Corporate
UK has had a salutary six months. Railtrack and Corus may have found themselves
in the eye of the hurricane of public scrutiny but Vauxhall and the oil
companies could each tell similar stories.
Chief
executives and directors may insist that they have the right to take their
decisions privately and that the only audience that requires consistent and
transparent fair-dealing is their shareholders and creditors – but they are
hauled up by the brute realities of modern democracy together with the speed
and depth with which information is communicated.
The
public consequences of private decisions cannot be wished away; we are being
sharply reminded that the public corporation is just that – public.
But
the belief in corporate privacy, discretion and secrecy, together with the
dismay that any other standard but loyalty to shareholders might apply to
corporate decision-making, runs very deep. If Sir Philip Beck, the chairman of
Railtrack, feels able to say that the Government has no right to interfere in
Railtrack’s decision-making – notwithstanding
the billions in support for rail investment and the public outcry
post-Hatfield – then that stands as a proxy for the way other boards feel in
companies less exposed to the demands of public accountability.
Sir
Brian Moffat, chief executive of Corus, was certainly within his rights not to
tell even the Prime Minister the details of Corus’ redundancy programme
beforehand on the grounds the information was price-sensitive. After all, there
are no legal obligations to consult and inform government. But his action
speaks volumes about UK PLC’s attitude to the public consequences of private
decisions. They are simply not a public corporation’s first concern.
If
we want something different, then we need leadership from government and the
business community alike and adherence to genuine universal rules.
The
Government should put corporate Britain on notice. It should declare that it
expects corporate social responsibility, community investment, ethical practice
and sustainable growth to be embodied universally by the business community
within five years. If not, it will legislate its intentions in a new Companies
Act.
For
its part, corporate UK should respond by meeting the challenge rather than
disputing whether it needs to be made. It should accept that it is proper that
the public conversation moves in this direction, and that in the public will
demand that public companies are public.
In
short we need to put the P back in PLC
– and the business community should lead in this process rather being forced
into its acceptance by legislation. We will see.
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Putting
back the P in PLC will be published today as part of the Industrial Society’s
leadership week
By
Will Hutton, chief executive of the Industrial Society
