Category: Uncategorized

Upholding Integrity: The corporate benefits of a robust Whistleblowing Policy 

May 13th, 2024 by

In recent weeks, aerospace giant Boeing could be found sitting somewhat uncomfortably in media headlines following multiple whistleblower reports from within its supply chain and manufactuing process, bringing consumer trust into and corporate integrity firmly into focus. So, this week Ebonstone has decided to look at the benefits in having a strong and functional whistleblowing policy and what elements should be included when implementing one. 

So why is it important to have a well written, accessible whistleblowing policy…? 

Corporate ethics and accountability are rightfully becoming more and more important to consumers and organisations when it comes to purchasing decisions, so whistleblowing has emerged as a critical mechanism for uncovering wrongdoing within organisations’ operation. A sound whistleblowing policy not only promotes transparency and accountability but also serves as a cornerstone for fostering a culture of integrity and trust both internally and externally. Companies that prioritise the establishment of effective whistleblowing protocols stand to gain numerous benefits, both tangible and intangible. 

At the heart of any successful organisation lies a culture of integrity. A clear whistleblowing policy signals to employees that unethical behaviour will not be tolerated and encourages them to speak up when they witness misconduct. By providing a safe and confidential channel for reporting, employees feel empowered to act as guardians of ethical conduct within the company. 

The scandal surrounding the collapse of Carillion in 2018 highlighted systemic issues including financial mismanagement and governance failures. A strong whistleblowing policy might have empowered employees to raise concerns about these practices sooner, potentially averting the company’s downfall and mitigating its impact on the wider economy. 

Whistleblowing policies are also essential for risk management, enabling organisations to identify and mitigate potential threats before they escalate into crises. By encouraging early detection and intervention, companies can avoid costly legal battles, regulatory fines, and damage to their brand reputation. 

An example of this can be found in 2012 in the LIBOR scandal, which rocked the financial industry. It involved manipulation of benchmark interest rates by several major banks, including Barclays. An open whistleblowing policy could have alerted senior management to these fraudulent practices earlier, potentially preventing the substantial fines and reputational damage incurred by the company. 

Compliance with regulations is also a key issue meaning, in an increasingly regulated business environment, adherence to legal and regulatory requirements is paramount. Whistleblowing policies not only demonstrate a company’s commitment to compliance but also help fulfil legal obligations by providing employees with a mechanism to report violations of laws and regulations. 

A clear example can be found with The Financial Conduct Authority (FCA) which requires regulated firms to have effective whistleblowing arrangements in place. Failure to comply with these requirements can result in regulatory sanctions and reputational harm. 

Next, safeguarding a company’s reputation and brand is one of its most valuable assets. A well-publicised whistleblowing policy sends a clear message to stakeholders, customers, investors, and the public, that the company is dedicated to ethical conduct and transparency. By proactively addressing misconduct, organisations can protect their brand reputation and maintain the trust of their stakeholders. 

In 2019, concerns about governance and accounting practices at Patisserie Valerie led to a significant decline in the company’s share price and ultimately its collapse. A well-positioned whistleblowing policy might have allowed these issues to be addressed sooner, potentially preserving the company’s reputation and financial viability. 

What components make up an effective whistleblowing policy…? 

In order to reap the benefits that we’ve looked at, companies must develop whistleblowing policies that are comprehensive, accessible, and user friendly. We have highlighted some of the key components essential when writing a great whistleblowing policy. 

To start with you’ll need clear reporting procedures that plainly outline how employees can report concerns, including multiple reporting channels such as a dedicated hotline, email, or online portal. The process must come with confidentiality protections that assure employees that their identities will be kept confidential to the extent possible, minimising the risk of retaliation. With this in mind, the presence of a non-retaliation policy should be clearly set out which explicitly prohibits retaliation against whistleblowers and provides avenues for employees to report any retaliation they experience. 

Next, your investigation protocol must be clearly laid out, detailing the process for investigating reports of misconduct, together with information on how allegations will be assessed, investigated, and resolved. Company culture should also have an emphasis on communication and awareness, ensuring the company regularly communicates the existence of the whistleblowing policy to employees and provides training on its use and importance. 

Finally, it is vital to have leadership commitment behind the policy, demonstrating visible support for the whistleblowing policy from senior leadership who emphasise its importance in upholding organisational values. Having a strong and concise whistleblowing policy should not just be a compliance requirement but hold strategic importance for any organisation committed to upholding integrity, managing risk, and safeguarding its reputation. By implementing and promoting a culture of transparency and accountability, companies can not only better protect their stakeholders, but help to nurture more sustainable, long-term success. 

