Play another record

Audit committees were likely reeling this week after it emerged that audit fees have reached record levels.

Numerous outlets reported figures from Thomson Reuters showing that the UK’s 500 largest companies paid a hefty £1.45bn for their audits in 2024.

HSBC is currently forking out for the largest audit, £88m, to PwC (the firm dominates the FTSE 100, so no surprise there).

Kyle Gibbons, head of global accounts at Thomson Reuters Confirmation, tells The Times: “More rigorous audits, including more audit testing and a step-change in resourcing for audit teams with accountancy firms, has pushed up the cost of audits.” Accountability doesn’t come cheap.

Connect flaw

Over in the climate or sustainability debate, there is some embarrassing news. Less than half of organisations—49%, according to accountancy experts ACCA—explain how sustainability is reflected in their operations. Worse, only 38% report how they are managing sustainability risks.

Sharon Machado, head of sustainable business at ACCA, says companies should be able to connect sustainability to their likely success.

“Currently, there is a real risk that progress will not be swift enough,” says Machado. Time to put the pedal to the metal. The sustainable EV metal, that is—not the carbon-based fuel one.

Resurrection story

The High Pay Centre, a think tank, this week set out the policy changes it believes necessary to ensure workers receive fair pay and they include reviving some fairly big, though .

In its newly published charter, HPC first wants section 172 of the Companies Act rewritten to ensure company directors “no longer elevate the interests of shareholders over other stakeholders.” HPC’s policy document says 172 should focus on the “sustainable success of the company, balancing the interests of all stakeholders.”

Second, HPC calls for workers on boards, as they are in many European countries. “They would not function strictly as representatives responsible for defending workers interests but, rather, would have the same legal duties to act in the long-term interest of the company as any other director.”

Workers on boards, an idea worth exploring, briefly had 15 minutes of fame back when Theresa May was prime minister. But lobbying persuaded the then government to move it to the UK Corporate Governance Code where it became a pick-one-of-three option: worker on the board, a non-executive director designated to represent the workforce or an advisory panel. Boards have overwhelmingly chosen the “non-exec” approach. No surprise there.

Governance is an obvious place to start with any bid for creating a framework and process for fair pay. It’s just that reform of section 172 and workers on boards have been kicked around, resisted and rejected before. Could they be resurrected under a Labour government focused on “growth” and keen to bouy a business sector complaining bitterly about tax hikes? We’re on standby with the defibrillator.

Guiding principle

There is a fascinating clash playing out between seven of the world’s most high-profile companies and the International Trade Union Confederation (ITUC), which, in September, alleged the seven were “corporate underminers of democracy”.

The Business & Human Rights Resource Centre has been busy trying to tease responses from the seven, but so far, only Meta (formerly Facebook) has answered the accusation in any detail.

Meta says its work is based on a “comprehensive” human rights assessment conducted in 2022, which identified eight priorities. It said in its response: “Meta is committed to respecting human rights as set out in the UN Guiding Principles on Business and Human Rights. Human rights also guide our decisions when developing responsible innovation practices, including when building, testing and deploying products and services enabled by artificial intelligence.”

Glencore responded by pointing to its annual ethics and compliance report.

The other companies – Tesla, Amazon.com, Blackstone, Vanguard and ExxonMobil – have yet to respond. But we’ve ordered popcorn and will keep you informed.