IoD Directors' Briefing Your update on directorship and governance
Welcome to your Directors’ Briefing. Over the last fortnight, as Americans voted for a new President and positive news around a successful coronavirus vaccine emerged, policymakers in the UK turned to focus on the challenge of climate change. The Chancellor announced plans for mandatory corporate climate disclosures while the International Environment Minister announced proposed legislation that would seek to protect rainforests and clean up supply chains.
In this edition’s Governance Perspective, the University of Exeter Business School’s Will Harvey reflects of the importance of corporate reputation. Will discusses the ways in which a “survival mode mentality” caused by the pandemic can risk the long-term reputation of firms.
Finally, we’re delighted to be hosting an event in the North West of national significance bringing together Andy Burnham and Steve Rotheram. On Friday 13 November, the Metro Mayors of Liverpool and Manchester will discuss the regions approach to the pandemic and their negotiations with central government.
- Governance Perspective
- Companies
- Charities and Public Sector
- Policy and Regulation
- Audit
- ESG Issues
- Thought leadership, opinion and research
- IoD in the News and Advocacy
- Upcoming Events
- Videos and Podcasts Research Responding to the Coronavirus Crisis
- Resources for Directors
Governance Perspective
Governance Perspective: Now is the time to build your reputation – William S. Harvey, University of Exeter Business School
Companies
6 November | Ant Group IPO halted by Beijing
The IPO of the Chinese fintech firm was postponed by the Shanghai and Hong Kong stock exchanges just two days before it was due to start trading. The $37bn listing was pulled after the firm’s founder Jack Ma was summoned for a regulatory interview by Chinese authorities. There has been speculation that Ma has fallen foul of the Communist Party. [New York Times]
5 November | WHSmith drops plan for £5m CEO share award after investor revolt
The retailer had planned to award CEO Carl Cowling long-term incentive shares worth roughly nine times his £525,000 basic salary in a special one-off award according to Sky News. The plans were dropped after investors expressed dismay given that the retailer has furloughed thousands of staff, made 1,500 employees redundant and raised £165m from shareholders to strengthen its balance sheet during the coronavirus pandemic. [Sky News]
3 November | Twitter’s Jack Dorsey secures board backing
Jack Dorsey has been reaffirmed as the chief executive of Twitter after a board committee including representatives from Elliott Management, the activist hedge fund, examined the tech firms group’s leadership structure. The hedge fund took a 4 per cent stake in the company in February and had called for management changes. Elliot had expressed concerns about Dorsey’s role at Square, the payments firm he co-founded. [Financial Times]
Charities and Public Sector
10 November | Kids Company Batmanghelidjh appears before High Court
The charity’s founder gave evidence at the High Court as part of the Official Receiver’s case against her and a group of former Kids Company trustees. The Receiver is seeking to secure disqualification from senior positions for periods of up to six years against Batmanghelidjh and seven other trustees of the charity. [Third Sector]
10 November | FA chair resigns after Select Committee appearance
Greg Clarke resigned from his role at the Football Association after a series of controversial remarks in an appearance before the Commons’ Culture, Media and Sport Committee. During an evidence session before the Committee, Clarke made references to “coloured” players and suggested that “different career interests” led south Asian people to choose careers in IT over sport. Following an emergency meeting of the FA board, it was announced that Clarke would immediately leave the position he has held since 2016. The resignation comes just weeks after the FA launched a review into diversity. [Guardian]
4 November | Charity Commission launches short guides
To coincide with Trustee’s Week, the regulator has released ‘five-minute’ guides covering topics such as financial oversight and good decision-making. The guides help to meet one of the Commission’s key objectives which centres on improving the usability of guidance. [Civil Society]
4 November | Charities call for politically neutral Charity Commission Chair
Charity leaders wrote to the Commons’ Culture, Media and Sport Committee urging the appointment of a political neutral successor to Baroness Stowell. Before being appointed to chair the regulator by the Culture Secretary, Stowell was a Conservative peer. [Civil Society]
Policy and Regulation
11 November | New Environment Bill to curb overseas deforestation
The Environment Department has proposed legislation that would require firms to undertake due diligence on their supply chain to ensure that they were not contributing to deforestation. [BBC]
10 November | UK to strengthen takeover regime to protect national security
Number 10 unveiled legislation that will require prospective foreign buyers of UK companies, shareholdings or intellectual property in 17 sensitive industries to notify the Government. Civil Servants expect around 1000 transactions to be notified under the new regime. It is has been widely suggested that the move has been prompted by concerns about China’s influence. [Financial Times]
9 November | Government push ahead with mandatory climate risk reporting by 2025
The Chancellor has announced that large UK companies and financial institutions will be required to disclose in line with guidance developed by the Taskforce on Climate Related Disclosures by 2025. The Government will consult upon the scope of the rules in the coming months. [Guardian]
7 November | Treasury announce review into UK listing rules
Former EU Commissioner, Lord Hill has been appointed to undertake a review of the listings regime to try to encourage technology giants and other high-growth companies to float in London rather than New York. [Daily Telegraph]
Audit
