26 July 2017 by Henry Ker
Companies who wish to remain in operation must restore public trust in them, says Henry Ker.
Closing this year’s ICSA Annual Conference, Lady Judge explained in her keynote: ‘Governance is about how to run a company, but also about how you run a society.’
Her thoughts chimed with this month’s Governance and Compliance cover interview, Ken Olisa. Mr Olisa discussed a wide range of topics with me, but his thoughts on his time with the Independent Parliamentary Standards Authority (established to look into the Parliamentary expenses scandal) resonated the most.
As he explains: ‘It was not the amount of money that was the issue; it was the affront to public trust.’
This is a common theme through many of the recent governance scandals; it is not necessarily the money involved, but because ‘the trust in people in positions of responsibility’ has been betrayed.
‘Public trust’ may be a phrase that gets thrown around a lot, but that does not mean it is a fatuous notion. Bronwyn Kunhardt, Co-founder and Managing Director of Polecat, writes of a ‘powerful threat emerging and making its presence felt – the court of public opinion’.
Thanks to technology, the public has a louder voice than ever before – and people are not afraid to shout. Not only are there direct financial dangers of lost sales but, as Ms Kunhardt explains, ‘any increase in public attention and anger can have a knock-on effect on the relationship between companies and regulators’.
Leo Martin of GoodCorporation writes that there is ‘an illusion that no rules apply’ among some companies, and they are above society. The reality could not be farther from the truth; as Mr Olisa says of politicians: ‘They only operate with a licence – one which comes from public trust’.
The same is true of companies. The licence to operate is granted by society and we have seen that it is not afraid to revoke it. ‘No one is free of societal responsibility,’ Mr Olisa says. ‘And when it all goes wrong and trust is damaged, the consequences can be dramatic.’