The report, entitled “Rewarding virtue – effective board action and corporate responsibility” was produced by Business in the Community, FTSE Group and Insight Investment. It follows consultation with some 40 directors and company secretaries of Britain’s biggest companies on the question: ‘What should boards do to ensure companies behave responsibly, and why?’

According to the report’s lead author, Craig Mackenzie, head of investor responsibility at Insight Investment, “Corporate responsibility sets the terms of a mutually valuable contract between companies and society. But short-term pressures can lead companies to behave irresponsibly. The board has a decisive role to play in resisting these pressures – serving the public interest and safeguarding long-term shareholder value.”

Stephen Howard, managing director of Business in the Community said “This report shows that corporate responsibility is not an optional extra. Principles of honesty, care, fairness and accountability are an essential part of long-term business success. The more effective boards can be at delivering corporate responsibility the more trust and freedom business deserves from its stakeholders and regulators.”

Mark Makepeace, chief executive of FTSE Group, commented “The recommendations in this report will help identify best practices in the governance of corporate responsibility at board level. We hope that it will facilitate the future development of international standards and that the debate will help inform the work of the FTSE4Good Policy Committee in this area.”

The report recommends that boards should:

. Set values and standards for the business
. Think strategically about corporate responsibility in the context of market pressures
. Be constructive about regulation, delivering self-regulation and supporting government intervention to correct market failure
. Align performance management, rewarding responsible success over the long-term
. Create a culture of integrity, setting the right tone at the top and cultivating the right values in the corporate culture
. Use internal control to secure responsibility, safeguarding standards with robust audit and control systems.

The “Rewarding Virtue” report is launched to coincide with the UK EU Presidency conference on corporate social responsibility and the finance sector.