Ethics Guidelines for Board Members

Ethics Guidelines for Board Members Presented by: Mrs. Layard Date: 9 August 2024 Our Purpose - Our Royal Charter sets out a clear purpose • We have a clear vision - The Institute of Directors is the professional institute for responsible directors and leaders. • Our mission is to develop, support and represent skilled, knowledgeable and responsible leaders for the benefit of the economy and society at large. • - Integrity and Enterprise are our core values. The objects of the institute are: • To promote for the public benefit high levels of skill, knowledge, professional competence and integrity on the part of directors, and equivalent office holders however described, of companies and other organizations. • To represent the interests of members and of the business community to government and in the public arena, and to encourage and foster a climate favorable to entrepreneurial activity and wealth creation. • To promote the study, research and development of the law and practice of Corporate Governance, and to publish, disseminate or otherwise make available the useful results of such study or research. • To advance the interests of members of the Institute, and to provide facilities, services and benefits for them. - The purpose of this Code is to help UK business win back trust by embedding the values that are already adopted as a matter of course by most responsible business leaders. - Written by directors for directors, it offers a roadmap that can help individual directors make the right decisions for themselves and their organisations, often in the face of complex challenges and trade-offs. - The Code represents a voluntary commitment and is not intended to hold back directors or create a new burden of compliance. Most of the undertakings contained within the Code are matters of common sense. - The Code may serve as a useful tool that directors can refer to when asking themselves the question: what would a responsible director do in this situation? A Code Of Conduct Is Distinct From A Corporate Governance Code Or The General Legal Duties Of Directors Embedded In Company Law - A governance code (e.g. the UK Corporate Governance Code) describes best practices relating to the structure, composition, activities and functioning of the board of directors as a whole. - Directors' General Legal Duties in the Companies Act 2006 are baseline fiduciary responsibilities that directors owe to their respective organizations, and do not provide much guidance about what good conduct looks like. The 6 Principles of Director Conduct 1) Leading by example: • Demonstrating exemplary standards of behavior in personal conduct and decision-making. - 2) Integrity: Acting with • - 3) Transparency: • - Taking personal responsibility for actions and their consequences. 5) Fairness: Treating • - Communicating, acting and making decisions openly, honestly and clearly. 4) Accountability: • - honesty, adhering to strong ethical values, and doing the right thing. people equitably, without discrimination or bias. 6) Responsible business: • • Integrating ethical and sustainable practices into business decisions, taking into account societal and environmental impacts. The Code Framework - Undertakings Leading by example Exemplary behaviors embodying and promoting values and challenging poor behaviors • Integrity Abiding with relevant laws and regulations, acting in good faith and upholding high ethical standards • Transparency Open and accurate communication about decision-making and actions • Accountability Understanding your responsibilities and providing honest accounts of your conduct • Fairness Making justifiable decisions based on impartiality, consistency and merit • Responsible business Aiming for long-term sustainable business success considering social and environmental impacts • Respect • Reputation • Confidence • Trust • Relationships • Legitimacy • Resilience Outcomes Principle 1: Leading by Example - As a director, I undertake to: • Exhibit high standards of personal conduct and professionalism. • Consider the impact of my behaviour on employees, fellow directors and other stakeholders. • Avoid behaviour which might adversely affect the reputation of my organization, or which contradicts its values. • Treat everyone with respect, dignity and consideration. • Devote sufficient time and attention to my role as a director. • Strive to develop my own competency and encourage that in others. Principle 2: Integrity - As a director, I undertake to: • Comply with the letter and spirit of applicable law and be willing to cooperate fully with regulatory authorities. • Deal honestly with all parties. • Place the interests of the organization and its societal impact above my personal interests. • Be alert to perceived conflicts of interest and manage them when they arise. • Voice constructive challenge and disagreement on matters of concern. • Challenge words, behaviour or attitudes that fall below expectations. • Adhere to collective responsibility for agreed decisions. • Be prepared to resign from the board if a matter of conscience, judgement or good governance • cannot be remediated through good business practices. • Safeguard confidential information unless appropriate disclosure has been authorized, and not make improper use of information. Principle 3: Transparency - As a director, I undertake to: • • Be open and transparent to the rest of the