Aviva Investors, one of the City of London’s largest asset managers, this week became the latest to announce a re-structuring of its socially responsible investing (SRI) and corporate governance teams. Both are to be disbanded. Aviva has announced that instead it intends to maintain a smaller core Global Responsible Investment Team supported by a network of responsible investment officers around the business.

Our own thoughts are that the new structure mirrors the trend that has been taking place over a number of years. This has seen SRI and corporate governance issues move from the margins to the mainstream in investor thinking. However, the move has been criticised in some quarters that have argued it undermines the company’s claims to be following the UN Principles for Responsible Investment.  It will be interesting to see how things at Aviva develop under the new structure.

CO3 will be contactable throughout this time by telephone (see details below) or email. Our office will close at 5pm on 22 December and will re-open at 9am on 29 December.

CO3 switchboard +44(0)845 345 4337 (this number will forward recorded voicemails to us via email). Or you can contact us directly via mobile telephone on +44(0)7904 056668.

“Company executives, staff, professional advisors, business associates of various kinds or trade competitors can talk to us in confidence,” said Richard Alderman SFO director, in a statement. “I want whistleblowers to feel comfortable about it and use SFO Confidential to help flush out fraud.”

The Financial Times reported this morning that the move is to help address the drop in funding at the SFO (£34m this year compared with £53m in 2008).

CO3 believes that this development underlines the importance of disclosing listed company procedures to address the UK Bribery Act on corporate websites (in line with the Guidance published by the Ministry of Justice in March 2011), within annual reports and information aimed at investors. Support, advice and guidance on this important area can be obtained by contacting us applying the details on this website.

FTSE has been placed in the unusual position of quasi-regulator when it wasn’t really set up for this purpose. However the matter does highlight the challenges facing the various parties involved in listing procedures. The conundrum appears to be how to continue to attract overseas companies to the London market whilst addressing certain investor concerns.

Perhaps the real solution is a little more involved than a discussion about free float percentages. Our own experience of working with overseas companies that are listed in London has led us to conclude that more work needs to be done with companies prior to entering the London market to ensure that they fully understand the “rules of the club”. Some of these are clear and documented in the various regulations. Others are, in a rather British way, not documented formally but are “the way things are done”.

We have noted that difficulties tend to arise because companies are less aware of the second requirement with the consequent effects on their investor relations. Addressing this matter at the outset, through dialogue with the authorities and company advisors, might be a good way of addressing potential issues further down the line and assist companies in satisfying the expectations of the market in the long-term.

Further evidence of institutional pressure on UK listed companies to improve boardroom diversity is reported in The Times this morning. Legal and General Investment Management (LGIM), which owns an average of 3% of every UK listed company, is revealed to be taking a harder line on the issue.

The article quotes Sacha Sadan, its new director of corporate governance. He states that the institution is urging companies to widen the range of experience of the directors on their boards. “As well as recruiting more female directors, companies should not be afraid to hire older staff and should actively recruit executives with an international background. This is not just for ‘feelgood’ reasons, it’s because we think it will make the share better. Good boards maximise value.”

The article goes on to explain that, whilst LGIM had not voted against an executive for failing to diversify the board, it is preparing to do so. “We are prepared to vote against them and there will come a point where we will”, said Mr Sacha.

CO3 is advising listed companies to adhere to the recommended disclosures that were contained within the Davies Report concerning boardroom gender balance. We are also recommending early adoption within the next annual report of the related changes to the UK Corporate Governance Code. These will officially come into effect for reporting periods commencing after 1 October next year.

This development shows that at least part of the investment community is viewing a company’s approach to this issue as being an indicator of its corporate governance credentials. We therefore recommend that FTSE350 companies publish a statement on their approach to this matter, in line with the suggestions within the Davies Report, if they have not already done so.

However the Square Mile has not emerged unscathed from the latest episode. There is no doubt that the activities of its leading corporate players are viewed by the British general public, perhaps understandably in view of the recent and vast cost to the public purse, with a much greater degree of suspicion and cynicism. This shift in opinion has been encouraged by stories within the media that have pointed to examples of eye watering remuneration payments and, when it has arisen, unfair corporate behaviour. The City is being viewed, in rather more domestic places than it was previously, as some sort of unregulated casino where the greedy winners run away with unimaginable amounts of loot and the losers get bailed out by Joe Public.

The latest symptom of this shift in UK public opinion was the appearance over the last few days of semi-organised and seemingly long-term protest “camps” outside St Paul’s Cathedral and around the corner from our office in Finsbury Square. Whilst this activity has not received much public support it is notable that the criticism of it has centred on the occupation of public spaces. Rather less attention has been paid to the complaints about City institutions because many people agree with them.

