Arsenal have launched Arsenal Fanshare, selling portions of shares in the club (their 62,000 shares trade at around £10,000 apiece) to fans. This will obviously increase their influence in matters relating to the club’s governance and future. With the governance and ownership of football clubs around the world very much in the spotlight, this is an interesting development.

But it’s nothing new. The reformed AFC Wimbledon is majority owned by The Dons Trust, a social enterprise formed by the community of supporters of Wimbledon FC. Brentford FC is 60% owned by another social enterprise called Bees United, the club’s supporters’ trust. Over in Spain, Real Madrid and Barcelona are owned by their supporters, and the German Bundesliga requires that a minimum of 51% of any club must be owned by club members.

Aside from being hugely successful on the pitch, both Real Madrid and Barcelona have built up enormous global fanbases. The supporter involvement has probably helped these clubs in developing a greater sense of loyalty, enhanced their brands and ultimately their businesses. Arsenal’s Fanshare initiative looks like an attempt to derive some of these same benefits. However, when it is compared to these examples, this step looks a little timid if the intention is to achieve the Spanish results. It will be interesting to see the effects of this scheme going forward. Will Arsenal’s future owners be prepared to cede further influence and control in the name of increasing the success of their business?

One of our clients, HCT Group, is a leading UK social enterprise. It runs a number of commercial transport operations around the country, then reinvests the surpluses into providing community transport initiatives aimed at those who find it difficult to use mainstream public transport, and related training for the long-term unemployed. This is an organisation that could participate in the Big Society idea, but its Chief Executive, Dai Powell, today expressed some concerns about whether social enterprises such as HCT will truly be able to contribute to the Big Society vision once ‘Many organisations’ grants…cease for good in March 2011’.

Dai’s views can be found in a piece entitled ‘The clock is ticking on Cameron’s Big Society’ on Guardian Public. We’d like to hear your thoughts on this issue, whether you’re involved in an organisation such as HCT, or simply an interested observer.

The Stewardship Code, which is complimentary to the Corporate Governance Code, ‘aims to enhance the quality of engagement between institutional investors and companies to help improve long-term returns to shareholders and the efficient exercise of governance responsibilities.’ To begin with, the Financial Reporting Council hopes that it will be taken up by ‘firms who manage assets on behalf of institutional shareholders such as pension funds, insurance companies, investment trusts and other collective investment vehicles.’

Similar to the Corporate Governance Code (and the Combined Code before it), the Stewardship Code is meant to be applied on a comply or explain basis, but as yet there is no regulatory need for asset managers to comply or explain, and perhaps not much peer pressure either.

The Stewardship Code is based on seven principles:

‘Institutional investors should:

• publicly disclose their policy on how they will discharge their stewardship responsibilities.
• have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed.
• monitor their investee companies.
• establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value.
• be willing to act collectively with other investors where appropriate
• have a clear policy on voting and disclosure of voting activity.
• report periodically on their stewardship and voting activities.’

A full version of the Code can be found here.

The FRC hopes to see some reporting coming out of the adoption of the Code, and we expect that certain asset managers will take up this challenge faster than others. It could be a way for some asset managers to set themselves apart from the competition, as a commitment to the principles of the Code may well appeal to their clients.

An example of this type of reporting can be found at the website of F&C Asset Management. Their Responsible Investment Report and Responsible Engagement Overlay report detail engagement, voting activities, and how these fit in with their broader investment strategies. It will be interesting to see how many other institutional investors follow this lead.

According to the new Code’s preface, ‘Two principal conclusions were drawn by the FRC from its review. First, that much more attention needed to be paid to following the spirit of the Code as well as its letter. Secondly, that the impact of shareholders in monitoring the Code could and should be enhanced by better interaction between the boards of listed companies and their shareholders.’ As a result of the second point, the UK Stewardship Code has also been published, and we’ll be recording some of our thoughts on that soon.

CO3 has prepared a summary of the major changes that appear in the new Corporate Governance Code. This can be downloaded here.

Some of the more interesting points found in the new Code deserve a little discussion, and we’d also be interested in hearing your thoughts on it.

Board review
The Code calls for an external evaluation of Board performance at least once every three years for all FTSE350 companies. This raises the question of who would provide this service, and how would they go about ensuring a high-quality, truly independent evaluation?

Diversity
The new Code states that ‘The search for board candidates should be conducted, and appointments made, on merit, against objective criteria and with due regard for the benefits of diversity on the board, including gender.’ This is not highly prescriptive language, but we believe that some companies will need to look at, and potentially adjust the terms of reference for their nominations committees. It will be interesting to see how companies go about creating robust processes to ensure that diversity is taken into account, and what effects these may have.

