The Institute of Directors (“IOD”) has launched a Code of Conduct which is aimed to “help directors make better decisions”.

We previously commented on a draft version of the Code here. According to the IOD, the draft Code received overwhelming support from respondents to its consultation.

The Code is voluntary, and the IOD makes clear that it is “not intended to hold back directors or create a new burden of compliance”. Instead, it is aimed to provide an ‘organisational framework to help directors make better decisions, maintain the trust of the public, and “navigate the complex trade-offs that directors deal with everyday”.

The Code is organised around six ‘Principles of Director Conduct’, inspired by the ‘Nolan Principles’ that govern the behaviour and activity of those who hold public office. The six Principles are as follows:

1. Leading by example: Demonstrating exemplary standards of behaviour in personal conduct and decision-making;
2. Integrity: Acting with honesty, adhering to strong ethical values, and doing the right thing;
3. Transparency: Communicating, acting and making decisions openly, honestly and clearly;
4. Accountability: Taking personal responsibility for actions and their consequences;
5. Fairness: Treating people equitably, without discrimination or bias;
6. Responsible business: Integrating ethical and sustainable practices into business decisions, taking into account societal and environmental impacts.

Each Principle is accompanied by a series of undertakings that those who sign up to the Code are expected to comply with, together with stated ‘Outcomes’ that will be achieved by such compliance. There is also a section that provides guidance on how directors should apply the Code, reiterating that it is voluntary and that there is no formal mechanism for enforcement. In addition, it states that “if the recommendations of the Code are perceived as conflicting with mandatory requirements – such as those arising from legislation, regulation, contractual obligations, professional standards or organisational rules – then the requirements of the latter should prevail. Directors should apply their judgement in the application of the Code, and seek professional advice in respect of fulfilling their legal obligations”.

Commenting on the launch of the Code, the Director General of the IOD, Jonathan Geldart, said, “we should be proud of UK businesses, but sometimes decision-makers fall short of societal expectations. Those at the top may lose touch with the need for exemplary values and integrity in their decisions and behaviours. This has led to scandals and controversies, negatively affecting business esteem. Without public trust, businesses may find their freedom increasingly questioned. This Code aims to help UK business regain trust by embedding values already adopted by most responsible leaders. Written by directors for directors, it offers a roadmap to help them make the right decisions amid complex challenges and trade-offs.”

To read the Code in full, click here.