We continue to destroy our only planet, driven on by the moneymen and women. Politicians, in awe of the economists, see growth as the answer to every question. Anyone who stops to think for a moment can see that more and more growth is not any sort of a solution to today’s problems on a planet with limited resources.
This view of economics is hard wired into our society through the legal system. Most company directors have as a prime responsibility, that they must maximise the money made by their shareholders. Failure to do this means that they can be sued. Without changing company law to expand director responsibilities to include environmental and societal issues, we will remain locked into money being the measure of everything. And consequent ongoing environmental destruction.
If the politicians and moneypersons don’t stand up now to save the planet, like Greta Thunberg in her “How dare you” speech to the UN, I will also not forgive them. And I am in my 70’s rather than a 16 year old.
The Tories will never change company and director responsibilities, Labour won’t dare to. Only a truly radical forward thinking party would make such legal change to save the world.
Any offers?
* Peter Davison is chair of Fareham Liberal Democrats
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5 Comments
Peter Davison playing devils advocate do you have some or any suggestions ? Can we surcharge amazon ,ebay for the additional cost of packaging , China for importing high carbon products .
I know nothing about company law, but Peter Davison makes a point that seems great in principle but will be very hard to achieve. I imagine that, as it stands at present, a manager or director is able to argue in court, if sued, that short or medium term profit had been reduced in the hope of longer term profit, eg by gaining a reputational advantage by going green. (Perhaps a definition of ‘greenwash’ might be making a rather negligible reduction in profits for reputational gain.)
How could one reframe company law to achieve the desired effects in a way that was either toothless or designed to make all rich people and all pension funds invest overseas, in a jurisdiction which cared nothing for the environment? Wasn’t that the motive for some (not all, I give credit to Mr Gove) Brexiters? They hope(d) to turn the UK into such an offshore jurisdiction.
It’s time for pressure groups to grasp this nettle. We must create a culture where organisations find it increasingly to act against the planet. Fundamental changes to company law are just one example where changes must happen to make further change easier.
Good policy very rarely comes out of efforts to brand a class of people as bad and undeserving.
A surprising and fast-growing volume of investment is targetted at “esg” (environmental, social and governance) under existing company law.
Perhaps that partly reflects the total absence of legal sanctions in the UK against company directors for pursuing these aims in a responsible fashion.
It may also reflect the recognition by a large proportion of shareholders that a company’s reputation is enormously important to its long-term growth and profitability, even if it may hurt short-term profits.
Peter: can you point to a successful legal suit in the UK by shareholders against directors for pursuing such policies competently?
Of course, shareholders can in theory replace directors for pursuing esg policies, and vote new directors onto the board, but again I don’t recall this ever happening.
There are also considerable regulations surround the reporting to shareholders of environmental, social and governance matters.
Ironically, I believe many not-for-profit charity trustees believe they have a legal obligation to pursue the financial interests of the charity’s beneficiaries regardless of the consequences to everyone else; but that’s another issue altogether.
Change company law….
Perhaps in the first instance we do, as we have done before, and simply change the additional information companies must provide in their annual reports.
Unfortunately, because we are no longer a member of a trading block, we can’t ensure that some of our competitors also adopt the same standards and as a block put pressure on those outside to do likewise. So expect some to complain that even such basic demands (namely to report) are burdensome red tape and constraining UK competitiveness. However, given that some in the USA are waking up to the trillon dollar ‘green’ market we do need to act if the UK once again isn’t going to be a laggard. To me greening our economy is a Brexit/CoViD dividend, the only question is whether we can move fast enough to ride the wave.