For more information on how Ebonstone can support corporate integrity and internal process, get in touch through our website or call on 07423 262245 for an informal chat.  

 

A Question of Ethics: How could a Code of Ethics help your business to stand out? 

April 19th, 2024 by

Let’s face it, throughout modern history, many businesses ethical considerations have often taken a back seat, behind ‘profitability at all costs’ driving the business focus. However, for companies listed on the FTSE 350 (and those with aspirations to be), maintaining a robust ethical framework isn’t just a moral imperative, it’s a strategic necessity, and an important way to separate themselves from other companies, and helps to introduce their ‘moral backbone’ to external stakeholders and potential investors.  

This week, we investigate the pros and cons of publishing a code of ethics for such companies and explore how a sound ethics policy aligns with the UK Bribery Act 2010. 

There are some obvious benefits when it comes to embedding and publishing a Code of Ethics within an organisation. To start with it serves to enhance their reputation. A transparent code of ethics signals to stakeholders (investors, customers, employees, and regulators) that the company is committed to operating with integrity. This can bolster its reputation and enhance trust, a valuable currency in today’s competitive market. 

A well-defined code of ethics helps to identify potential risks early on, allowing companies to take proactive measures to mitigate them. By outlining acceptable behaviours and practices, companies can reduce the likelihood of legal and regulatory violations, safeguarding against costly penalties and reputational damage. 

A coherent code of ethics can also serve to strengthen positive culture and engage staff. Clear ethical guidelines provide employees with a roadmap for navigating complex ethical dilemmas they may encounter in the course of their work. It can therefore foster a culture of accountability and integrity, leading to higher employee satisfaction, retention, and productivity. 

When it comes to investor confidence, environmental, social, and governance (ESG) criteria are increasingly influential in investment decision making. Consequently, a robust code of ethics can attract socially responsible investors who prioritise ethical conduct, which in turn, can drive long-term shareholder value. 

So, what are the drawbacks of an ethics code? To begin with, it can be resource intensive, as developing, implementing, and enforcing a comprehensive code of ethics requires significant time, effort, and financial resources. For smaller companies within the FTSE 350, especially those with limited budgets and personnel, this could pose a challenge. 

Next, we consider the increased burden in compliance. While a code of ethics aims to promote ethical behaviour, the sheer volume of regulations and legal requirements can sometimes overwhelm companies, leading to compliance fatigue. Balancing ethical considerations with regulatory obligations can be a delicate task, requiring careful and considered navigation. 

A strong code might also hold the potential for hypocrisy. Publishing a code of ethics sets a high standard for behaviour, where any deviation from these standards could be perceived as hypocrisy, damaging the company’s reputation. Maintaining consistency between stated values and actual, embedded practices is crucial to avoiding accusations of green/blue washing or ethical misconduct. 

Lastly, we need to consider and respect the fact there will never be a universal standard of ethical norms as differences will exist across cultures, industries, and regions. This can make it challenging to develop a one-size-fits-all code of ethics that resonates with all stakeholders, particularly for truly global organisations and brands. Companies operating in multiple jurisdictions must evaluate and manoeuvre cultural nuances and legal frameworks to ensure their code remains relevant and effective. 

Why is an ethics policy considered important in the first place? Well, the UK Bribery Act 2010 represented a significant milestone in the fight against corruption, imposing stringent penalties on companies found guilty of bribery and corruption offenses. Therefore, a robust ethics policy serves as a vital tool for compliance with this legislation in several ways. 

A clear code of ethics prohibits bribery and corruption in all forms, aligning with the zero-tolerance approach mandated by the Bribery Act. By establishing robust anti-bribery measures, companies can minimise the risk of legal liability and reputational damage associated with corrupt practices. 

In addition, implementing comprehensive due diligence processes, as outlined in the ethics policy, enables companies to assess the integrity of third parties, such as suppliers, agents, and business partners. This is crucial for mitigating the risk of inadvertently engaging with entities involved in corrupt activities or unearthing potential conflicts of interest. 

The training and education of employees about their responsibilities under the ethics policy and the Bribery Act is vital and promotes a culture of compliance and ethical awareness. Training programmes can empower employees to recognise and report potential bribery and corruption risks, strengthening the company’s internal controls. 

As a result of this, and in the event of suspected bribery or corruption, a well-defined ethics policy must provide clear procedures for reporting and investigating such incidents. Timely and transparent handling of allegations demonstrates the company’s commitment to ethical conduct and cooperation with regulatory authorities. 

