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It’s what’s inside companies that counts

27 July 2018 by Henry Ker

It’s what’s inside companies that counts

Attitudes to ESG matters reflect a company's personality and culture

We know any relationship built on purely superficial attraction is doomed to fail – why should the relationship between companies and their owners be any different?

‘What [companies] should be trying to do is to win, not just to look good. We can tell the difference,’ says Sacha Sadan, director of corporate governance at Legal & General Investment Management in our cover interview this month.

Sadan explains how investors are looking for ‘all-important humility’ in engagement with firms. He accepts ‘Companies will not always get things right … But the question is whether they are trying, whether they are open to new ideas and whether they can make challenging decisions.’

This concept is picked up by Black Sun’s Anne Kirkeby, as she explores how honest communication plays an integral part in raising trust in business. Drawing lessons from her analysis of FTSE reporting, Kirkeby says, ‘what is needed is less perfection and more authenticity, while acknowledging that the imperfections make a corporate narrative honest and relatable and through that, believable.’

“ESG matters are now being treated with deserved gravity”

A key part of this is the rising attention on environmental, social and governance (ESG) issues. Once considered niche or purely the purview of social crusaders, ESG is now firmly on the agenda. As Sadan explains, a combination of factors and changing attitudes ‘have collided to bring ESG concerns into the mainstream’ as an understanding develops that these are, most definitely, business concerns. 

It is a theme that permeates this issue, with Daniel Godfrey, independent director of Moneybox, explaining how ‘successful, sustainable wealth creation has the potential to change the world for the better’, while Sir Kenneth Olisa argues that business’s reluctance towards social mobility flies in the face of logic.

Similarly, David Gracie of KPMG and Purple’s Mike Adams explore how, with disability affecting 15% of the world’s population, ‘forward-thinking leaders and organisations are already building a more inclusive and prosperous future in which the potential of disabled people can be fully realised.’

There will always be those who think the point of business is purely financial. But I think that is a diminishing demographic – ESG matters are now being treated with deserved gravity. And this means ultimately it is a company’s personality and culture, as much as the numbers used to dress the annual report, which are important.

Henry Ker is editor of Governance and Compliance

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