A poll of 250 senior business leaders found overwhelming opposition to key Government proposals to weaken corporate reporting requirements, with 88 per cent warning that the UK risks losing its reputation for strong governance if standards are lowered. The Government has said it wants to modernise rules to cut red tape and boost growth, but the plans have triggered a backlash from campaigners and business figures concerned about accountability to shareholders.
The survey, conducted by the Governance for Growth Investor Campaign which represents some of Britain's largest pension schemes, revealed the depth of concern about specific proposals. Only 5 per cent of business leaders thought moving to virtual-only annual general meetings was a good idea, whilst 83 per cent preferred hybrid events combining in-person and online participation. The biggest majority, at 92 per cent, wanted to retain the annual advisory vote on executive pay, which often leads to shareholder revolts and can damage company reputations.
Caroline Escott, chair of the Governance for Growth Investor Campaign, said the survey showed that watering down governance standards was ill-advised. She warned that simplifying rules in the current form would come at the expense of vital accountability mechanisms. Diandra Soobiah, director of responsible investment at Nest, which has 14 million pension savers, said modernising corporate reporting should go hand in hand with protecting shareholder rights and maintaining accountability to drive long-term growth and better retirement outcomes.
The Government said companies spend too much time on corporate reporting that is not always useful and that it is consulting on making annual reports shorter, clearer and more focused on what investors need. A Government spokesperson added that the department welcomed constructive engagement from stakeholders during the consultation, which closes at the end of the month. Campaigners believe some firms are using digital-only meetings to stifle debate and dissent whilst saving costs, exploiting a loophole in the law that ministers want to close.
For pension savers and retirement scheme members, the stakes centre on whether changes to shareholder voting and meeting formats will weaken the accountability mechanisms that protect their long-term investment returns and retirement income.