While the decision to publish a code of ethics involves careful consideration of the associated benefits and drawbacks, for FTSE 350 companies, the imperative of ethical leadership cannot be overstated. By embracing transparency, accountability, and integrity, these companies not only comply with legal obligations but also foster sustainable growth and stakeholder trust in an increasingly complex business environment. 

 

If you would like to talk through any thoughts related to ethical codes of practice within your organisation, please get in touch with the team to learn more about how we can help. 

 

Learning from the Carillion Collapse: Improving Corporate Governance in the UK 

April 5th, 2024 by

It’s been just over 6 years since the collapse of Carillion in January 2018 that sent shockwaves through the UK business world, prompting a critical examination of corporate governance practices. As one of the largest construction and facilities management companies in the UK, Carillion’s demise raised serious questions at the time about governance failures and their broader implications.  

So, how have we evolved from this? We’ve decided to look into the causes and effects of the Carillion scandal, with a focus on governance, and explore the subsequent improvements made in UK corporate governance aimed at preventing similar crises. 

A bit of background…. 

For those of you unfamiliar with the case, the Carillion scandal stemmed from a confluence of systemic governance deficiencies and operational mismanagement. First, we’ll recap several key factors that all collided to contribute to its collapse. 

To start with, Carillion exercised poor risk management where their aggressive expansion strategy led to overextension and high debt levels, exacerbating financial vulnerabilities. The company’s failure to adequately assess and mitigate risks associated with major contracts further compounded its financial woes. 

Next, Carillion’s financial reporting practices were heavily criticised for their opacity and lack of transparency. The company’s complex corporate structure and use of off-balance-sheet arrangements obscured its true financial health, deceiving investors and stakeholders. 

The board composition and dynamics also came into question, with concerns raised about the independence and expertise of non executive directors. Weak oversight resulted in the board of directors’ failure to provide effective strategy and challenge management decisions.    

A lack of auditor scrutiny may also have played a part in the collapse where external auditors were accused of failing to exercise sufficient skepticism and diligence in their audits of Carillion’s financial statements. Critics argued that auditors overlooked warning signs and relied too heavily on management assurances. 

What were the effects? 

The collapse of Carillion had far reaching consequences, impacting various stakeholders and raising broader governance concerns. The social and economic impact of the collapse was profound as thousands of employees lost their jobs, subcontractors faced financial losses, and pension fund deficits deepened. The ripple effects of Carillion’s collapse reverberated deeper throughout the supply chain and affected many local economies. 

Investor confidence was significantly eroded in corporate governance and financial reporting standards. Shareholders suffered significant losses, prompting calls for greater accountability and transparency from corporate leaders together with deeper regulatory scrutiny and reforms.  

How have we evolved? 

So, what improvements have taken effect in UK Corporate Governance since Carillion’s collapse? Subsequent reviews did indeed highlight the need for stronger oversight and regulatory enforcement as government committees investigated the circumstances leading to Carillion’s collapse and proposed reforms to improve corporate governance standards aimed at enhancing corporate governance practices and mitigating systemic risks. 

First of all, reforms focused on enhancing director accountability and responsibility. The UK Corporate Governance Code now emphasises the importance of board diversity, independence, and effective risk management oversight. 

Corporate reporting practices have improved as companies are since required to provide clearer and more transparent disclosures regarding their financial performance, risk exposures, and corporate governance practices. Enhanced narrative reporting requirements aim to improve stakeholder understanding and scrutiny. 

Regulatory reforms have been introduced to enhance auditor independence, accountability, and the quality of audit services. Measures include mandatory audit firm rotation, increased regulatory oversight, and improved audit committee oversight of auditor selection and performance. 

There has also been a growing emphasis on stakeholder engagement and dialogue as a means of promoting long term sustainable value creation. Companies are encouraged to consider the interests of a broader range of stakeholders, including employees, customers, suppliers, and communities, and demonstrate their wider impact of their strategy and decisions. 

When viewed with positive hindsight, the Carillion scandal served as a wake up call for the UK corporate governance establishment, prompting a reassessment of governance practices and regulatory frameworks – it refocused the vital importance of ‘good governance’, what that should look like, and the deeper value it holds when embedded smoothly throughout an organisations’ operation.  

While significant improvements have been made since Carillion’s collapse, ongoing vigilance and continuous improvement are essential to ensure that governance failures are identified and addressed promptly, boosting investor confidence, safeguard stakeholders’ interests, and promoting sustainable corporate performance in the years ahead. 

