Page 30 - DIY Investor Magazine Issue 24

an enormous missed opportunity if companies did not use this crisis to reset their relationship with wider societyBoards have to explain how they have taken employees, suppliers, customers, the environment, the communities in which they operate and society in general into account in the decisions they have made. If ever there has been a catalyst to kick-start this re- thinking, it is the Covid-19 crisis.
We have seen numerous examples of companies working much harder to support their customers and employees through this crisis, alongside their suppliers and communities. Management teams have offered pay cuts and abandoned their bonuses.
But companies are aware that if they participate in Government schemes to help them, through business rate holidays or contributing to furloughed workers pay, the Government will feel a right to influence future decisions – on dividends or executive pay, most
obviously – as a quid pro quo for support now.
Some companies shun Government help for this reason, but this misses the bigger picture.
It would be an enormous missed opportunity if companies did not use this crisis to reset their relationship with wider society. Public mistrust of business is sky high. Embracing the spirit of the new Code’s emphasis on treating all stakeholders fairly is the only way in which confidence in corporate behaviour and integrity can be rebuilt.
Lower leverage, lower returns on equity, lower dividends. Lower executive remuneration.
But a more stable economy, a less crisis-prone equity market and a more equitable society, working better together for our mutual benefit.
Bring it on.
VISIT MERIAN GLOBAL INVESTORS
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First appeared in Financial News on 13 April 2020
DIY Investor Magazine | Apr 2020 30