Margot James MP: how do you get your voice heard in company boardrooms?

business meeting

Consumer Minister, Margot James MP, joins us to explain more about the Government’s review of corporate governance, and ask you: how do you get your voice heard in company boardrooms?

Britain has a strong framework of consumer protection and millions of companies take the integrity of the products and services they supply seriously.

But some companies don’t, and even when they have the will to make good when things go wrong, there are still too many instances of inadequate redress.

So how do you – the consumer – make sure companies hear your concerns at boardroom level?

Corporate governance reform

This Government is committed to making Britain one of the best places in the world to work, invest and do business. And a big part of that is making sure companies operate in a responsible way, taking into account the interests of its shareholders, employees and you – the consumer.

At the end of last year, we launched a consultation on how to make sure all businesses are run as responsibly as the best of British companies already are, in the Corporate Governance Reform green paper.

We’ve already received responses from businesses, but it’s just as important to hear views from the public too – and that’s where you come in.

Responsible business

This Government is determined to make sure all companies operate as responsibly as the majority do already, and play their part in building an economy that works for everyone.

Having set up and run my own business, I know it makes sense to listen and act on customers’ opinions.

At the moment, all company directors are required by law to run their business responsibly. This includes taking into account the interests of their employees and the company’s relationships with suppliers and customers.

Now, I imagine you don’t want to spend your spare time leafing through companies’ accounts to check if they’re being run responsibly, which is why it’s great to see Which? working with businesses to help them better understand how they can and should be engaging with consumers.

But we want to go one step further and make sure the UK isn’t only the best place to do business, but where consumer and workers’ views are heard in the boardroom and acted upon.

Share your views

And with only a few days to go until the consultation closes, we want to make sure we hear your opinions. Your views could shape the future operation of businesses.

I’m delighted to be working with Which? to promote the Corporate Governance Reform green paper and ensure we capture your views. So thank you in advance for your contributions and comments on this conversation, which will be fed into the consultation before it closes on 17 February 2017.

This is a guest contribution by Margot James MP, Minister for Small Business, Consumers and Corporate Responsibility. All views expressed here are Margot’s own and not necessarily those shared by Which?.

Which? will be compiling your comments to be fed into the consultation before it closes on 17 Feb. So, tell us, how would you like your voice heard in company boardrooms?

Comments
Member

Perhaps businesses ought to be required to establish an ethics ‘filter’ committee, through which all proposals would have to be taken. The committee would have to have carefully conceived criteria and possibly legislation to back that up.

Member

Thanks Ian

Interesting view on having such a committee. Some businesses do have customer challenge groups or groups that aim to represent the consumer but it interesting to hear that you feel maybe legislation would be needed.

Do you have any views on who could sit on such groups and how we could ensure they reflect all consumers views?

Its one area I’m really interested in, having had experience of such groups in the water sector.

Member

I would expect those with experience at senior management of organisations such as CAB might be invited. Obviously consumer groups such as Which? would also need to be represented. The committee would have to have a department, responsible for collation and presentation of potential issues to the committee, whose job it would be to bring pertinent matters to their attention.

Member

My initial, and grumpy, reaction to this invitation is this. The consultation document was issued on 29th November 2016. The consultation closes on 17th Feb – in 4 days time. There are 59 pages of information to digest. So how are we supposed to discuss and make considered responses, and how are Which? going to collate them properly, in that time? Why leave it so late?

Off the cuff, shareholders should be presented with senior members’ proposed total pay packages with justification and, as they are the owners of the company, their majority decision should be binding. They should also consider whether bonuses should be based on achieving long-term objectives. This could be applied to public bodies and charities also.

Member

Hi Malcolm – sorry to hear that. I’ll be honest with you we’re looking at supporting BEIS, through this convo, towards the end of this consultation so they get real consumers views of corporate governance. It is a great chance to feed in any initial ideas and thanks for yours.

Do you have a view on how consumers could be engaged by corporates and their Directors to demonstrate that they are delivering under their obligations? As the Minister has said I can’t imagine many of us enjoy reading the annual reports of the companies we deal with on a daily basis – I think i’d prefer to watch paint dry – but should and how can these companies engage with us, as consumers?

Member

Thank Simon. I’d like to see an independent body that not only looks routinely at company performance and reports to the public on misdemeanors, as well as taking action, but actively invites the public, customers and employees to report issues that they consider to be of concern. If you read Private Eye you will find such reports occasionally appearing. One problem will be who acts as judge and jury when our public sector also behaves badly at times?

Annual reports are. of course, sanitised and unless you are a direct shareholder (most will be through nominees) you won’t see them.

The bulk of the reforms seem to focus on boardroom pay. There is, in my view, a mistaken belief that you have to pay for the best (I believe many have a less mercenary outlook) and that indeed this really does attract “the best”. However, individuals and working owners of companies large and small are free to take as much money as possible from their enterprise, partly because their investment and talent has been risked. Employed directors are not in this position and shareholders should decide their remuneration; guidance on acceptable limits may well result in those limits being applied as a norm. I would like to see a substantial proportion of their salary being paid in shares, at current prices, with a requirement that they be held for a certain number of years. The long term health of their company may then determine their objectives, rather than short term gains. (I wish politicians could be paid on the same basis 🙂 )

Member

I have read a good few company annual reports in my time, many from consumer goods producing companies, and I am afraid that generally, in the narrative, there is not much said about ethical matters or social responsibility issues. There is a page or two of the statutory ‘corporate social responsibility’ report but even the tobacco companies manage to paint a rosy picture of themselves! Annual reports are addressed to shareholders, not customers or consumers, and are high on new product developments and profitable activities but short on anything revealing about the company’s general standards of behaviour [unless that is one of their hallmarks as with The Body Shop before it sold out to L’Oréal]. Most high street companies seem to be owned by hedge funds, corporate investment vehicles, offshore trusts, and other remote or invisible backers so they don’t issue public documents for review. I think if we can’t see what companies are doing on the inside I think we must beef up our efforts to call them out from the outside as soon as they act against the public interest. Private Eye does a good job in that respect but lots of other dubious dealings go unreported. Even bad eggs sniffed out through Which? Conversation seem to get away with it for years, partly because consumer protection and trading standards are so weak and under-resourced. Let me mention Curry’s PC World for one and their duplicitous selling of laptops that goes on and on and on without any abatement despite media attention, and that is because the barrow-boy mentality is ingrained in the corporate culture. If for legal reasons we cannot name and shame the bad companies, let’s make a comprehensive list of the good ones and remove them if they put a foot out of line. Instead of the Rich List [P. Green & Co], how about the Which? List?