The purpose of the report is to help company directors understand what makes up good governance, according to Ken Olisa, chairman of the report's advisory panel.
"In order to perform well in our rankings, companies have to score well across a range of areas, including board structure, financial performance, remuneration and transparency," explained Olisa in a press release.
"Despite the setbacks corporate Britain has endured this year, it still has an enviable global reputation for good governance. The range between the top and bottom companies on our list is narrow, indicating that directors could improve their governance substantially by focusing on limited problem areas."
Good governance is not just important for public relations. New research from Hermes Investment Management published this week finds that shares of companies with poor governance underperformed well-governed firms, returning 0.3 percent, or 30 basis points (bps), less to shareholders.
"Two years on from our original study, which also showed a discrepancy of 30bps per month between well and poorly governed companies, this research highlights that the 'governance premium' is well and truly entrenched," said Geir Lode, head of global equities at Hermes, in a press release.
"Furthermore, our latest study demonstrates that the premium holds true across different geographies and sectors – albeit with a few caveats – proving the almost universal power of effective corporate governance."
British American Tobacco was placed first in the IoD governance rankings.
"For us, high standards of corporate governance are a fundamental element that underpins the sustainable, long-term growth of our business, and we are very pleased to see this commitment being recognised in the IoD report," Simon Cleverly, group head of corporate affairs at British American Tobacco, told CNBC via email.