Corporate Governance and Accountability

Lord Patten Excerpts

Tuesday 5th July 2011 Lords Chamber

[Lord Patten]

My Lords, I want to make three points before the clock strikes three. First of all, I strongly believe in the corporate, social and environmental agenda. I equally strongly believe in the enterprise economy in this country. It is extremely important that our growth agenda succeeds at a time of fragile economic recovery. Therefore I believe it is extremely important that across the piece, in the areas of environmental responsibility and corporate social responsibility, there is no more unnecessary loading of unnecessary regulation on the shoulders of businesses, which are trying to create jobs and employment opportunity. It is extremely important to counterbalance the quite proper pleas for better reporting, greater clarity and all the rest that we have seen. Along with our growth agenda, we also have, as a coalition, a happiness agenda. I know that the Minister wants to make me happy, and I hope that she will indeed make this Back-Bench Peer happy in her wind-up speech by saying that we are not going to have any more unnecessary regulation in this area of corporate social responsibility and environmental social responsibility between now and 2015.

Secondly, there are of course some successful companies that have made very good money by selling themselves quite properly as ethical producers. Body Shop and Lush are examples from the cosmetics world, while Ben & Jerry’s and Innocent are producers in the worlds of ice creams, fruit drinks and vegetables. By comparison, most companies make cars, build buildings or supply services and try to be good corporate citizens, just as most individuals try to be good individual citizens. They are generally now, I think, very responsible in these areas. The noble Lord, Lord Harrison, who has a good track record for introducing interesting debates of this sort, said in his very interesting speech that he wanted more companies to take the view that this was an important issue. In my experience, in declaring my own financial and corporate interests, I think most companies do indeed take this very seriously and have already taken the view that this is something that they should do. In other words, it has entered into their corporate DNA. Just as belatedly, in the slipstream we are seeing the need to have more women and greater diversity on the boards of our companies getting into the DNA. It is lagging a bit and still has some way to go, but with the enactment of the Bribery Act last Friday, we are going to see ethical training and ethical codes also coming along and getting into the DNA of companies. That is a very considerable agenda indeed and I think that the direction of travel is right.

Lastly, investors and institutions have been criticised for perhaps not being active enough, particularly those that hold shares for a short period. I welcome very much the Government’s encouragement for greater employee share ownership. I think that is a very good thing, and as the Government and others try to explain why participating in a capitalist economy is a good thing, at the same time they should stress financial benefits and their promotion and the opportunities for people with shares newly given to take an active interest in the social and environmental agenda of the companies of which, after all, as employees, they are now part-owners.