporate governance unless effective standards are maintained, a study by the Governance for Growth Investor Campaign (GGIC) has found.

The survey examined the views of 250 business leaders across UK public and private companies on key measures proposed in the government’s Modernisation of Corporate Reporting (MCR) consultation.

While the GGIC, a campaign comprising some of the UK’s largest pension schemes, welcomed several proposals in the consultation, it warned that some of the proposed reforms could threaten shareholder confidence, undermine the effective functioning of UK markets and weaken the UK’s position as a global leader in corporate governance.

The survey found that, amid growing external pressures, including geopolitical volatility and the rise of artificial intelligence, 80 per cent of business leaders believed effective corporate governance standards were more important than they were five years ago.

It also found strong support for hybrid annual general meetings (AGMs), with 83 per cent of publicly listed company leaders identifying in-person and online meetings as their preferred format.

Appetite for virtual-only AGMs was low, despite the government’s proposals, with just 5 per cent favouring this approach.

According to the research, the hybrid format is seen to improve relationships and trust with shareholders, cited by 73 per cent, and enable unfiltered and direct dialogue with shareholders, chosen by 54 per cent.

Meanwhile, 92 per cent of public listed company leaders agreed that shareholders should have an annual vote to be able to express their views on the remuneration report

In response, the GGIC urged the government to set hybrid AGMs as the baseline for listed companies, keep the annual advisory shareholder vote on a company’s remuneration report, and retain transparency on how boards respond to shareholder concerns on executive pay.

GGIC chair, Caroline Escott, said the government’s consultation is an “important step” towards a system that delivers “meaningful information, not more information”.

“However, in its current iteration, the push for simplification will come at the expense of vital accountability mechanisms, namely further enabling virtual-only AGMs and removing the annual shareholder advisory vote on remuneration reports,” she said.

“Our survey shows that business leaders agree with pension scheme investors, both in the principle that watering down the UK’s corporate governance standards risks is ill-advised, and in practice that the government must retain an element of in-person engagement at AGMs and keep the annual remuneration report vote.”

Nest director of responsible investment, Diandra Soobiah, said they supported GGIC’s recommendations to the government.

“Modernising corporate reporting should go hand in hand with protecting shareholder rights and maintaining accountability so that good governance continues to drive long-term growth and better outcomes for our members,” she said.

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