Market

Big business should talk more about people


It is news to no one that UK business — big business at least — has had a difficult few years in terms of the zeitgeist.

You can argue whether the vote to leave the EU — when business almost universally pointed in one direction and the decision went the other — was symptom or cause. In all likelihood both.

But the acrimony since hasn’t helped. The pandemic prompted a crisis-time rallying-round that improved the standing of large corporations in polling, along with other national institutions. But that is a distant memory.

A government trying to push through tax rises has concluded in recent months that the most painless way to do that is on business. The energy crisis could mean windfall taxes on oil and gas producers. Big housebuilders are on the hook for the cladding crisis. When a combination of Brexit and Covid created serious labour shortages, it was business that was standing in the way of a higher-wage, higher productivity economy — at least according to the government.

Perhaps, then, it’s no surprise that a readout of the public’s view isn’t exactly glowing. Research from Hanbury Strategy and Stack Data Strategy, published this week, found that 56 per cent of those asked thought business was “out of touch”. 

When choosing what best described British businesses, the 2,000 respondents went for statements like “trying their best in a difficult time” and “care only about making money” in four times the numbers that sentiments like “share my values” or “making the world a better place” received.

The prescription from Hanbury, founded by former Vote Leave communications director Paul Stephenson, is to focus more on the basics, like producing better goods and services for customers and looking after employees. Talking more about those would better reflect the public’s priorities, the research said, as opposed to environmental, social and governance (ESG) issues.

There is a decent tinge of anti-wokery sentiment to the findings. But still, this sounds like a challenge to companies and what my colleague Rob Armstrong calls the ESG industrial complex alike. If the professionalisation and financialisation of what amounts to asking companies to do the right thing has resulted in something that doesn’t very obviously include treating your staff well, then everyone has a problem. See Terry Smith’s criticism of Unilever this week: purpose-driven mayonnaise isn’t a ridiculous idea but it is basically meant to result in a product that is more interesting or relevant to customers, or more likely to motivate and retain staff.

It’s not that the public is only concerned about things that affect them right now; the strong interest in issues around climate change in the Hanbury results shows that. But the results point to a known failing within ESG: that the social part of it gets overlooked and that within that, investors aren’t asking the right questions. Responsible investment campaigner ShareAction found that investors are more likely to vote for environmental or governance resolutions than social ones.

The group is pushing for better information from companies about their workforce. Its latest data, released this week, received responses from only 173 companies of the 1,000 asked globally. The FTSE 100 does better with half sending back at least some numbers. Last year, the average completion rate was about 60 per cent of what is a detailed survey.

The charitable interpretation is that companies are too busy treating their employees well to fill in endless forms (and mounting requests for disclosure is one of the top complaints about the ESG machine). This isn’t entirely baseless: about half the blue-chip index are accredited Living Wage employers, and only about 55 per cent of them contribute to the ShareAction disclosure initiative.

But which questions companies choose to answer is also revealing. The best response rates in the past were on governance issues like board responsibilities and policy statements, unlikely to capture the public imagination. The spirit of openness doesn’t extend as much to the nitty gritty of pay, conditions or safety. Staff turnover appears a closely guarded secret, says ShareAction’s Rosie Mackenzie. And in other areas, like who works in the supply chain and where, companies simply aren’t collecting the basic data, she says.

Businesses should know more and talk more about their people. And ESG investing, done properly, should be part and parcel of that.

helen.thomas@ft.com
@helentbiz





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