Of the six construction companies listed in the FTSE 100 index, only one ranks in the top 50 for corporate governance.
That is one of the findings in the Institute of Directors 2016 Good Governance Report, published today.
Overall, the construction sector fared poorly, with Berkeley Group being the worst offender ranked in the bottom decile at 99, Barratt Developments was the construction company listed highest at 42.
Other firms listed included Wolseley, ranked 53, Persimmon (57), Taylor Wimpey (70) and timber and builders merchant Travis Perkins (94).
The report ranks the FTSE 100 companies using various performance indicators and is intended to stimulate debate on what constitutes good governance. Its publication follows in the wake of recent parliamentary inquiries into BHS and Sports Direct, which accused both firms of governance failings.
The study looked at 34 factors across five areas of corporate governance: board effectiveness; audit and risk/external accountability; remuneration and reward; shareholder relations; and stakeholder relations.
As government money is likely to be invested in infrastructure projects and industrial development, the construction sector is under particular pressure to demonstrate its commitment to strong governance to deliver quality projects on time and in budget.
Speaking on behalf of the Chartered Quality Institute, a key partner in the compilation of the report, Estelle Clerk, head of profession, commented: “Good governance requires more than a stated intent. It requires a profound understanding of how principles of good governance are implemented and delivered at every level of a company and its delivery partners.
“For the construction sector, working with a diverse supply chain in order to deliver key projects, this is especially challenging. Our intention in supporting the Good Governance Report is to stimulate discussion on what constitutes good governance and how this can be demonstrated.”
Ken Olisa, chairman of the report’s advisory panel, added: “This has been a difficult year for business, with MPs lambasting the directors of major high street brands, and the prime minister making clear that corporate boards are in her crosshairs. Given the mood music, it has never been more important that directors understand what good governance looks like, and which practical measures can be taken to improve and to convince the outside world they are delivering it.”
