On paper, the shift from the 2018 to the 2024 UK Corporate Governance Code looks incremental. In practice, for boards of UK-listed multinationals with far-flung subsidiaries, it represents one of the most difficult expectations yet: to demonstrate that culture is not only defined, but embedded — across the group.
The FRC’s new expectation
The 2024 Code (Provision 2) moves from describing culture to proving how it has been embedded. This subtle shift requires boards to show not just alignment of values and strategy, but tangible outcomes: how behaviour, decisions and incentives reflect those values across jurisdictions.
Provision 29 adds another layer. From 2026, boards will need to declare the effectiveness of material internal controls — a manageable task for financial and operational systems, but far more complex for something as intangible as culture.
The FRC’s guidance doesn’t give a definition of culture. That flexibility is deliberate — but it also leaves boards exposed. If the regulator later interprets “culture” narrowly (e.g., measurable indicators, ethics data), most companies will fall short. If interpreted broadly (purpose, leadership behaviour, employee experience), the challenge becomes one of evidence and consistency.
When culture crosses boundaries
Most global companies “scale culture” by exporting a Code of Conduct, global policies, and online training. KPIs are typically procedural — 100 % completion of Code of Ethics training, number of speak-up cases investigated, zero tolerance reported.
These create the appearance of control, but little insight into whether the values are lived
Studies of MNCs highlight three persistent culture-transfer failures:
- Parent control vs. local legitimacy
Headquarters often frame culture as a compliance artefact — “this is how we do business.” In subsidiaries, particularly outside Europe, that language can seem foreign or paternalistic. Employees complete training but don’t internalise the message. - Institutional and geopolitical context
The rise of national identity and differing ethical frameworks means “imported” Western policies can lose credibility or even trigger resistance. A code perceived as externally imposed risks symbolic compliance rather than behavioural change. - Contextual adaptation gap
Culture depends on daily routines — who gets promoted, how feedback is handled, how mistakes are discussed. These are shaped by local norms. Without adaptation, even well-designed values become abstract— alignment, not uniformity, drives success.
For Boards, the challenge is systemic
Unlike internal controls, culture cannot be tested by sampling transactions. Evidence must come from patterns of behaviour across the organisation.Boards signing off on culture disclosures under Provision 2 will need assurance that goes beyond “survey scores” or policy completion.
What Boards Should Be Asking
- What evidence shows our values influence decisions?
Examples of actions taken or declined on ethical grounds, supplier exits, pricing changes, or leadership behaviour adjustments. - How do we measure and respond to local sentiment?
Use metrics such as speak-up case resolution times, employee turnover in high-pressure roles, near-miss transparency, and stakeholder trust scores. - Where is adaptation necessary?
Identify where the parent’s mechanisms (training, incentives, communication) need localisation to achieve the same behavioural outcome.
What assurance do we receive?
Independent verification from Internal Audit or HR analytics on whether desired behaviours are consistently demonstrated across key subsidiaries
Bridging the measurable and the intangible
Risk, compliance, and internal controls are measurable.Culture, by contrast, is interpretive — a blend of tone, trust, and behaviour.But the same principles apply: define the control objective, identify indicators, and test whether they work.
Boards can integrate cultural assurance into existing frameworks:
- Risk registers can include behavioural risks (e.g., pressure to meet sales targets).
- Internal Audit can review culture proxies (speak-up follow-through, safety incident reporting).
- Board dashboards can combine quantitative metrics with qualitative feedback from site visits or local employee councils.
Good Practice and the Board’s way forward
Some FTSE 100 companies are already piloting “culture assurance statements” — concise board-level summaries linking key culture indicators to oversight actions. Others publish “values in action” vignettes, where a real decision or ethical dilemma illustrates how values were applied — a model Bunzl and other global groups could adopt in future reports. A few organisations go further, using “cultural heatmaps” that combine survey data, HR metrics, and compliance findings by geography to spot local misalignment early.
For UK boards, the path forward lies in shifting governance narratives from process to impact — describing what changed, not just what was reviewed. They can begin piloting culture evidence packs from major subsidiaries, capturing 3–5 indicators, actions, and outcomes, and ensuring that Provision 29 readiness includes behavioural and ethical controls alongside financial ones. Most importantly, boards should clarify what “embedded” means for their organisation: consistent values, local adaptability, and visible results.
Culture will test the limits of the 2024 Code’s measurability. Internal controls can be declared effective; culture can only be demonstrated through evidence of lived values. For boards of global companies, the question is no longer whether culture scales — it’s how to prove, and where necessary adapt, that it truly exists beyond the UK headquarters.
