In it together

New corporate reporting rules, recently released, would seem to confirm the UK government believes that old adage – beloved of CEOs in their introductions to the annual report and accounts – that “our people are our greatest assets”. (Their sincerity is rather too often swiftly undermined by descriptions of the latest restructuring for ‘optimalisation’ that follow in the management review.)

First up, in July the Financial Reporting Council released the new UK Corporate Governance Code, aiming to “put the relationships between companies, shareholders and stakeholders at the heart of long-term sustainable growth in the UK economy.” A quarter of a century on from the original Cadbury Code, the emphasis is even more on building trust and strong stakeholder relationships. See here for the highlights – all about establishing a corporate culture aligned with the company purpose and business strategy, one that promotes integrity and values diversity. Again, the talk is all about principles, applied flexibly, not a rigid set of rules.

Yet in one area, employees, the Code is highly specific. Large companies are now required to engage the workforce in decision-making, through some combination of an employee director on the board, an advisory panel or a designated non-executive director. Those with long memories will recall the firm promise by Theresa May in her July 2016 leadership bid: “If I’m Prime Minister, we’re going to change [the] system – and we’re going to have not just consumers represented on company boards, but employees as well.” Well, not quite, as it turns out. (I wrote about her u-turn on that point soon after here.)

The second big change is a set of rules about mandatory reporting each year of how Continue reading →

The number of purpose-led businesses is growing,  and with it the evidence of a pay-back for business and society.

News breaks this week that the smoothie drinks company, innocent, has become a B Corp.  With its iconic products on most supermarket shelves, this feels like a breakthrough moment for the B Corp movement in the UK.  Innocent joins a roster of some 150 British firms – including Cook, Pukka Herbs, Divine Chocolate and (probably the largest) Danone UK – alongside some 2,500 worldwide.

But isn’t innocent part of Coca-Cola, asked a sceptical colleague in the office; how can they be a B Corp?  While the technical answer to that question lies in the detail of the certification process, the implication is that this has now become a proxy for an all round ‘good’ company – which only adds to expectations about the validation process.

In summary, you can get the accolade if you meet three tests.  Details vary in different jurisdictions, here’s the UK procedure.  Continue reading →

The proposition is simple: that purpose-led businesses and brands outperform the average.  Surveys abound with data from consumers saying that, price and quality being equal, they’ll switch to cause related brands.  Unilever has become the poster-child for the proposition, reporting that last year its ‘sustainable living’ brands grew 46% faster than the rest of the business and delivered 70% of its revenue growth.

Now a group of ten stewardship investors, collectively managing $8 trillion worth of assets, have taken the question to company boards, using eight agreed questions to uncover the extent to which a company is genuinely and effectively being purpose-led.  Convened by Blueprint for Better Business, the group includes Schroders, Hermes and Legal & General.  Their proposition is that having a clear corporate purpose is a key part of creating long-term sustainable value.

This new focus on purpose raises an awkward question – I believe – for those of us working in this space about why we continue to speak a confusing language about CSR, ESG, corporate responsibility, citizenship and sustainability.  In fact, I’d go further and say it’s worse than that, as we can’t agree among ourselves what the words we use actually mean.  The biblical story of the Tower of Babel comes to mind, a collective endeavour thwarted by language differences.

Continue reading →

At Corporate Citizenship this week, we assembled a premier league team to discuss whether sports sponsorship can – and should – have a lasting impact beyond the immediate commercial payback. Sustainability meets sports, you might call it.

Seb Coe – who chairs CSM, our sports and entertainment sister agency, and is best known for delivering the hugely successful London 2012 Olympics – joined Liz Nicholl, CEO of UK Sport, Martin George, customer director at Waitrose, and Justin King, ex CEO of Sainsbury’s where he set up that retailer’s ground-breaking sponsorship of the Paralympic Games.  Pitch referee and incisive compere was our new CEO at Corporate Citizenship, Neil Davy.

The prior question is why this matters at all. Well, in simple money terms, sports sponsorship is now a $65 billion dollar worldwide business – a staggeringly large number that’s nearly doubled over the last decade or so. And sport’s reach is huge, arguably the biggest human activity in all its forms, from jogging round the park and kicking a ball in the back yard to the Olympics watched by billions. Continue reading →

Try and make sense of this…. The G20 has asked the FSB to look at GHG emissions, so they’ve set up the TCFD which is working with CDP, SASB and CDSB on new reporting guidance – that BEIS could make mandatory.

Full marks if you got all the acronyms right, you are well up to speed.  For everyone else, here’s a plain English translation.

Governments around the world are increasingly taking the risks posed by run-away climate change seriously. However they worry that the financial system has got its head in the sands, ignoring the likely impact of the big policy changes they are making in trying to shift the economy to a path compatible with 1.5 – 2 degrees of global warming. If so, current asset values could be massively overstated – anything upwards from $4.2 trillion according to one estimate – and a repeat of the global financial crash is possible when reality hits home. That matters to you and me because our pension savings are at risk.

So they want companies to start estimating the financial implications of their climate-related risks and opportunities and to disclose them in annual reports in a way that investors can act on. A taskforce headed up by Bank of England governor, Mark Carney, and former New York mayor and eponymous business data provider, Michael Bloomberg, has created a set of reporting guidelines.  These are voluntary for now, but the UK’s business department is said to be supportive of adding them to the existing rules about reporting greenhouse gas emissions if the uptake is slow.

Acronyms aside, the danger is this becomes just another reporting requirement, with Continue reading →

Yesterday was a first for us at Corporate Citizenship.  We’ve been working with companies for over 20 years now, and for the first time we brought together in one room representatives of the investor community for a face-to-face dialogue with those in companies charged with explaining how they approach sustainability.  And a powerful discussion it was too, all part of our continuing Long Term Value Project.

‘IR meets CR’, we called it.  Speakers came from Schroders, MSCI, Aberdeen Standard Investments, Royal Bank of Scotland, Total, Stora Enso and more.  You can get a tweet-by-tweet account of how it went here. Some 150 people participated, kindly hosted at Chartered Accountants Hall in London by the ICAEW and run in partnership with the Investor Relations Society. It was especially pleasing for me to be back at the ICAEW: when I was training to get my accountancy qualification, these topics were not on the syllabus at all.

Our proposition was that there’s a disconnect between corporate responsibility

Continue reading →

As I write, here in London the shops are full. Households are preparing for the Christmas season, when Christians astutely adopt the pagan winter solstice festival to mark new beginnings and everyone settles in against the cold for an excess of consumption.

If the advertisements are to be believed, high on Santa’s list of presents this year will be smart speakers – with Amazon Echo battling it out with Google Home, since Apple has announced that its HomePod will not be shipped until early 2018. New on the scene is the Echo Dot, small enough to slip into anyone’s Christmas stocking.

If you’ve not yet joined the fun (and I’m firmly resisting so far) these devices harness voice controlled AI assistants – Amazon Alexa joining iPhone’s Siri, Microsoft Cortana and Google Now out in the cloud – to give you a hands-free way to play music, control your ‘smart home’ devices, tell you the weather forecast, and much more.

Continue reading →