TASK FORCE CALLS FOR RADICAL, PRACTICAL AND COHERENT ROADMAP TO ENABLE PURPOSEFUL COMPANIES TO FLOURISH FOR THE BENEFIT OF ALL

27th February 2017

The Purposeful Company Steering Group

FOR IMMEDIATE RELEASE

TASK FORCE CALLS FOR RADICAL, PRACTICAL AND COHERENT ROADMAP TO ENABLE PURPOSEFUL COMPANIES TO FLOURISH FOR THE BENEFIT OF ALL

Britain needs to radically overhaul its corporate governance, reporting and investment management industry according to The Purposeful Company Task Force.

Britain must make good its shortfall of purposeful, long-term companies if the economy is to rise to the challenge of lifting investment, innovation and living standards, argues a seminal report from a leading UK Task Force. Following the government’s Green Papers on Corporate Governance and Industrial Strategy, The Purposeful Company Task Force builds on extensive evidence that companies driven by a vision of their role in the world outperform those that do not, and advocates for Britain to make it much easier for them to flourish than at present. In this comprehensive report on practical policy options that connects up Corporate Governance and Industrial Strategy, The Purposeful Company Task Force recommends that the UK’s company law, accounting systems, investment industry, shareholder structure, and executive remuneration be radically overhauled to promote purposeful companies.

In particular:

  • Companies should state precisely their purpose – their role in the world from which profit results – in their articles of association and regularly report on the delivery of that purpose.
  • Directors should be required to report on how they fulfil their legal obligations to ‘have regard’ to all stakeholders.
  • Government should formalise alternative models so that companies can choose a corporate form which best reflects their purpose, strategy and business model.
  • Company reporting should be overhauled to go behind financial assets and more effectively communicate companies’ strategic intent and value to shareholders. Timely and disaggregated national statistics on intangibles should be reported.
  • The asset management industry should be repurposed. Asset managers should state and have certified their purpose, in particular how they promote the long-term interest of the companies they invest in and the savers they invest for. They should also publish metrics on their stewardship activities.
  • Executive pay should be more simplified and aligned to the long-term. All companies should produce a Fair Pay Report, outlining their approach to pay fairness throughout the organisation.
  • Regulatory obstructions to the creation of and engagement by large independent shareholders – blockholders – should be removed. Voting with borrowed stock should be limited.
  • The default pension fund allocation could be set to apportion a given percentage towards purposeful companies, creating a pool of up to £100 billion for such investment.

Bringing together a Task Force which includes major industry and government organisations such as Infosys, EY, Guardian Media Group, Scottish Government and more, The Purposeful Company Steering Group synthesised the most recent evidence and expertise into its Policy Report that sets out 22 robust recommendations within 6 key policy areas: Company Law and Reporting, Accounting for Purpose, Repurposing the Investment Industry, Blockholding, Finance for Purpose and Executive Remuneration.

There is a growing consensus around this agenda across business, finance and Government. The substantial evidence gathered by The Purposeful Company Task Force and Steering Group was cited in the Green Papers on Industrial Strategy and Corporate Governance.

Commenting on the report Iain Wright MP, Chair of Business, Energy and Industrial Strategy Select Committee, said: “The Business, Energy and Industrial Strategy Committee is leading an inquiry into the area of corporate governance, focussing on how modern companies can better serve their shareholders, employees and our wider society. The Big Innovation Centre report on the Purposeful Company is a hugely valuable intervention in this debate, and, as we on the committee consider our recommendations to government this is a timely, welcome and very powerful contribution.”

Paul Polman, Chief Executive Officer of Unilever, said: “This timely report is a welcome contribution to the growing debate about the importance of business purpose and how to deliver it.”

Véronique Laury, Chief Executive Officer of Kingfisher plc, said: “The report advances the purposeful company debate and explores the reality of its impact on stakeholders and society”.

Will Hutton, Chair of Big Innovation Centre Steering Group and Co-Chair of the Purposeful Company Task Force, said: “The evidence is clear, companies with a declared purpose, adhered to by their leaders and understood by their employees, perform far better over time than their less purposeful peers. The practical reality is that our economy is missing a huge opportunity the longer that this issue isn’t addressed. Britain must create innovative, purposed capitalism populated by purposeful companies. Now is the moment to begin the journey.”

Clare Chapman, Non Executive Director, RemCo Chair and Co-Chair of the Purposeful Company Task Force, said: “When we kicked off this Purposeful Company project in 2015 none of us could have predicted just how relevant or timely the recommendations would be. Companies acting with purpose, for the long term, must be at the heart of transforming our economy and living standards. An extraordinary alliance has come together from right across the investment chain to re-think the very fundamentals of what it means to be a modern company and point the way forward for the good of all’”.

