Too much expected of section 172?
‘Although the FRC’s Guidance on Board Effectiveness states that in order to protect the company’s long-term interests, difficult board decisions may “sometimes” adversely impact stakeholders, section 172 cannot prevent directors taking actions that are contrary to stakeholder interests or even the long-term interests of the company. No doubt such a company would not thrive. Nevertheless the section does not guard against bad business judgements taken in good faith.’
‘Society and key stakeholders have more expectations than ever before in companies and they expect companies to be part of the solution within society, rather than the problem. The growing recognition that “good” business behaviour supports strong financial performance is becoming the norm.’