Question to the Department for Business and Trade:

To ask the Secretary of State for Business and Trade, what assessment his Department has made of whether the corporate governance framework incentivises short-term shareholder returns over long-term value creation for the wider economy.

Section 172 of the Companies Act 2006 enshrines in law the ‘enlightened shareholder value’ principle, in which directors must have regard in their decision-making to the long-term and to the impact of the company’s operations on the community and the environment. The UK Corporate Governance and Stewardship Codes also include principles that promote a focus on long-term value creation by business and institutional investors. The Government will shortly publish a ‘Modernising Corporate Reporting’ consultation which will give an opportunity to stakeholders to comment on UK corporate governance reporting and the wider governance framework, among other matters.