7 November | EY faces lawsuit over NMC Health audit
The administrator of the former FTSE 100 private healthcare firm is pursuing a lawsuit against the auditor. The claim could amount to around $4.5 billion, the level of the undisclosed debts at NMC discovered by investigators. [The Times]
6 November | Deloitte fined over Johnston Press audit
The FRC fined the Big Four Auditor £362,500 over its audit of the former publisher of The Scotsman. The audit regulator said that the firm had breached its duties when it failed to properly audit the cash held by the publisher’s pension scheme and the value of its assets. [Financial Times]
30 October | PwC Chair warns auditors task is harder than ever due to COVID 19
Kevin Ellis, who has run PwC in the UK and the Middle East since 2016, told the Financial Times that December would pose a significant challenge with many corporate year ends coinciding with re-imposition of lockdown measures in several countries. [Financial Times]
ESG Issues
10 November | Oxford University opts to divest from fossil fuels
The University’s endowment fund is implementing its plan to divest from fossil fuels by using a specially developed BlackRock index fund. The University first committed to divest its endowment form fossil fuels in April this year. [Funds Europe]
5 November | MPs raise concerns over Boohoo and Nike supply chains
Representatives from both firms appeared before the Commons’ Business Committee as part of an inquiry examining the extent to which the products of forced labour and exploitations of Uyghurs in Xinjiang are reaching the supply chains of UK businesses. [City AM]
Diversity and Inclusion
3 November | McKenzie-Delis Packer Review announced
The review examines 10 distinct aspects of diversity and inclusion — ethnicity, gender, age, nationality, mental health, sexual orientation, socioeconomic status, disability, religion, and parenthood. The data for the review was collected from 79 UK employers including FTSE and private companies and public sector organisations and will be released on 20 November. [Yahoo Finance]
Thought leadership, opinion and research
9 November | The Return on Purpose: Before and During a Crisis
In this paper, the authors examine the impact of purpose on performance. The authors conducted new analysis on how corporate purpose relates to company financial performance, market valuation and shareholder value creation. The analysis highlights how effective investment in corporate purpose can deliver value to both stakeholders and shareholders. [Harvard Law School Forum on Corporate Governance]
2 November | Trump Legacy: Boom in Corporate Political Disclosure
In this paper, the authors examine how the Trump presidency impacted corporate political disclosure and accountability. The authors report that the Trump years spurred the growth of corporate political disclosure and more robust oversight by company boards and review by committees of how company political money is spent or whether the company should engage in political spending. [Harvard Law School Forum on Corporate Governance]
IoD in the news and advocacy
Responding to the UK becoming for the first country in the G20 to seek to introduce mandatory climate reporting, Head of Policy and Governance Roger Barker told The Guardian the “What gets measured gets changed. The problem is there’s a hundred and one different ways of measuring climate impact out there right now. It’s a confusing landscape for companies and investors alike, so bringing in common standards is absolutely the right thing to do”.
Commenting on plans that would see the UK government given additional powers to undo transactions on national security grounds Roger told Bloomberg “there’s a real risk of a chilling effect on wider investment, particularly if interventions could be made retroactively.”
Upcoming Events
25 November | FutureBoards Cross Border Dialogue: Women in Finance
The Norwegian Embassy is hosting an event in collaboration with the IoD examining differences experienced by women in finance in the UK and Norway. The panel will exchange thoughts on concrete actions taken in the two countries that have proven effective ask what the role of investors and boards is. [Register here]
Videos and Podcasts
5 November | Getting ‘Back to Business’: Restructure debt, restore businesses, save jobs (Video)
Norton Rose Fulbright Partner Alison Goldthorp discusses recent changes to insolvency law and when directors should seek professional advice if they find themselves in difficulty, in a webinar hosted in collaboration with the IoD. [YouTube]
Responding to the Coronavirus Crisis
The IoD’s Coronavirus Resource Hub is being updated frequently.
New resources include:
- Directors and Corporate Governance Resources
- Coronavirus Business Support – UK Government website
- Coronavirus (COVID-19): UK government response
- Guidance for Employees, Employers and Businesses
- How to Access Government Financial Support
Resources for Directors
UK Corporate Governance Code (Financial Reporting Council)
The leading source of governance principles and recommendations for companies with a premium listing on the London Stock Exchange.
Wates Principles (Financial Reporting Council)
Key governance principles for large private companies.
Corporate governance: Board responsibilities at major banks (Bank of England)
Supervisory guidance from the Prudential Regulation Authority for the boards of regulated firms.
OECD Guidelines on Corporate Governance of state-Owned Enterprises (OECD)
The OECD Guidelines provide an internationally agreed benchmark to help governments assess and improve the way Governments exercise their ownership functions in state-owned enterprises.
The European Confederation of Directors Associations (ecoDa)
The umbrella body for directors associations in Europe.
The Global Network of Director Institutes (GNDI)
The umbrella body for directors associations around the world.
IoD Corporate Governance Team
- Dr. Roger Barker – Director of Policy and Governance ([email protected])
- Carum Basra – Senior Policy Adviser (Corporate Governance) and Editor of Directors’ Briefing([email protected])
