To improve public procurement – use the Trust Test
Public procurement is too often solely made on price, and not enough on true value and to account for areas...
Commenting on The Telegraph article from 30th December: RBS investors mount campaign for shareholder committee
It is understandable that those representing small shareholders would seek to be better represented in influencing the direction of RBS. It is also encouraging to see that there is wider debate about the Swedish experience of shareholder nomination committees as a result of Tomorrow’s Company’s earlier advocacy of this reform.
The original idea proposed by Tomorrow s Company in 2010 was for a Shareholder Committee which would involve shareholders large (and small) in the most important single governance decision – who represents them on boards. Later variants, like this one and that by Chris Philp MP, have widened the scope to involving investors in discussions about remuneration.
The risk of this more complicated approach is that it compromises the clear leadership responsibility of the board. Shareholders delegate full responsibility to directors when they elect them at the AGM. The starting point for better stewardship by shareholders and directors is to engage the first in the nomination as well as the election of the second, as happens in Sweden. This will then be a catalyst for investment institutions and shareholder groups to work more coherently with each other on the stewardship agenda.
Like ShareSoc and UKSA Tomorrow’s Company wants to get capitalism working better in the interests of long term wealth creation. The full agenda on which we are working on with both institutional investors and business leaders would cover not only the director nomination process, but also a whole range of measures to encourage better stewardship throughout the investment chain that links asset owners, asset managers and boards. Let’s make sure that the corporate governance reforms that flow from the Prime Minister’s welcome provocation are so well thought through that they don’t create new complexity or distraction.
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