Making values less great again

Has Donald Trump’s return to the White House, and the stampede of businesses signing up to his anti-woke agenda, proved beyond all doubt that corporate adherence to “values and ethics” was only ever performative?

Some see it slightly differently. On the letters page of the Financial Times a debate has broken out around what has really happened over the past decade when big corporates signed up to DEI and sustainability policies.

Ethics adviser Vera Cherepanova writes: “What is changing is not the difficulty of applying values, it’s that the pretence is no longer necessary.

“Where diversity, equity and inclusion were once helpful in securing investor capital governance contracts, they can now get companies debarred as contractors.”

Cherepanova adds: “The signalling has fallen out of political fashion. The two faces of corporate conduct—lofty ideals and operational reality—are becoming more aligned.”

In the comments, it turns out readers were never that convinced. One reader writes: “I think the whole issue is not how values may or may not have been applied, but the fact that ‘values’ were taken and turned into tick-box policies.” Oof!

Here’s another: “Companies need to adapt their public faces to the cultural/political environments that matter to their bottom line. They blow with the wind. This should surprise nobody.” Ouch!

Is all that effort convincing corporates they should cut the externalities and have a “purpose” really gone to waste? The battle seems to be on for the soul of business.

Holding boards to account? All youth in favour say ‘AI’

Amid all the doom and gloom around AI comes the view that it could be very good indeed for corporate governance.

Pierluigi Matera, legal eagle at the University of Rome, writes that AI is currently being deployed by institutional investors and activists on one side of the engagement equation to target boards, and by management on the other to predict potential shareholder challenges.

But, Matera writes, it could also be used by millennials and Gen Z to influence corporate policy on issues like climate, diversity and “social accountability”.

Boards could therefore use AI to respond to their concerns, “not merely by responding to activist pressure, but by anticipating generational demands”.

He adds: “By integrating AI into their own governance strategies and embedding younger perspectives into boardroom deliberations, directors could transform AI into a vehicle for channeling technological innovation into social innovation within the governance landscape.” We can only hope.

Keep things simple on purpose

Companies don’t need an “alternative corporate form” or special conditions in their governing documents to pursue a “corporate purpose”, according to new research.

A team of profs from Glasgow University looked at companies “influenced by religious beliefs” and found that they tend to use the “standard private limited company form”. Nothing special.

The team—Catriona Cannon, Irene-Marié Messer and Iain MacNeil—concludes that “alternative corporate forms and articulation of social objects in governing documentation are unnecessary for the pursuit of corporate purpose”.

They add: “This, in turn, lends weight to the argument made previously that purpose can be calibrated more effectively through indirect adjustment to capital, profit and governance mechanisms.” As someone else might have put it, just do it.