Corporate governance is the bedrock of organisational resilience. Governance frameworks ensure there is clear accountability and transparency across business operations, that there are clear rules and processes in place around decision-making and that financial reporting is high quality.

As Peter Van Veen, Director of Corporate Governance and Stewardship at ICAEW explains, investors are looking at corporate governance with renewed attention. 

Strong governance central to investor confidence 

With confidence in external environmental, social and governance (ESG) scores weakening and more investors questioning the reliability of third-party provider metrics, the onus is increasingly on the company itself to demonstrate strong governance frameworks and provide high-quality, insightful reporting.

“There is now much more emphasis on good governance, especially as we are seeing some pushback on external metric providers, especially around ESG metrics,” Van Veen explains.

CFOs and auditors therefore have a role in driving dialogue and meaningful conversations around audit quality and pushing what ‘good’ looks like. “Audit is now on investors’ radar and that’s a positive thing. They are now starting to understand our language and the value audit brings to investment decisions.”

The increasing interest – and, indeed, expectation – from investors to see evidence of good governance and high-quality audits from businesses is likely to be a developing trend over the next few years. 

Application of 2024 UK Code 

The UK Corporate Governance Code 2024, which applies to premium-listed entities on the London Stock Exchange, is a response to exactly this. Recognising the need for companies to demonstrate sustainable practice, improve trust and provide accurate reporting, the code provides businesses (and those engaging on a voluntary basis) with a solid framework to embed good corporate governance principles into business practices and operations. 

Provision 29 requirements

The code was officially introduced in January 2025 with a key new Provision 29 coming into effect on 1 January 2026. Under the new Provision 29 requirements, boards must monitor and review the effectiveness of their risk management and internal control framework, and sign a board declaration that they have done so in the annual report.

“Boards need to provide an attestation that their material controls are fit for purpose,” explains Van Veen. “Those internal controls don’t just cover financial controls, but operational, reporting and compliance controls too. So potentially it’s a big exercise. Most boards are well ahead of the game but there are still quite a lot of discussions around how much detail the board might be expected to go into.”

According to Van Veen, all the preparation and collection of data needed for Provision 29 must take place ahead of the balance sheet year end. Moreover, any material controls that are failing or not working adequately must be identified and reported in the annual report, along with details on what’s being done to remedy the failings.

There are some exceptions to this requirement, but the board may find it very hard to explain itself if a material control that has been a known issue leads to an impact on the share price and it wasn’t reported on in the preceding annual report.

“Provision 29 sounds like a simple change of the UK Corporate Governance code, but in practice it’s proving quite a lot of work for some organisations,” he says. “It is potentially one of the biggest things companies and their accountants need to prepare for in 2026.”