A full copy of the Policy Report can be found at www.biginnovationcentre.com

Now that the Policy Report has been published, the focus of the Purposeful Company Task Force will turn to leading and enabling change. The next meeting of the Task Force to kick off this new phase will be on Thursday 27th April 2017. If you have any questions or would like to join us to become part of this powerful alliance please contact us on 0203 713 4036, and ask for Maria Ponce or Alice Piterova.

ENDS

 

FURTHER INFORMATION:

Alice Piterova                                                  Laura Holloway

Big Innovation Centre                                    JBP

a.piterova@biginnovationcentre.com            laura.holloway@jbp.co.uk

020 3713 4036                                                  0203 267 0074

 

NOTES TO EDITORS

Purposeful Company Task Force and Steering Group

The Purposeful Company Task Force and Steering Group bring together experts from business, investors, academia, policy-makers, and business advisory firms. The report itself has been authored by a subcommittee of the Purposeful Company Steering Group following the framework of the Task Force’s core beliefs set out in Section 1 and 2 of the report, to which all our Task Force members subscribe. However, there is a diversity of view and differences of emphasis depending on sector and business model. We nonetheless believe the Policy Report, taken as a whole, represents a radical, practical, and coherent roadmap for creating a better environment for purposeful companies, thinking and acting for the long term, to flourish for the benefit of the UK and all its citizens.

The Task Force members are from Infosys, EDF Energy, EY, Bank of England, Kingfisher, Barclays, Hermes Investment Management, Fidelity International, Guardian Media Group, Scottish Government and Innovate UK. The Steering Group members include Will Hutton, Chair of the BIC Steering Group; Clare Chapman, Non-executive Director and Member of the BIC Governing Board; Birgitte Andersen, CEO and Co-Creator of BIC; Colin Mayer, Peter Moores Professor of Management Studies at Saïd Business School, University of Oxford; Alex Edmans, Professor of Finance at London Business School; Tom Gosling, Partner and Leader of PwC's Reward & Employment Practice and Philippe Schneider, independent consultant.

Big Innovation Centre (BIC), website: www.biginnovationcentre.com; @BigInnovCentre

Launched in September 2011, the Big Innovation Centre is a hub of innovative companies and organisations, thought leaders, universities and 'what works' open innovators. Together BIC enlarges innovative capabilities, acting as a catalyst in co-shaping innovation and business model strategies – testing and piloting ideas - that are both practical and intellectually grounded, with the aim of making business more purposeful and inclusive through the enormous potential of technology, creativity and innovation.  The vision is to help make the UK a Global Open Innovation and Investment Hub by 2025, and to build similar initiatives internationally.

FOR IMMEDIATE RELEASE

TASK FORCE CALLS FOR RADICAL, PRACTICAL AND COHERENT ROADMAP TO ENABLE PURPOSEFUL COMPANIES TO FLOURISH FOR THE BENEFIT OF ALL

Britain needs to radically overhaul its corporate governance, reporting and investment management industry according to The Purposeful Company Task Force.

Britain must make good its shortfall of purposeful, long-term companies if the economy is to rise to the challenge of lifting investment, innovation and living standards, argues a seminal report from a leading UK Task Force. Following the government’s Green Papers on Corporate Governance and Industrial Strategy, The Purposeful Company Task Force builds on extensive evidence that companies driven by a vision of their role in the world outperform those that do not, and advocates for Britain to make it much easier for them to flourish than at present. In this comprehensive report on practical policy options that connects up Corporate Governance and Industrial Strategy, The Purposeful Company Task Force recommends that the UK’s company law, accounting systems, investment industry, shareholder structure, and executive remuneration be radically overhauled to promote purposeful companies.

In particular:

  • Companies should state precisely their purpose – their role in the world from which profit results – in their articles of association and regularly report on the delivery of that purpose.
  • Directors should be required to report on how they fulfil their legal obligations to ‘have regard’ to all stakeholders.
  • Government should formalise alternative models so that companies can choose a corporate form which best reflects their purpose, strategy and business model.
  • Company reporting should be overhauled to go behind financial assets and more effectively communicate companies’ strategic intent and value to shareholders. Timely and disaggregated national statistics on intangibles should be reported.
  • The asset management industry should be repurposed. Asset managers should state and have certified their purpose, in particular how they promote the long-term interest of the companies they invest in and the savers they invest for. They should also publish metrics on their stewardship activities.
  • Executive pay should be more simplified and aligned to the long-term. All companies should produce a Fair Pay Report, outlining their approach to pay fairness throughout the organisation.
  • Regulatory obstructions to the creation of and engagement by large independent shareholders – blockholders – should be removed. Voting with borrowed stock should be limited.
  • The default pension fund allocation could be set to apportion a given percentage towards purposeful companies, creating a pool of up to £100 billion for such investment.