Independent internal audits are just part of Ebonstone’s service offering – get in touch for an informal chat about how we can help to enhance and better protect your business. 

The Geopolitical Chessboard: Strategic business thinking at the board level 

March 22nd, 2024 by

The geopolitical landscape has become a paramount consideration for businesses operating in the United Kingdom, with its influence extending deep into corporate strategy at the highest levels of governance. This weeks’ article delves into the multifaceted impact of geopolitics on strategic decision making within UK boardrooms, underlining the imperative for foresight and nimble feet when choreographing movement through complex terrain. 

An obvious place to start is with trade relations and tariffs where geopolitical tensions often manifest in trade disputes and tariff wars, disrupting established trade relationships and global supply chains. An illustrative example is the ongoing trade dispute between the United States and China. The imposition of tariffs by both countries has significantly impacted businesses worldwide, prompting UK board members to reassess their supply chain dependencies and diversify sourcing strategies to mitigate risks. 

Next, we can see how geopolitical events can trigger global economic uncertainties by influencing currency values, interest rates, and market stability. Brexit serves as a pertinent example, as the UK’s decision to leave the European Union introduced considerable economic volatility. Board members must recognise and plan for such uncertainties, employing scenario planning and robust risk assessment frameworks to safeguard their organisations against unforeseen economic disruptions. 

We can also look at how changes in regulations stemming from geopolitical events pose compliance challenges for businesses. For instance, the UK’s departure from the EU necessitated a review of regulatory frameworks across various sectors. Boards must remain agile, anticipating regulatory changes and ensuring their organisations remain compliant while retaining the flexibility to adapt to evolving geopolitical scene. 

Geopolitical tensions can also disrupt global supply chains, leading to delays and increased costs. The COVID-19 pandemic highlighted the vulnerability of supply chains to geopolitical shocks, with widespread disruptions impacting industries worldwide. UK board members are increasingly focused on building resilient supply chains, incorporating redundancy measures and localisation strategies to mitigate geopolitical risks effectively. 

Finally, geopolitical instability can exacerbate security threats, ranging from physical to cyber risks. The escalating tensions between Russia and Ukraine, for example, have raised concerns about cybersecurity vulnerabilities and potential retaliatory cyberattacks. Boards must prioritise investments in robust security measures to safeguard their organisations’ assets, employees, and sensitive data in an increasingly volatile world. 

So, how to be pragmatic when thinking strategically at board level – let’s begin with scenario planning and risk management. Boards would be wise to engage in scenario planning and comprehensive risk assessments to anticipate and mitigate geopolitical risks. By envisioning various geopolitical scenarios and their potential impact on the business, boards can proactively devise strategies to navigate uncertainty and capitalise on emerging opportunities. 

The interconnected nature of geopolitical events necessitates proactive engagement with diverse stakeholders. Boards might cultivate strong relationships with governmental bodies, industry associations, and international partners to obtain key insights and foster collaborative problem solving amid geopolitical uncertainty. 

Adaptive leadership and flexibility is essential for boards to navigate geopolitical complexities effectively. This involves staying abreast of global trends, continuously monitoring geopolitical developments, and swiftly adjusting strategic plans in response to evolving international dynamics. 

This is where the investment of technology and innovation can play a pivotal role in mitigating geopolitical risks and enhancing organisational resilience. Boards may decide to prioritise investments in technologies that optimise supply chain visibility, enable remote work capabilities, and bolster cybersecurity defences, thereby fortifying their operation against geopolitical challenges. 

Essentially, the interplay of geopolitics and business strategy underscores the need for proactive and agile decision making at the board level – internal governance processes are key to this. By understanding and effectively evaluating geopolitical risks, UK businesses can position themselves to thrive in an increasingly interconnected and unpredictable global setting. 

Ebonstone help businesses to assess and address internal governance structure and process in order to improve resilience, efficiency, clarity and ultimately to help lower associated risks. Get in touch with the team for an informal chat to learn more. 

Balancing the Board! The evolution of gender equality in UK boardrooms 

March 14th, 2024 by

Following on from International Women’s’ Day last week, Ebonstone wanted to revisit gender equality within business where the past two decades have witnessed a slow but perceptible shift in the dynamics of boardrooms across the UK. 

While progress has been made, the journey towards achieving gender balance in the corporate echelons remains an ongoing battle. Within the FTSE 350, the stats are looking promising but there is still work to be done. At present, aspiring privately owned, fast growth and AIM listed companies have no formal obligations to address gender equality within their boards and senior management teams. This article delves into some of the challenges still faced by women at board and executive level, and examines the transformation trends in the male-to-female ratio among board members over recent years. 

