by Dina Medland
Action, Not Words
This is the new mantra, aimed at British business and being chanted at it from all directions: ‘Action, Not Words’ (as noted in the last Governance Watch) when it comes to gender progression, ethnic representation and inclusion.
Multiple efforts in the United Kingdom involving the government, St James’s Palace, investors and think-tanks are being made to drag the laggards in the FTSE 350 to the economic realities of the benefits of diversity in a competitive global market. The links are to coverage on my blog Board Talk.
The need for action was further fuelled by the launch of a report based on excellent analysis of board diversity reporting by Professor Ruth Sealy of the University of Exeter Business School for the UK’s corporate governance watchdog, the Financial Reporting Council. The report was also covered by me pre-launch in Britain, We Have A Problem: FTSE 350 And Diversity In Business.
It is an excellent report, because the data harvested from the FTSE 350’s own words makes it painfully clear how much remains to be done on all fronts. At the FRC’s launch of the report earlier this week to a packed and visibly diverse audience, a strange thing finally happened in Britain. Women – and they were all female on the panel chaired by Stephen Haddrill, the FRC CEO, got angry, and expressed that anger in a public forum.
“The numbers on ethnicity are dire” said Heather Melville, Director at RBS and Chair of CMI Women.
A refusal in the UK to put up with a dominantly white male status quo in senior roles in business and in positions of power and authority elsewhere is becoming a political stance taking its power from the grass roots, similar to the #MeToo movement.
In doing so, it could be a game changer – because when this debate about gender progression began in 2011 around non-executive directors in boardrooms, the only truths being spoken at such events on the need for diversity were spoken by women to women in the privacy of the Ladies’ Room. I know, because that is why I launched Board Talk at the time. Early posts are still accessible on the old website if you want confirmation.
Sensing that the time has come, now ambitious women including politicians or would-be ones, are falling over themselves to speak truth to anyone who will listen. It’s all grist to the mill in any hope of change.
At the FRC’s event, Victoria Atkins, the Minister for Women used strong words, telling the audience that there were too many FTSE companies lagging behind on diversity and inclusion. “Be transparent about what you are doing – and if you are not doing it, why not?” she demanded. The Minister also told investors to “use your power” to pressure for change.
After a decade of words and in distracting political times, it will be interesting to see if there is any action, not more words.
A fundamental interest in ethics lies behind my interest in corporate governance, so I covered a recent report from the Institute of Business Ethics in my blog. There are interesting ethical concerns in the announcement from Formula One of a sponsorship and data rights deal with sports marketing company International Sports Group (ISG). Formula One, a private company, was bought by Liberty Media, controlled by US billionaire John Malone, in 2016.
This sponsorship goes against the culture set by the previous British owner, business magnate Bernie Ecclestone, who ran F1 for almost 40 years before the takeover and refused to accept endorsements from betting groups as the image of betting was not one he wanted associated with the sport.
The deal raises the issue of the influence of gambling on sports groups and it will be interesting to see if there is any impact on brand and reputation for Formula One as a result, or just more cash in the till.
The reverberations continue as we head to the end of the year and the deliberations of the Kingman Review, previously covered on Governance Watch, even while the audit regulator, the FRC, distracts us with diversity and inclusion.
The Financial Times reported earlier this week that senior UK politicians have held private meetings with the largest challenger audit firms outside the Big Four in an attempt to find ways to solve the lack of competition in the market.
“Politicians are concerned that the Big Four firms— EY, KPMG, Deloitte and PwC — have become too powerful, leading to a deterioration in audit quality” said the FT report.
These are interesting times in the politicisation of corporate governance in the UK, as audit joins diversity and inclusion as hot topics on which politicians can hang their hats.
Data and Ethics
The critical link between data and ethics was made clear last week when Bloomberg, along with other media outlets ran a story quoting a Wall Street Journal report saying that Amazon was investigating employees linked to leaking data to merchants selling on the site in return for bribes.
“Employees are allegedly selling information on sales and searches to the independent merchants that operate on the site and providing a way to delete negative reviews, the Wall Street Journal reported Sunday. These practices may help sellers’ products appear higher in search results, bettering their chances of attracting customers.” it said, adding that WSJ cited brokers who act as intermediaries between employees and merchants, individuals who bought the services, and people familiar with the investigations.
“The trillion-dollar firm reportedly initiated an internal probe in May after being alerted to instances of this taking place in China, where it is said to be most prevalent” said Bloomberg.
Technological transformation is bringing ethics into a new dimension and once again, placing a spotlight on culture.