board and relevant stakeholders in respect of anything that might be perceived as affecting my objectivity (such as a conflict of interest). Promote an open business culture which does not cover up wrong-doing or mistakes. • Encourage the adoption of 'speak up' mechanisms which enable employees and other relevant stakeholders to report concerns about any misconduct or actions that are not aligned to the organization’s values. • Communicate with stakeholders in a straightforward and accessible manner, providing proactive, relevant and timely information. • Be candid with stakeholders about the limits of transparency (such as information of a commercially sensitive nature). Principle 4: Accountability - As a director, I undertake to: • Comply with my legal duties to the organization, fulfil my delegated responsibilities, and take personal responsibility for my actions. • Be open to feedback and, where applicable, make improvements based upon that feedback. • Oversee and hold management to account. • Understand the legitimate expectations of shareholders and other relevant stakeholders and engage appropriately with them. • Seek independent advice on matters of concern at an early stage and, where appropriate, call for action to protect the interests of creditors if the organisation is struggling financially. • Reflect on whether I have the knowledge and skills required to fulfil my role as a director and, where appropriate, decline to serve on a board. • Principle 5: Fairness - As a director, I undertake to: • Make decisions on an objective and evidence-based basis. • Recognize and respect the legitimate interests of relevant stakeholders including customers, employees, investors and suppliers. • Promote equality of opportunity in all business activities. Encourage the fair treatment of suppliers. • Promote diversity of thought, by being open to differing ideas and views. • Engender an inclusive culture where all employees can bring their best selves to work. • Share credit with those contributing to successful outcomes, and provide constructive feedback where performance does not meet expected standards. • Advocate for reward and recognition structures that are fair, encourage ethical behaviour and support a longer-term perspective. Principle 1: Leading by Example - As a director, I undertake to: • Exhibit high standards of personal conduct and professionalism. Principle 6: Responsible Business - As a director, I undertake to: • Consider the consequences of my decisions for society, local communities and the environment. • Avoid prioritizing the short-term financial interests of shareholders above the longer-term interests of the organization as a whole. • • Promote high business standards across the supply chain, particularly with regard to employment conditions and environmental impact. • Reject corrupt business practices. • Advocate for an organizational culture which values diversity and inclusion. Responding To The Consultation - We welcome feedback on the Code from the business community and the general public. We invite you to submit your written comments by Friday 16 August 2024. You may submit feedback to the following email address: codeofconduct@iod.com - In particular, we would be interested in receiving your views on the following: Are there any additional issues that should be addressed in the Code? • How can awareness of the Code be encouraged amongst directors and the wider public? • Should directors make a public declaration or disclosure of their adoption of the Code? • Is there a role for government, regulators or professional bodies in encouraging adoption of the Code? • If you are currently serving as a director, would you be willing to commit yourself to the principles and undertakings of this Code? Emerging Thoughts Arising From The Public Consultation - Are there any additional issues that should be addressed in the Code? • Digital Conduct/Technological change Given the pace of technological change should there be reference to include guidelines on digital conduct/technological stewardship and leveraging technology for better decision making. • • Sustainability Strengthening of ESG factors, particularly looking out longer term and the role of directors/ business in supporting. • Director Competence/Capability Requirement that Directors really understand the organization/sector, how the organization works and strategic direction and values. Directors should have an impact through being genuinely involved, walk the floor, be visible, accessible. • Wellbeing and mental health Specific promotion of mental health, kindness and personal development to enhance well-being, team spirit and loyalty - How can awareness of the Code be encouraged amongst directors and the wider public? • Public Endorsements from Directors/leaders - enhancing • visibility and credibility of the Code • References in Annual Reports/Public Reporting Incorporate into recruitment process for Directors -benchmark against the Code Principles • Incorporate intro contracts/bid documents • Develop an implementation guide/guidelines/practical checklists for Directors • Regular training and workshops for Directors • Other communication methods - newsletters etc. • Use Case Studies and real-world examples • Develop support networks - sector specific, peer-to-peer groups • Code Ambassadors • Access to experts to provide guidance and support on specific issues helping Directors to navigate.