This year’s annual meeting season has witnessed a spate of protests from activist shareholders, reminiscent of the 1970s. Are ethical issues rising up the public agenda again?
SHAREHOLDER PROTESTS
Sir Adrian Cadbury, chairman of the committee on financial aspects of corporate governance, said on May 24 that the voluntary Cadbury Code had met with a high degree of compliance among large companies. At the publication of Compliance with the Code of Best Practice, he said presentation of executive pay in annual reports and ways of making it easier for shareholders to present resolutions at AGMs are topics that a follow-up committee should examine.
He was speaking just days before thousands of angry British Gas shareholders gathered in London, forcing the annual meeting to move to a larger venue. Other leading companies have endured disrupted AGMs in recent months; a tank arrived at HSBC Holdings, parent company of Midland Bank, to protest at arms sales. British Aerospace, Shell, Wimpey and RTZ have also witnessed angry scenes. Contact Gee Publishing on 01345 573113
ETHICAL CONSUMERS
A report by CWS Retail published on April 24 shows that seven in ten people are concerned about animal welfare issues and believe that the food industry has a duty to the environment. Two in three want more informative labelling and three in five say they will pay more for products meeting ethical standards. Gallup questioned 30,000 people between December 1994 and March 1995 for the cooperative retailer and found growing concern about ethical issues, with 60% prepared to boycott a shop or product. CWS Retail is introducing a ‘right to know’ policy through labelling. Contact Martin Henderson, CWS, on 0161 827 5292
BT ENVIRONMENT WEEK
BT Environment week, May 19-29, was marked by a Gallup survey showing that green shopping is still very real; for example, 26% of women often refuse paper or plastic bags and 20% are prepared to pay extra for an environmentally friendly product. The survey also found that 75% of people think their environmental surroundings have deteriorated over the last two years, but only 27% of 16-24 year olds recycle their rubbish. Around 3,000 local projects were scheduled to take place during BT Environment Week. Contact Caroline Lucas, Morris Media, on 0171 384 1114
CONCERNED SHOPPERS
A survey of consumers in America by the Pillsbury Company suggests that shoppers are influenced by a company’s philanthropic record. Of those questioned, 35% say they would be very likely to change brands to support a company with evidence of charitable support and 24% somewhat likely. Nine in ten said it is important that companies whose products they purchase are involved in charitable activity. Nearly 600 callers to the toll-free customer number of Grand Met company, Pillsbury, were questioned last year. Contact Susan Enright, Pillsbury Center, on 001 612 330 7040
Comment
The ethical conduct of companies is again in the public eye. Executive pay, animal welfare and environmental protection are separate issues. But each says something about the values of the company. And surveys show consumers say they’ll switch purchases to a company or brand closer to their own values. How many actually do is another question, but at the margin it has an effect – and that’s where competitive advantage lies.
Ironically most of those companies with recent disrupted shareholder meetings have long had active community affairs programmes. Does that mean they are not effective? No, since CCI cannot be expected to insulate a company from criticism if its operations are not consistent with the values it professes or if external communication is inadequate. And no again, because – British Gas apart – those protesting often have their own agendas, using corporate AGMs as the platform.
British Gas is the exception because the protest was not ‘organised’ and is very much about the values of the company: senior management is trying to create a competitive international energy company like any other, while much of the media and the public still see it as a utility providing a social service. Even as a private company, British Gas must combine both, and community relations is a vital part of that.
COMMENTS