Risk
From the Code’s main principles: ‘The board is responsible for determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives. The board should maintain sound risk management and internal control systems.’ We sometimes find that the discussion of risk within annual reporting can be lacking depth. A greater focus on risk in the new Code could result in a more thorough discussion of this area, enhancing the transparency of certain organisations and the way they do business.

Chairman’s role
The new Code puts additional responsibility and emphasis on this role. We think that companies with combined CEO/Chairmen may find this brings greater pressure to separate the roles, especially given that the Chairman’s responsibilities include fostering constructive relations between executive and non-executive directors.

In case you missed it the first time, our guide to the changes found in the new UK Corporate Governance Code can be found here. The Code itself can be found on the FRC’s website, here.

Good to see then, that PwC, one of the leading accountancy firms, plans to source a good chunk of the energy needed to run its new building from a local biodiesel producer. Uptown Oil manufactures heating and vehicle fuels from oil it collects from local venues. Taxis can fill up at its Southwark base and the company delivers fuel nationwide.

As part of biodiesel’s beauty is that it can be produced locally, perhaps we’ll see the company able to expand – Manchester, Leeds perhaps – as more businesses look for lower-carbon alternatives to regular fuels. There’s certainly no shortage of chip fat around.

Maybe next time you’re in London, tucking into a plate of chips, ask where the oil is going to end up. And if you’re working at PwC, fried food might not be such a sin anymore.

This innovation is clearly welcome, but will it start and end with PUMA? Hopefully not. One of the claims, or hopes, laid out in the promotional video is that the Clever Little Bag ‘may one day change the industry’. This idea appears to be backed up by the words of PUMA CEO/Chairman Jochen Zeitz, who Treehugger quotes as saying ‘there is a patent pending for the bag design but that he would be happy to share it with others and make it a universal system.’ It’s a positive sign, and may be a precursor to a joint approach to the other issues faced by companies such as PUMA, Adidas and Nike.

Annie Leonard, a US-based activist, narrates The Story of Bottled Water, an animated look at the bottled water industry. The video is well-produced, entertaining, and ultimately effective. In response, the International Bottled Water Association (IBWA) put out a press release and video aimed at rebutting Leonard’s stance. The IBWA’s video is poorly put together, almost painful to watch. Take a look at both videos below, and see who you think comes out ahead in this argument.

The IBWA press release can be found here.

More videos from Annie Leonard can be found here, and more from the IBWA here.

The Footprint Chronicles minisite explores the company’s products, their journeys from design to production, and provides a large amount of data on power usage, water usage, greenhouse gas emissions…the list goes on. The site links subtly back to the corporate website, where you can buy the products, or read about Patagonia’s approach to sustainability. It’s thorough, that’s for sure, and is well worth checking out for some inspiration.

Law firm Eversheds recently engaged with 694 executives to gauge their knowledge on the issue. The firm concluded that as well as a general lack of awareness, many businesses simply do not have policies and systems in place to avoid, or deal with, corrupt business practices.

Eversheds have suggested that organisations that cannot demonstrate “adequate procedures” will have less of a defence in the case of relevant legal action. The indications are also that the planned legislation will encompass breaches by the company’s agents, not just the company itself.

Consequently, we believe that it is therefore a good idea for companies, particularly organisations that operate in parts of the world where these issues present a significant risk, to ensure that they have put in place the required systems and policies. We also think it is important that they clearly demonstrate this to their internal and external audiences.

Some organisations have made significant efforts to make this kind of information transparent and accessible. Two good examples can be found at the websites of CRH and BHP Billiton. On the other hand, there are plenty of corporate websites and reports that contain no mention of a code of conduct, relevant policies or management systems (such as whistle-blowing procedures). As such, we believe that there are a significant number of organisations that, despite the adoption of the related policies and systems, are still leaving themselves exposed because of a lack of communication.

The report, Golden Opportunity or False Hope?, is accessible, beginning with an executive summary – a smart move, given that many will get no further than reading this. Its recommendations are reasonable, focusing on transparency and encouraging engagement. It also acknowledges the roles of the state mining company and the national government in the matter, making further suggestions to these two parties.

CAFOD’s report does not attempt to attack or shame AngloGold. It is not even particularly critical in tone. Instead, it seems to be aimed at bringing the company’s activities out into the open, encouraging dialogue, rather than picking a fight.

It is clear from the report that AngloGold and CAFOD have been in some contact, but the publication suggests that CAFOD felt it necessary to make its suggestions public. The expectation now will be for AngloGold to respond in some fashion, and CAFOD have left the door wide open for the company to do so. We’ll be keeping an eye on this one.