The boardroom, traditionally perceived as an exclusive enclave of male leadership, has posed numerous challenges for women striving to ascend its ranks. Deep seated gender biases, systemic barriers, and an old boys’ network have long hindered the progress of women in the corporate world. Despite women proving their mettle in various industries, the ascent to board positions has been an uphill battle. 

One persistent challenge is the prevalent notion that diversity initiatives compromise meritocracy. However, numerous studies have shown that diverse boards enhance decision making processes, foster innovation, and contribute to the overall success of companies. The struggle lies in dismantling these ingrained biases and recognising that gender diversity is not just a social imperative but a business necessity. 

Over the past 20 years, there has been a perceptible shift in the composition of UK boardrooms. The turn of the century saw an overwhelmingly male dominated scene, with women occupying only a small fraction of board positions. However, concerted efforts and advocacy for gender diversity have started to bear fruit. 

Government initiatives, such as the FTSE Women Leaders Review (2022) and Davies and Hampton-Alexander Reviews, have set targets for increasing female representation on boards and SLT’s by the end of 2025, acting as catalysts for change. As a result, the percentage of women on FTSE 350 boards has more than tripled, reaching over 40% in February of last year, ranking second to France in international rankings who achieved this through quota legislations across a smaller number of businesses. 

Constituents of the FTSE 350 are reported to be on track to meet the target of 40% women in leadership teams by the end of 2025. While this progress is commendable, challenges persist in achieving parity, especially in executive positions and smaller companies. 

Despite the positive trajectory, several barriers impede the swift attainment of gender balance. Unconscious biases, lack of mentorship opportunities, and the scarcity of visible role models for aspiring female leaders continue to hinder progress. Additionally, the scarcity of women in executive roles – the traditional pipeline to board positions – remains a significant challenge. 

To address these issues, companies must prioritise inclusive leadership, mentorship programs, and transparency in recruitment processes. By fostering an environment that values diversity, businesses can break down barriers and empower women to ascend to the highest echelons of leadership. 

The call for gender diversity in boardrooms is not just a matter of social justice, it is a strategic imperative for businesses in an ever evolving global landscape. Companies with diverse leadership teams are better equipped to navigate complexity, adapt to change, and capitalise on a broader range of perspectives. 

The transformation of gender dynamics in UK boardrooms over the past two decades is a testament to the collective efforts of individuals, organisations, good governance and policymaking under a business-led approach. While progress has been made, challenges persist. Achieving true gender balance requires a continued commitment to dismantling systemic barriers, promoting inclusivity, and recognising that diverse leadership is not just a moral obligation but a competitive advantage. These can start with small steps by ensuring ‘positive action’ is used to actively encourage candidates (gender or other specific groups) towards a post. The selection process must remain the same for every candidate with the successful candidate is appointed on their ability, irrespective of race or gender etc.

You can widen the diversity of staff by using a number of simple techniques, from ensuring the language used in attracting people is inclusive and doesn’t inadvertently use terminology that might deter applications, to flexible working policies and the use of a broad range of media for advertising, including local press, web sites, social media, in addition to using specific organisations and associations that promote equality for protected groups.

As we reflect on the journey so far, it is clear that the path to an equitable boardroom is one that demands perseverance, courage, and a shared commitment to rewriting the narrative of corporate leadership in the 21st century. 

Get in touch with Ebonstone for a free and informal chat about how to improve your gender equality strategy, policy and embedded process. 

Brilliant Businesswomen: Inspiring Journeys of Female Entrepreneurs in the UK 

March 8th, 2024 by

In the bustling UK business arena, a powerful wave of change is surging, driven by resilient and visionary women who have dared to dream beyond (long established) boundaries. Today is International Women’s Day, so as an all female owned business, Ebonstone duly wanted to pay homage to the struggles, journeys, and triumphs of female entrepreneurs who have carved their own paths in the business world, defying stereotypes and redefining success. 

Historically, women in business have struggled for recognition, and faced a myriad of challenges, from ingrained gender biases to limited access to funding. Despite these obstacles, women in the UK have been breaking glass ceilings and shattering stereotypes. One notable example is Sarah Wood, co-founder of Unruly, a video ad tech company. Wood’s journey began with scepticism and resistance from potential investors who doubted her ability to lead a tech enterprise. However, through tenacity and innovation, Unruly became a multimillion dollar success story, eventually acquired by News Corp. 