Bringing together a Task Force which includes major industry and government organisations such as Infosys, EY, Guardian Media Group, Scottish Government and more, The Purposeful Company Steering Group synthesised the most recent evidence and expertise into its Policy Report that sets out 22 robust recommendations within 6 key policy areas: Company Law and Reporting, Accounting for Purpose, Repurposing the Investment Industry, Blockholding, Finance for Purpose and Executive Remuneration.

There is a growing consensus around this agenda across business, finance and Government. The substantial evidence gathered by The Purposeful Company Task Force and Steering Group was cited in the Green Papers on Industrial Strategy and Corporate Governance.

Commenting on the report Iain Wright MP, Chair of Business, Energy and Industrial Strategy Select Committee, said: “The Business, Energy and Industrial Strategy Committee is leading an inquiry into the area of corporate governance, focussing on how modern companies can better serve their shareholders, employees and our wider society. The Big Innovation Centre report on the Purposeful Company is a hugely valuable intervention in this debate, and, as we on the committee consider our recommendations to government this is a timely, welcome and very powerful contribution.”

Paul Polman, Chief Executive Officer of Unilever, said: “This timely report is a welcome contribution to the growing debate about the importance of business purpose and how to deliver it.”

Véronique Laury, Chief Executive Officer of Kingfisher plc, said: “The report advances the purposeful company debate and explores the reality of its impact on stakeholders and society”.

Will Hutton, Chair of Big Innovation Centre Steering Group and Co-Chair of the Purposeful Company Task Force, said: “The evidence is clear, companies with a declared purpose, adhered to by their leaders and understood by their employees, perform far better over time than their less purposeful peers. The practical reality is that our economy is missing a huge opportunity the longer that this issue isn’t addressed. Britain must create innovative, purposed capitalism populated by purposeful companies. Now is the moment to begin the journey.”

Clare Chapman, Non Executive Director, RemCo Chair and Co-Chair of the Purposeful Company Task Force, said: “When we kicked off this Purposeful Company project in 2015 none of us could have predicted just how relevant or timely the recommendations would be. Companies acting with purpose, for the long term, must be at the heart of transforming our economy and living standards. An extraordinary alliance has come together from right across the investment chain to re-think the very fundamentals of what it means to be a modern company and point the way forward for the good of all’”.

A full copy of the Policy Report can be found at www.biginnovationcentre.com

Now that the Policy Report has been published, the focus of the Purposeful Company Task Force will turn to leading and enabling change. The next meeting of the Task Force to kick off this new phase will be on Thursday 27th April 2017. If you have any questions or would like to join us to become part of this powerful alliance please contact us on 0203 713 4036, and ask for Maria Ponce or Alice Piterova.

ENDS

 

FURTHER INFORMATION:

Alice Piterova                                                          Laura Holloway

Big Innovation Centre                                              JBP

a.piterova@biginnovationcentre.com                      laura.holloway@jbp.co.uk

020 3713 4036                                                        0203 267 0074

 

NOTES TO EDITORS

Purposeful Company Task Force and Steering Group

The Purposeful Company Task Force and Steering Group bring together experts from business, investors, academia, policy-makers, and business advisory firms. The report itself has been authored by a subcommittee of the Purposeful Company Steering Group following the framework of the Task Force’s core beliefs set out in Section 1 and 2 of the report, to which all our Task Force members subscribe. However, there is a diversity of view and differences of emphasis depending on sector and business model. We nonetheless believe the Policy Report, taken as a whole, represents a radical, practical, and coherent roadmap for creating a better environment for purposeful companies, thinking and acting for the long term, to flourish for the benefit of the UK and all its citizens.

The Task Force members are from Infosys, EDF Energy, EY, Bank of England, Kingfisher, Barclays, Hermes Investment Management, Fidelity International, Guardian Media Group, Scottish Government and Innovate UK. The Steering Group members include Will Hutton, Chair of the BIC Steering Group; Clare Chapman, Non-executive Director and Member of the BIC Governing Board; Birgitte Andersen, CEO and Co-Creator of BIC; Colin Mayer, Peter Moores Professor of Management Studies at Saïd Business School, University of Oxford; Alex Edmans, Professor of Finance at London Business School; Tom Gosling, Partner and Leader of PwC's Reward & Employment Practice and Philippe Schneider, independent consultant.

Big Innovation Centre (BIC), website: www.biginnovationcentre.com; @BigInnovCentre

Launched in September 2011, the Big Innovation Centre is a hub of innovative companies and organisations, thought leaders, universities and 'what works' open innovators. Together BIC enlarges innovative capabilities, acting as a catalyst in co-shaping innovation and business model strategies – testing and piloting ideas - that are both practical and intellectually grounded, with the aim of making business more purposeful and inclusive through the enormous potential of technology, creativity and innovation.  The vision is to help make the UK a Global Open Innovation and Investment Hub by 2025, and to build similar initiatives internationally.

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