London Evening Standard

Piece submitted to the London Evening Standard for Anthony Hilton's article on 20 January 2009. 

 

 

The Government is now set to become a major shareholder in what were some of the biggest PLCs in the global economy, but as a relative newcomer to the hurly burly of the relationships between major shareholders and Boards.  It nevertheless has a de facto mandate to act on our behalf on securing the future of the banking system and the economy, possibly the greatest social issue of our time.

The concept of socially responsible share ownership has been gaining in importance in the dialogue between institutional investors and PLCs over the last five years. Unfortunately, in spite of some notable successes (the shareholder revolt against the 'fat cat pay deals' at GSK in 2003 for instance), PLCs in general and banks in particular have shown little sign that they take socially responsible share ownership seriously.

We would all wish the government to be a socially responsible shareholder on our behalf, and I believe it has a once-in-a-lifetime opportunity to bring about a paradigm shift in how much attention PLC Boards pay to their shareholders by insisting on an effective form of Best Practice regulation. Alastair Darling's requirement of a legal undertaking from RBS to offer £6billion of loans in return for share capital is a step in the right direction.