Access to capital has long been a significant hurdle for female entrepreneurs. Nevertheless, dynamic women like Debbie Wosskow, founder of Love Home Swap, have proven that a compelling idea and determination can bridge the funding gap. Facing initial rejections, Wosskow persisted, securing backing from a mix of venture capitalists and angel investors. Love Home Swap went on to revolutionise the travel industry, showcasing the untapped potential that women entrepreneurs bring to the table. 

Some women have chosen to step into traditionally male dominated industries, challenging stereotypes and reshaping perceptions. Tech entrepreneur Kathryn Parsons, co-founder of Decoded, played a pivotal role in demystifying coding and making it accessible to people of all backgrounds. Breaking into a field largely dominated by men, Parsons is a testament to the transformative power of women forging their paths in unconventional sectors. 

Collaboration has proven to be a key driver of success for many female entrepreneurs. Alice Bentinck and Anna Bance, co-founders of Entrepreneur First, created a platform that brings together aspiring tech founders, fostering a collaborative environment that thrives on diversity. By providing a space for women to connect, collaborate, and innovate, Entrepreneur First has become a launching pad for numerous successful startups. 

The success stories of female entrepreneurs in the UK are not just individual victories; they are building legacies that inspire future generations. Dame Mary Perkins, co-founder of Specsavers, revolutionised the eyewear industry and continues to empower women through philanthropy and mentorship. Her journey exemplifies the lasting impact that female entrepreneurs can have, not only on their industries but on society as a whole. 

And so to Ebonstone’s esteemed entrepreneurs, Marie-Claire Haines and Judith Barrass. Having both worked in governance in different corporate environments, they formed a new, like minded approach to delivering bespoke, effective, ethical and embedded process to an organisations’ governance and cosec function, where clients recognise genuine value and challenge to what ‘good’ should look like. They apply this ethos to their own business journey, putting people and positive culture at the forefront of the adventure whilst working towards their destination.  

Each year, the landscape of female entrepreneurship in the UK is evolving and looking evermore positive, with women overcoming obstacles, breaking moulds, and leaving an indelible mark on various industries. These entrepreneurs serve as beacons of inspiration, proving that success knows no gender. As the UK continues to champion diversity and inclusivity in business, the stories of these remarkable women will undoubtedly inspire others to dream big, break boundaries, and redefine success on their terms. 

Empowering Change: The Purpose and Impact of B-Corps 

March 1st, 2024 by

IT’S B-CORP MONTH!… and as a proud certified B-Corp company, Ebonstone wants to promote the movement, explaining to the uninitiated what it’s all about and why EVERY organisation should strive towards a better way of doing business! In a world where business success often hinges on profit margins and shareholder returns, a new wave of companies is emerging, dedicated to a higher purpose beyond just financial gain.  

Certified B Corporations, or B-Corps, represent a revolutionary shift in the business landscape, embodying a commitment to balancing profit with purpose. These companies, driven by a desire to make a positive impact on both society and the environment, are rewriting the rules of commerce and fostering a new era of responsible capitalism. 

Becoming certified makes a statement that your business really does live and breathe these values! 

So, what is a B-Corp? 

B-Corporations are businesses that voluntarily meet the highest standards of social and environmental performance, transparency, and accountability. Unlike traditional companies that focus solely on maximising shareholder value, B-Corps aim to benefit all stakeholders, including employees, communities, and the planet. 

To become a certified B-Corp, a business undergoes a rigorous assessment conducted by the non-profit organisation B Lab. The assessment evaluates a company’s impact on workers, customers, suppliers, community, and the environment. Achieving B Corp certification is not an easy feat, and it requires a commitment to meeting stringent standards and continuous improvement. 

The Purpose of B-Corps 

At the core of the B-Corp movement is the belief that businesses can be a force for good. B-Corps operate with a triple bottom line, considering people, planet, and profit in equal measure. This holistic approach to business encourages sustainable practices, fair treatment of workers, and the development of products and services that contribute positively to society. 

By fostering a sense of purpose beyond profit, B-Corps attract like-minded individuals who are not only motivated by financial success but also by the desire to create a meaningful impact. This purpose-driven mindset is reshaping the corporate world, demonstrating that businesses can thrive while also contributing to a more equitable and sustainable future. 

Benefits of B-Corp Membership 

B-Corp certification brings a plethora of benefits to member companies. Firstly, it provides a competitive edge by showcasing a commitment to responsible business practices, attracting conscious consumers who prioritise ethical products and services. Moreover, B-Corps gain access to a supportive global network of businesses that share similar values and goals. This community fosters collaboration, knowledge sharing, and the exchange of best practices, creating a collective force for positive change. 

