In the face of increasing fragmentation and individualism people seem to crave a holistic ethical approach to life
In the face of increasing fragmentation and individualism, people seem to crave a holistic, ethical approach to life. Why make the effort to fix an old granny’s boiler late on Christmas Eve when your boss seems interested only in lining his own pockets?All these factors are part of a broader change in society. Employees, facing the sack and, in some cases, pay cuts have, not surprisingly, been giving less than their best after Mr Brown’s generous award. The example for the rest of the company must come from the top. Any suspicion about senior management, any rumour that they have their hands in the till, will destroy the fabric of the company.
Thus, British Gas shareholders became worried about the Cedric Brown pay rises when they realised that complaints to the Gas Consumers’ Council had risen sharply. This is because companies are typically devolving decision-making down to the lowest possible level in an effort to hold down costs. The collapse of Baring’s bank was a good example of the heavy price paid when those with delegated powers could not be trusted to behave properly.If companies cannot offer job security, the only way that they can weld together a structure is by being clear about their values and maintaining a high standard of corporate ethics. Downsizing and delayering have severely undermined the staff loyalty that acted like a glue keeping organisations together Yet companies need their staff to be honest as never before. It is no longer rare for an AGM to dissolve into acrimony and bitter exchanges.There are good commercial reasons why shareholders should become concerned when their executives fail to practise high ethical standards. But instead of telling investors to get out of certain distasteful companies, it encourages them to buy shares and change the company’s policies. This new type of activism is taking place at a time when shareholders are flexing their muscles across all of British industry.
The motion is sponsored by Pirc, a corporate governance consultancy that advises on ethical investment. Anne Simpson, Pirc’s joint managing director, argues: “We believe that the integrity of the board rests on its ability to lead by example. If you see directors taking long lunches and walking off with corporate umbrellas, we don’t see how they can hold the respect of the employees.”Launched in 1986, Pirc now has clients worth more than pounds 70bn. Next week, at the annual meeting of British Gas, shareholders will debate a motion condemning the huge pay rises awarded to Cedric Brown, the company’s chief executive. A survey of 1,000 heads of households in the United States found that 75 per cent actively blacked certain products.Institutional shareholders also expect more of the people who run the companies that they own.
Now, according to recent research by the Cooperative Wholesale Society, three out of five consumers say they are prepared to boycott firms or stores over their ethical standards. They should also be good.The new morality has been growing for many years among consumers. It dates back to the student boycotts of Barclays because of the bank’s links with apartheid, campaigns against Nestle over baby milk formula and the legal battle for compensation in thalidomide cases. So the executives should not have behaved in the way they did.
The row demonstrated the great cultural gulf that has opened up between most people and those who run industry and the Government. Suddenly, those who sit in the Cabinet and in boardrooms are looking like yesterday’s men and women They do not understand how much Britain has changed. People now want more than the simplistic liberal economics that those who forged the Eighties revolution proclaim. They are not hostile to capitalism, but demand that business should also operate according to certain additional ethical standards They want integrity and high-mindedness Companies must not only be profitable.
Meanwhile, the rest of us looked on angrily, fed up with a bunch of characters who did not seem to know the difference between right and wrong The issue was not whether the tax wheeze was legal What mattered was that it failed to pass the Nineties test It was not fair. Jon Castle is either a hero or a fool. Who else would choose to spend his time a hundred feet below sea-level in the company of tons of oily sludge, radioactive waste and poisonous gas? Mr Castle is no stranger to uncomfortable situations: he was the skipper of the Rainbow Warrior when French secret agents blew her up in New Zealand. But without Greenpeace most of us this week would have neglected the North Sea altogether. It is always easier to forget the distant effects of our ordinary everyday activities. The value of activists such as Mr Castle is that they remind us of uncomfortable truths.Daily life is warmer, safer and easier than ever before in our little patch of the planet. Thanks to Shell we can turn on our radiators and jump into our cars.
