Governance in A Pandemic
Less than five hours after the UK’s Chancellor of the Exchequer, Rishi Sunak, delivered what was being called an emergency coronavirus Budget yesterday, the World Health Organisation (WHO) declared coronavirus a pandemic. A global pandemic is declared when a new disease for which people do not have immunity spreads around the world. The UK government is convening a second meeting of Cobra, its emergency committee today, and it is expected to announce that it is stepping up its response to the coronavirus while other countries also take action.
The WHO was quick to jump onto social media to shift any reaction from fear to collaboration and a proactive response. Any business that likes to wear the now fashionable hat of responsible capitalism should be paying attention to the other words beginning with the letter P that its tweet points to, and in particular 'People’, formerly known in corporate circles as Human Capital.
In his full briefing on #COVID19 Dr Tedros Adhanom Ghebreyesus, the Director-General of the WHO, said: "This is not just a public health crisis, it is a crisis that will touch every sector – so every sector and every individual must be involved in the fight."
His remark will resonate with anyone who believes that good corporate governance is an evolutionary process which does not occur in isolation. A changing socio-economic landscape and growing awareness of the need for action on climate risk are contributing to a perceived need to focus more broadly on the stakeholders in a business (and not just its shareholders).
When concerns about public health lurk in the air in any business, it starts to become a human rights issue. We are coming around to thinking that it is both duty and self-interest for employers to look after their employees and their health – now extending to mental health - and well-being. Yet this virus has until now been treated thus far in the UK across many public and private sectors as somehow outside that ‘well-being’ preserve and not, fundamentally, an Environmental, Social and Governance (ESG) issue.
There are many large businesses facing major disruption to their production line and their supply chain as a result of the coronavirus and its rapid escalation. But if they don’t look after their people well by limiting their exposure to health risks, they could also face destruction in levels of trust, which we should know by now is hard to quantify in how it translates into engagement, productivity, and cost.
The concept of flexible and remote working has been resisted by many large businesses, but also by employees reluctant to be out of sight and by implication, perhaps out of mind with potential negative bearing on their careers. But remote working also offers the advantage of embracing new technology and innovation across an organisation, opening the door to new ways of work.
It might also provide another way into diversity and inclusion, particularly when it comes to hiring women who may wish to be flexible around childcare and bringing in older people wishing to work part-time. If every cloud has a silver lining, the pandemic may yet teach us a thing or two about best practice in challenging times.
Weinstein, Women and #MeToo
Another issue that has moved steadily into the human rights arena over the years is the treatment of women. Yesterday, as the BBC reported, disgraced film producer Harvey Weinstein was sentenced to 23 years in prison for rape and sexual assault. As mentioned before on Governance Watch, it is striking in what a short period of time the public outcry around #MeToo on social media - a medium that has often been derided in boardrooms filled with people over a certain age - has heightened awareness, and is contributing to social change.
Businesses that are tuned in know that, but they also know about resistance to power sharing by gender. We still see stories like this one. It might be a very good time for many a business to reconsider the issue of women and gender equality as one of human rights.
Premium Listings (Again)
There it is, in the news again: NMC Health. It was also mentioned in my last column, when it was still a FTSE100 company. That is no longer the case.
The Financial Times could not resist this post on FT Alphaville ‘presented without comment.’ Since then, the group has said that its advisers had “discovered evidence leading to suspected fraudulent behaviour in relation to some elements of NMC’s previous financial activities”. It added that NMC was “fully committed to investigating these activities and has notified the relevant authorities in the UK and UAE to determine what action they also consider to be appropriate”.
The revelations have left many commentators speechless. There are those who will say that there are always a few bad apples in any cart’. But this issue of corporate governance, premium listings and accountability does not look like it’s going far away from being headline material.
G4S
On the day that the Chancellor ensured his Budget went some way to mitigating the effects of the coronavirus outbreak, a FTSE250 business that has repeatedly claimed a place in the headlines around a variety of corporate governance issues quietly claimed a place in the news again. G4S, the outsourcing firm which is one of the world’s biggest private security firms, reported a £91m loss for 2019, compared with a profit of £81m the previous year, after taking a hit of £291m on its UK cash-handling unit.
G4S has features around human rights. Its shares were blacklisted by Norway’s sovereign wealth fund last November, which cited “unacceptable” risks around the “violation” of rights of its 30,000 migrant construction workers in Qatar and the United Arab Emirates.
Ironically, in media coverage of the story on its profits the G4S CEO, Ashley Almanza, is reported to have said: “While there is clearly near-term uncertainty about the impact of the coronavirus on the global economy, the effect on the group has, to date, been immaterial.”
On the horizon
Good corporate governance remains critical for the smooth running of the UK’s businesses long after the coronavirus comes under control. While the UK’s businesses digest the implications of the Government’s £12bn emergency stimulus, they remain in the dark on many aspects of the immediate future.
These include the trade agreements and barriers yet to be determined after leaving the European Union as well as the measures required to achieve net zero emissions targets in a year when the UK is hosting the 26th UN Climate Change conference, COP 26.
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