Certified B-Corps also benefit from increased employee satisfaction and retention. Workers are drawn to organisations that prioritise their wellbeing, offer fair wages, and contribute to social and environmental causes. B-Corps, therefore, have a distinct advantage in attracting top talent, fostering a motivated and engaged workforce. 

Positive Impact on Society 

Beyond individual company benefits, the B-Corp movement has a broader positive impact on society. As more businesses embrace the principles of social and environmental responsibility, they contribute to the creation of a more sustainable and equitable economy. B-Corps set a precedent for ethical business practices, influencing industry standards and encouraging competitors to follow suit. 

The B-Corp movement is a catalyst for systemic change. By redefining success in business, B-Corps inspire traditional companies to reassess their priorities and adopt more sustainable practices. This ripple effect extends throughout the supply chain, encouraging suppliers and partners to align with socially and environmentally conscious values. 

To Sum it All Up 

Certified B Corporations are at the forefront of a transformative movement that aims to redefine the role of business in society. By putting purpose on par with profit, B-Corps are creating a model that not only benefits individual companies but also contributes to a more just, equitable, and sustainable global economy. 

As consumers become increasingly conscious of their purchasing choices, and employees seek meaningful work, the B-Corp movement is positioned to grow and shape the future of business. Through collaboration, transparency, and a commitment to positive impact, B-Corps are proving that business can be a powerful force for good, and that profit and purpose can coexist harmoniously in the pursuit of making this world, a better world…..there is no planet ‘B’! 

Learn more about the movement here in the UK buy visiting ‘B-Lab’ at https://bcorporation.uk/ 

As a B-Corp company, we are happy to speak with any organisation and share our experience of becoming certified, including the challenges, the benefits, the timescales, the whole process!  

Get in touch for an informal chat. 

University Challenged? Governance challenges facing UK Higher Education sector.

February 16th, 2024 by

With welcome news this week that overall undergraduate applications from overseas students for UK universities is up 0.7% on last year, we look at how good governance should play a part in the growing challenges our Higher Education institutions face. 

The world of higher education in the UK stands on the precipice of transformation as we delve into the complexities of the academic year 2024/25. A host of governance challenges loom large, reshaping the foundations of how universities operate, govern, and position themselves on the global stage,  

Universities, traditionally reliant on tuition fees and government funding, find themselves at the mercy of economic uncertainties, fluctuating exchange rates and shifting funding models, meaning the need for diversified revenue streams, strategic fiscal management, and philanthropy has never been more critical. Fundamentally, strategic governance must grapple with the delicate balance of maintaining financial sustainability while ensuring the preservation of academic excellence. 

Financial stability becomes more complex in an age where global collaboration is the cornerstone of academic progress and universities are confronted with further governance challenges tied to internationalisation. On the international stage universities are not only impacted by UK govt policy, but by the policy of overseas governments. For example, Australia and Canada have both opened their doors to students with incentivised immigration policies that include beneficial changes to working hours, refunds on visa application fees, and extending post study working rights. 

In addition to this this, overseas political decision making can affect student finances, making it more difficult to move money across borders. An example can be found with Nigeria where students have to use the Nigerian bank to access foreign currency at a rate that is much worse than that available on parallel markets.  The Nigerian government also limit the amount of money that can be exchanged meaning students may struggle to pay deposits towards course fees. 

Other challenges exist where some countries, such as Kuwait, will pick and choose individual institutions for acceptance on their government sponsorship schemes. 

The rise of exchange programs, satellite campuses, and collaborative ventures demands adept manoeuvring through intricate regulatory environments, cultural nuances, and geopolitical risks. Effective governance becomes the linchpin in fostering ethical practices, upholding academic freedom, and establishing successful, longer term global partnerships.  

Collaboration between institutions also requires concise ethical governance to underpin competitive marketing strategy. The growing importance attached to league table standings not only increase competition between institutions but can also create friction for those who wish to collaborate whilst, at the same time, wanting to gain more market share from each other. 

Remote learning and internationalisation have required the rapid integration of digital technologies into higher education, ushering in a new era of academic possibilities together with the associated risks. The spectre of cybersecurity threats looms large, compelling governance bodies to address issues related to data protection, online learning infrastructure, and the ethical use of emerging technologies. Striking a fragile balance, governance structures must ensure that the benefits of digital transformation do not compromise student privacy or institutional integrity. 

