By Dr. Georgina Tsagas, Senior Lecturer in Law (Brunel University) and Prof Charlotte Villiers, Professor of Company Law (University of Bristol Law School).
In our paper we shed light on why ‘Less is More’ in the Non-Financial Reporting landscape and explain how an effective decluttering of the non-financial reporting landscape can take place by focusing on improving and widening the scope of the application of the EU Non-Financial Reporting Directive.
What is the root cause of the problem at hand?
Knowing ‘the price of everything and the value of nothing’ is more than just a nice turn of phrase that Oscar Wilde had Lord Darlington quip in one of his plays. Projecting into the future, the phrase has spoken volumes on how modern society has drifted away from cultural values and has also highlighted society’s collective failure to place those values on a par with financial ones. Yet in the area of corporations’ non-financial reporting the problem remains that, although in the year 2020 we have reached a common ground on the fact that sustainability is a value worth preserving, there is no rate, no metric, no price nor cost attached to it, which arguably creates chaos for private and public actors alike. Not only do identified stakeholders face the negative consequences, but in both the short term and long term all actors involved and affected corporations, as well as society as a whole, will face the adverse effects of corporations’ unsustainable practices. The fact that sustainability cannot be accounted for in a consistent way is the essence of the problem. Assuming that the chaotic framework for non-financial reporting is part of the problem, we argue that fixing that framework must be part of the solution. (more…)
The current COVID19 crisis has shone a light on the world of work by interrupting the supply and demand necessary for global capitalism to function. In the UK context, it has drawn attention to the inadequacies of our current employment rights framework; the ways in which certain types of work is insecure and de-valued; the racialised, gendered and classed boundaries of some ‘front-line’ jobs; the vast power disparities between employers and employees; and called into question the necessity of office work, or indeed a 5 day working week.
Perhaps then this period of reflection might open up new perspectives and ideas amongst the public which could radically transform the future world of work, pushing forwards positive change which forefronts worker protection, adequate remuneration, recognition, work-life balance and interests outside of traditional ‘work’ under industrial capitalism. Below, I outline some of the areas in which these changes should take place. (more…)
The world is now in almost complete lockdown as this Covid-19 public health crisis has reached its ‘boom’ stage for many countries. People are frightened for the health of themselves and their loved ones and the financial security of huge numbers of workers is at risk. In the UK, the front-line workers with the task of treating the sick and caring for them are the care professionals, clinicians and nurses in the NHS. One of the key words that guides the NHS and is embedded within its constitution is ‘compassion’. Principle 3 states that: ‘Respect, dignity, compassion and care should be at the core of how patients and staff are treated not only because that is the right thing to do but because patient safety, experience and outcomes are all improved when staff are valued, empowered and supported.’ In its Values section, the constitution adds: ‘compassion is central to the care we provide and respond with humanity and kindness to each person’s pain, distress, anxiety or need. We search for the things we can do, however small, to give comfort and relieve suffering. We find time for patients, their families and carers, as well as those we work alongside. We do not wait to be asked, because we care.’
It was notable that in recent announcements from our new Chancellor, Rishi Sunak, and Scotland’s First Minister, Nicola Sturgeon, both expressed the need for compassion. Rishi Sunak said: ‘Now more than at any time in our history we will be judged by our capacity for compassion. Our ability to come through this won’t just be down to what government or businesses do but the individual acts of kindness that we show each other.’ Nicola Sturgeon also said ‘This crisis is reminding us just how fragile our world is. But it is also reminding us what really matters – health, love, solidarity. With compassion and kindness – and with the dedication and expertise of our NHS – we can and we will get through this.’ These speeches indicate that our political leaders recognise that compassion is a necessary response to the crisis that we must confront, collectively, as human beings. (more…)
The UK currently faces huge economic and political challenges. The Brexit negotiations are clearly of central importance and the outcome will strongly influence our country’s future as a trading nation. Our economic prospects will also be dependent on the strength of our corporate governance system. During the past couple of years, a number of corporate scandals and failures such as the demise of BHS with its huge pension losses and the worker exploitation at Sports Direct as well as continued publicity of ‘fat cat’ executive pay have threatened the reputation of the UKs corporate governance framework. In light of these negative reports a corporate governance inquiry was launched by the House of Commons Committee of the Department for Business, Energy and Industrial Strategy and the Government published a Green Paper on Corporate Governance Reform in November 2016. Despite a busy schedule with Brexit and a slimmed down Queen’s Speech, the Government continues to pursue its plans for corporate governance reform with its publication of a Government Response to the Green Paper in August 2017.
When Theresa May made her speech launching her campaign to become Prime Minister in July 2016 she announced her intention to ‘have not just consumers represented on company boards, but employees as well.’ She repeated the promise as Prime Minister at the Conservative Party Conference in the same year. In that same campaign speech in July Theresa May also noted that during the previous eighteen years executive pay had more than trebled and there was ‘an irrational, unhealthy and growing gap between what these companies pay their workers and what they pay their bosses’. She said that she wanted ‘to make shareholder votes on corporate pay not just advisory but binding’ and ‘to see more transparency, including the full disclosure of bonus targets and the publication of “pay multiple” data: that is, the ratio between the CEO’s pay and the average company worker’s pay’ and ‘to simplify the way bonuses are paid so that the bosses’ incentives are better aligned with the long-term interests of the company and its shareholders.’
Our corporate landscape has relevance for our post-Brexit future. Yet deep public distrust exists not just with regard to our politicians but also with regard to business. Recent debacles involving the now defunct British Home Stores and Sports Direct are just the tip of the iceberg in what is widely seen as a broken economic and political system that has given precedence to the leading market actors.
Corporate governance is the key means by which global wealth is distributed but that wealth is not distributed fairly. Two stakeholder constituents are prioritised: boardroom directors who frequently enjoy eye-watering pay and perks, and shareholders, at least in theory, through the profit maximisation imperative. Both groups have focused on making a quick buck rather than the long term interests of their companies. Workers, at the bottom of the corporate hierarchies, have little chance of improving their means of living and face greater levels of insecurity in their working and home lives. Workers further down the supply chain risk their lives trying to scratch a living in countries only too glad to gain trade from the powerful multinationals. Consumers lose out as product quality and services are whittled down and the environment, as a natural resource constituency, barely gets a look in. (more…)