Long-term value creation
How to apply the revised Dutch Corporate Governance Code 2016
Corporate governance is in a constant state of flux. The revised Code provides more relevant and up-to-date best practices for good governance. To contribute to the public governance dialogue and assist companies and directors on how to apply the Code we have translated our experience into practical implementation guidance.
It was with particular interest that we took note of the revised Dutch Corporate Governance Code 2016, published by the Monitoring Committee on 8 December 2016. We particularly welcome the following aspects in the revised Code:
• The emphasis on long-term value creation and the introduction of culture as a key governance mechanism.
• The switch from a functional to a thematic approach. We support the idea that this contributes to a more integral approach and less of a ‘tick-box’ mentality.
• The increased attention to risk management, and specifically the positioning of risk management as an enabler of long-term value creation rather than as a compliance exercise.
Joint research with Nyenrode Business Universiteit shows that, in practice, application of good governance mechanisms does actually drive corporate performance and long-term value creation. This research supports the Code in several respects, including board diversity and remuneration.
Based on a combination of academic research and practical experience we have set out Deloitte’s vision on the possible challenges identified with regard to applying the Code, along with our corresponding response for each key area affected:
• Leadership & Culture
Long-term value creation is not possible without a Culture of Integrity
• Risk Management
Realizing opportunities for long-term value creation through intelligent Risk Management
• Internal Audit
The Risk Management system needs reassurance from Internal Audit
• External Audit
How can your external auditor help in addressing the Code?
• Board Diversity
Effective diversity requires other checks and balances in the boardroom
• Balanced Remuneration
A balanced remuneration structure focuses on long-term value creation
The vision and good practices we set out in this article based on our experience provide practical guidance on how to apply the revised Dutch Corporate Governance Code 2016.
Would you like more information on the revised Dutch Corporate Governance Code? Please consult our brochure or contact Wim Eysink via +31882881899 or Arjen ten Cate via +31882884517.