Ironically, in the midst of the protests, a related banking industry announcement appeared that went almost completely unnoticed. It reported the formation of the Chartered Banker Professional Standards Board. This is a voluntary joint initiative set up by nine UK based banks (Barclays, Clydesdale, HSBC, ING Direct UK, Lloyds, RBS, Santander UK, Tesco Bank and Virgin Money) and Chartered Banker, the Edinburgh based industry representative body. The press release trumpeted that the new body “serves as a public demonstration of banks’ collective commitment to restoring trust in the banking profession and emphasising our responsibilities to our customers, colleagues and wider society.” It aims to:

• Develop a series of professional standards to support the ethical awareness, customer focus and competence of those working in the banking industry;
• Facilitate industry and public awareness and recognition of the standards;
• Establish mechanisms for the implementation, monitoring and enforcement of the standard; and
• Help build over time, greater public confidence and trust in individuals, institutions and the banking industry overall, and enhance pride in the banking profession.

The new organisation has also published a seven point Code of Conduct “which sets out the ethical and professional attitudes and behaviours expected of bankers” by the new body.

Cross industry initiatives to address major CSR related reputation issues are not new. The best example is probably the International Council on Mining and Metals (ICMM). The organisation was formed around ten years ago as the mining industry’s response to the threats that its major players were facing concerning their licence to operate and unwanted regulatory intervention. ICMM has succeeded in supporting the sector through the development of detailed and involved joint solutions which address many of the complex sustainable development issues faced by mining companies around the world.

This initiative, in comparison, looks well overdue and a relatively tiny step in the right direction. It will be interesting to see how it develops over time and whether its participants can mirror the ICMM model within the financial services sector.

A progress report published by the Cranfield School of Management on Wednesday showed an increase of women on FTSE100 boards (now 14.2% up from 12.5% last December). It also reported that only a third had followed the call within the report to set targets for raising the number of female directors by the end of September. The Prime Minister, David Cameron, plans to write to the non-complying companies urging them to sign up for target setting.

On Tuesday the Financial Reporting Council confirmed that it planned to change the UK corporate governance code to require all listed companies to report annually on boardroom diversity policy, including gender (so also covering issues such as race, faith and sexuality) and on progress towards these objectives. This is envisaged to apply from October 2012.

CO3 recommends that FTSE350 companies adopt the Davies Report target recommendations concerning gender if they have not already done so. We recommend that all listed companies adhere to the planned FRC requirement within their next annual report.

In our modern world of twenty four hour media and the ever increasing sprawl of online social networks it is rather de rigueur to be cynical and scoff at organisations that attempt to demonstrate that they are being responsible. Companies are to some extent currently caught between a rock and a hard place with this issue. To my right we have the shareholder value disciples that write their harpie prose in business publications about enterprises wasting their money on pointless “do gooding” efforts. And on my left we have the campaigners (and not infrequently politicians) who seem to think that most corporate activity involves some sort of suspect “stuff”. This corner usually argues that CSR is really a PR inspired camouflage to divert unwanted attention from all the dodgy things the company is actually getting up to.

Of course both sides are completely missing the point because they don’t understand the relevance of CSR concepts in the first place. Public opinion has changed over the last few years. Businesses are expected, perhaps more than ever before, to be responsible in the conduct of all of their activities. That doesn’t mean they have to get things right all of the time. But it does mean that they have had to respond to this change and demonstrate that they have done so. Today’s successful enterprises understand this, have embraced the change as part of what they do and reflect this within their branding, marketing and communications.

My message to companies that wonder about hosting their CSR flag for public inspection is not why but why not?  If you’ve got it…why not flaunt it!  And a PS. Don’t pay attention to those silly naysayers that don’t know what they are talking about.

A good example arrived in CO3′s in box yesterday afternoon. The unmissable opportunity was a “high level sustainable finance” conference to be held in December by an organisation with the word “ethical” in its name. We were being asked, amidst all the tedious blurb, to purchase something called a “sponsored speaking opportunity” and “be up onstage alongside the key players in the banking sector, in front of an audience of (over a hundred) high level potential clients”.

Presumably the hundred or so potential clients won’t be told that the speakers are in fact punters who are paying to sell their wares at them. I’ve no doubt they will be told that they are there to listen to people who want to tell them something independent, informed and useful.

This may be an old fashioned opinion but I don’t think there’s anything ethical about advertorial being presented as editorial.  In fact I think it smells along with the hard sell tactics applied to push it.  No thanks.