February 01 1997
by Mike TuffreyThe closing date for submissions to Sir Ronald Hampel's Committee on Corporate Governance has prompted the usual protagonists to parade their party lines. Interesting then, that the new Commission on Public Policy and British Business (not in anyone's pocket, pace Michael Heseltine) has come out in favour of companies having a legal duty to report on a broader range of non-financial indicators. As Community Affairs Briefing has previously argued, companies have a choice: either willingly be more open and accept a measure of accountability to all those with a significant interest in the business - or face unwieldy and inappropriate regulation.
The Greenbury Committee was a classic example of the motto "legislate in haste, repent at leisure". Reacting to the 'fat cats' scandal, it tried to control the symptom, not cure the underlying disease. The real need is to rebuild public and employee confidence, without which the creation of long term sustainable shareholder value will not be held back.
Arguing that corporate governance is only about shareholders, as the CBI appears to, is to miss the point. Ownership does give rights of accountability, but if companies are to continue to thrive, other interests have to be taken into account too. Hampel should scrap the narrow and detailed restrictions in favour of a duty to report on a much broader range of issues, of keen interest to all those on whom business success depends.
Corporate Citizenship Briefing, issue no: 32 - February, 1997