The Governance of the Group is set out in a formal Operating Agreement. The Group has established its own policies and procedures as well as adopting the pre-existing processes from the Shareholders where appropriate. The Group has appropriate internal controls and risk management programs which are subject to Shareholder review.
The Companies (Miscellaneous Reporting) Regulations 2018 introduced new statutory reporting requirements for financial years beginning on or after 1 January 2019. Although the Group does not exceed the requirement thresholds, the directors of Ethos Energy have decided to provide a statement in the Report of the directors stating which corporate governance code if any, Ethos Energy Group followed during the year, how it applied the code and any part of the code it did not follow. For the financial year ended 31 December 2019, Ethos Energy Group Limited has chosen to report against the Wates Corporate Governance Principle for Large Private Companies, published by the Financial Reporting Council (FRC) in December 2018 and available on the FRC website (the Wates Principles). The disclosures below explain how Ethos Energy Group Limited has reported against the Wates Principles in the context of its corporate governance arrangements.
Purpose and leadership
Ethos Energy Group’s purpose is established by the Board of Directors who provide governance to the CEO and the leadership team. A new CEO has been appointed in the year with a new strategy in place and has the Board’s full support to help achieve the long-term sustainable success of the business. The CEO and leadership team spend significant time on strategic development and planning and determine the leadership of the Group.
The Board has currently five directors, comprising the Chairman and four executive Directors.
The Board considers that the Chairman was independent on appointment and individual directors’ continuing contribution to Ethos Energy Group Limited are considered at least annually.
The role of the Chairman is to lead the Board and ensure its overall effectiveness. This is distinct and separate from that of the Chief Executive Officer (CEO) who manages the business day to day.
All directors receive accurate, timely and clear information on relevant matters have access to the advice and services of the Company Secretary.
The Board is structured to ensure that the directors provide Ethos Energy Group Limited with the appropriate balance of skills, experience and knowledge as well as independence. A number of the directors have substantial experience in the industry and this experience brings various insights on how the Group should perform.
The Board monitors the commitment of the Chairman and directors and is satisfied that they are able to allocate sufficient time to enable them to discharge their duties and responsibilities effectively. Any additional external appointments require prior Board approval.
All directors receive guidance on their statutory duties under the Companies Act and are supported in the discharge of their duties by the Company Secretary.
The Board is the main decision-making forum for Ethos Energy Group Limited. The Board is collectively responsible for the long-term success of Ethos Energy Group Limited and the delivery of sustainable value to its shareholders. The Board’s role is to provide leadership to the Group, monitoring and maintaining the consistency of the Group’s activities.
The Chairman, CEO and Company Secretary are responsible for the quality and integrity of information provided to the directors. At each scheduled Board meeting the directors receive reports from the CEO, which is prepared by the CEO and the leadership team as appropriate and these members may attend certain Board meetings to provide an opportunity for the Board to engage directly with management on key issues and supports succession planning.
There are quarterly Board meetings each year where the CEO will present the Group’s current financial position, as well as, at the appropriate time each year, the annual budget for the forthcoming year which will be reviewed and approved by the Board. In between these meetings the CEO is in regular contact with the Board, with calls occurring to discuss key specific matters as appropriate.
Opportunity and risk
The role of the Board is to promote the long-term sustainable success of Ethos Energy Group Limited.
The Group’s risk strategy is informed and shaped by an understanding of the risk landscape including a range of significant risks and uncertainties in the external economic, political and regulatory environments. This strategy now also considers the impact of COVID 19 across the world and the impact it has had on all industries.
The Board regularly review and identify potential opportunities that will help create and preserve the value of Group as well as considering any potential risks or issues that may arise which could prevent the continued success of the business.
Executive remuneration structures incentivise individuals to deliver sustainable performance based on strategic objectives for the Group. The approach to performance management provides clarity to employees about how their contribution links to the Group’s ambition and all employees have goals set against different measures. The Group continues to ensure employees are paid fairly for the work they do, and the pay is periodically compared against the external market to ensure that they are competitive.
For details of the Board’s engagement with the different stakeholders see below in the S172 statement.
Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders in their decision making. The Directors continue to have regard to the interests of the Company’s employees and other stakeholders, including the impact of its activities on the community, the environment and the Company’s reputation, when making decisions. Acting in good faith and fairly between members, the Directors consider what is most likely to promote the success of the Company for its members in the long term.
The Board regularly reviews our principal stakeholders and how we engage with them. The stakeholder voice is brought into the boardroom by regular reporting from our CEO, CFO, and Heads of HSSE, HR and Legal and the Strategic Business Unit Leaders. The company has identified 5 Ethos principles (Safety, Service Excellence, People, Financial Responsibility and Integrity), as its driving principles. The Group’s principal stakeholders include its employees, investors, customers and suppliers and the relevance of each stakeholder group may increase or decrease depending on the matter or issue in question, so the Board seeks to consider the needs and priorities of each stakeholder group during its discussions and as part of its decision making.
The Board methods of engagement with the workforce is by regular dialog with the business and functional leaders.
We aim to work responsibly with our suppliers by establishing processes and procedures to drive compliance with EthosEnergy’s standards of integrity and quality.
The Board has overseen the implementation of measures to ensure that stakeholder interests are always taken into account. At all future board meetings the Company Secretary will include a written reminder of the section 172 duty on each Board agenda. Papers prepared by management for Board approval highlight relevant stakeholder considerations to be considered as part of the debate when making decisions. As required, the Company Secretary will provide support to the Board to help ensure that sufficient consideration is given to stakeholder issues.