Alan MacDougall takes issue with Peter Knight’s recent attack on ‘tick-box political correctness’
A response is needed to Peter Knight’s claim in last month’s guest column
that ‘self appointed judges’ such as Pensions and Investment Research
Consultants lay a ‘pathetic emphasis on political correctness’ by
marking down companies that fail to reflect the diversity of society or
show evidence of engaging with stakeholders. So here we go:
Self-appointed judges: Like Context, Pirc provides services to clients
on a commercial basis, and we hope we do it in a socially responsible
manner. Peter, perfectly respectably, takes money to help companies
present their story to the best possible effect.
We work
for investors willing to pay for our research and an independent view.
We do not act as company consultants. We try to convince others of the
merit of our ideas, and many of our guidelines on corporate governance
are in the revised Combined Code published last year. The economic
impact of publicly listed companies means that accountability is
important. If we are ‘self-appointed’, then so too are all equity
analysts.
CSR pundits say we should reflect the
diversity of the society around us: Until Peter’s business becomes a
listed company, we couldn’t care less about Context’s diversity,
although his multinational clients may wonder to what extent his firm
can tailor appropriate messages that recognize cultural differences.
The reference to his engineering firm client is revealing. How does he
back up his claim that the pool of talented engineers is limited to
what – by his description – are a type of white, male ‘anorak’? The
same way British boardrooms justify the absence of diversity among
their directors? Or previous generations argued that women couldn’t
succeed in business?
Pirc marks down these mono-crop
companies when they rank them in The Times: False. Diversity is not
considered in our ratings. But if a company has a lot of staff from
‘minority’ backgrounds (however defined), though none in its upper
echelons, shouldn’t it investigate whether it is getting the best out
of all its people or whether an assumed mould is creating hidden
barriers?
They do the same if businesses can’t
demonstrate that they engage with their stakeholders: Here we plead
guilty. We do take this into account, as we believe it is something
investors need to know. For a consumer goods company, consumers will be
the major stakeholder group. But not the only one. Managing stakeholder
engagement can assist both risk control and better performance. On all
of these issues there is room for different opinions. Our positions
reflect 16 years’ experience of looking at CSR and corporate governance
issues from a portfolio investor’s perspective. Pirc doesn’t sit
Hobbit-like in a hole, but goes out and debates with companies and
investors. We look forward to continuing to do so!
Alan MacDougall is managing director of Pensions
and Investment Research Consultants Limited.
email: [email protected]
