Fair grounds?

A small blow to DEI (diversity, equity and inclusion) this week. Two regulators have abandoned plans to introduce tougher reporting rules, amid government pressure to continue easing the burden of regulation.

The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have set aside the reporting measures amid criticisms from the government, according to the Financial Times

Financial firms were set to report more information on staff diversity, including age, ethnicity, gender and religion and sexual orientation.

The figures would have been useful but, given the government’s competitive agenda, it’s no surprise the rules have been shut down. But calling a halt remains nowhere near the screaming DEI reversal under way in the US.

Small mercies.

Business as usual

For those wondering what’s happening to audit reform, there is an update or, rather, a statement of very little news.

Under secretary for business Justin Madders spoke in the House of Commons this week to offer an update, saying the government has announced its “intention” to publish a draft bill in the current Parliamentary session.

“Investors and the public need access to truthful reporting from our most important businesses on their finances and related issues.

“My department continue to progress that important work, and a timetable for the publication of the bill will be confirmed in the usual way for draft legislation in due course.”

In due course? Don’t expect anything any time soon. But then those who have been watching never did.

The real question is how much of the original reform intentions survive. It’s no coincidence Madders made his statement during a debate on reforming the “regulatory landscape”. The government wants 25% out of regulatory admin costs this year, Madders underlined. Audit reform will need to fit in.

With respect to authority

Just in case anyone was unaware, it looks as if the reasons for US watchdogs ending work on mandatory climate-risk reporting rules are pretty insurmountable.

This week, chief financial watchdog Mark Uyeda published a note outlining his reasons for calling on the court to not schedule a case in which the rules were due to be challenged (before they had been implemented) by US business interests.

Uyeda, acting chair of the Securities and Exchange Commission (SEC), writes that the SEC was “without statutory authority or expertise” to introduce the rules and climate-related risks are already covered by other existing disclosure rules.

“The lack of statutory authority is weighty factor,” writes Uyeda.

Anyway, Donald Trump has already ordered a regulatory freeze, so it’s hard to see how regulators would get around that. Uyeda says there will be a further update on the SEC view, but don’t expect: “What the heck! Let’s do it anyway!”

Green screen

Competence must be critical to a more sustainable world, right? Apparently not.

A team of business boffins from Coventry University has undertaken a huge analysis looking at the issue of CEO competence and sustainability; they draw the disturbing conclusion that being good at your job doesn’t mean being good at sustainability.

But there’s a kicker.

The authors write that “CEO ability negatively impacts corporate sustainability, while CEO reputation shows a positive association, contributing new insight to the empirical corporate finance and sustainability literature.

“The negative relationship between CEO ability and corporate sustainability aligns with the signaling view that low-ability CEOs engage more in sustainability to improve public perception.

“In contrast, high-ability CEOs focus less on sustainability as they can utilize resources effectively to enhance financial performance.”

So, the smart CEOs are less concerned about sustainability than they are about the bottom line, while the not-so-smart CEOs use it to cover their flaws.

Can someone please make it all make sense? When it does, let us know.