Smart technology, financial pressures and social frameworks bring the larger ‘student experience’ topic into focus where mental health and well-being of students take centre stage as crucial governance concerns. In the modern academic landscape, universities must not only prioritise academic excellence but also develop comprehensive strategies for mental health support and inclusive environments that should not only include access to sports, clubs, community engagement projects, charity events, etc, but can include broader social education programmes that support a young persons’ development into adulthood. Governance structures must proactively respond to the evolving needs of students, ensuring that policies are both progressive and responsive. 

The clarion call for diversity, equity, and inclusion also reverberates through the hallowed halls of academia, reshaping governance frameworks. Universities are under increasing pressure to dismantle systemic inequalities, promote diversity at all levels, and foster inclusive environments that breed innovation and excellence. Governance structures must not only echo these ideals but actively drive and support initiatives that break down barriers to access and success. 

The pursuit of the highest standards in research ethics and integrity remains an enduring challenge for universities. As scrutiny on academic research intensifies, governance bodies must strengthen policies, foster a culture of transparency, and address issues related to intellectual property, collaboration ethics, and the responsible use of research funding. Effective governance becomes instrumental in preserving the integrity of academic pursuits. 

Moving away from internal governance, the UK Higher Education sector finds itself navigating a dynamic regulatory landscape, shaped by government reforms and new policies. Governance structures are tasked with the formidable challenge of swift adaptation to comply with evolving regulations, managing reputational risks, and safeguarding institutional autonomy. A considered balance between accountability and academic freedom requires governance structures to exhibit agility and adept capacity for decision making. 

As the academic year 2024/25 unfolds, the success of UK higher education hinges on the effectiveness of governance structures. Universities must confront financial uncertainties, embrace digital transformation responsibly, champion diversity and inclusion, and respond dynamically to the evolving needs of students and society. Governance should stand as a stalwart guardian to this ambition, playing a pivotal role in determining how institutions take on these challenges, adapt to change, and continue to thrive in the ever evolving academic landscape. 

If this article has raised any questions you would like to discuss about building resilience into your corporate strategies, please contact us for a free confidential chat.  

 

Social Governance….corporate perception that blue my mind!

February 9th, 2024 by

How accurate is the general social picture when it comes to company image and perception?

In the ever evolving landscape of corporate communication, companies often resort to strategic messaging to create an illusion of virtue. This phenomenon, commonly referred to as ‘washing,’ comes in various hues, each representing a different facet of corporate misdirection. From environmental posturing to social responsibility claims, Ebonstone explores the spectrum of washing practices, revealing the governance failings that often accompany them.  

Whilst we are all familiar with the term greenwashing, this article will mainly focus on an organisation’s social behaviours…enter the room – the dangers of bluewashing! 

Bluewashing. In an era where corporate responsibility is in the spotlight, the phenomenon of bluewashing has emerged as a significant concern, diverting attention from real societal issues. Bluewashing occurs when organisations make superficial or token gestures towards social causes without genuinely addressing the core problems. Despite good intentions, these actions can have unintended consequences and harm the credibility of the organisations involved.   

Social reporting requires statements and disclosures in the same way as environmental reporting, so making false or misleading claims can be equally damaging. It is vital that a company only reports and articulates its social initiatives where it is confident it can evidence it upon further scrutiny, making the measurement and review of implemented social impact strategy even more important.  

An example of bluewashing can be found in Nestlé’s Child labour controversies in 2020. Nestlé, despite its extensive Corporate Social Responsibility (CSR) efforts, faced allegations of child labour in its cocoa supply chain. The company’s bluewashing tactics were exposed when reports revealed that its commitment to ethical practices was not reflected in its supply chain management. 

Another stark example of bluewashing unfolded during the 2020 Black Lives Matter protests. The ‘Blackout Tuesday Movement,’ where organisations posted black squares on social media, initially aimed at solidarity, ended up overshadowing essential communication from activists. The sheer volume of black squares drowned out educational content, diluting the message and diverting attention from authentic activism.   

Bluewashing is not confined to online trends; it often permeates formal disclosures. Misleading data and imagery, particularly prevalent in annual reports, can create a façade of commitment to social causes. An example is seen in the fashion industry, where claims of ethical clothing production may conceal underlying labour and human rights issues within the supply chain.   

So, what can you do to avoid falling into the bluewashing trap? Organisations need to move beyond token gestures and focus on authentic contributions to social causes. Here are key considerations:  

  • First of all, implement inclusive policies and culture. Organisations should align their actions with their values, so before engaging in social issues, ensure that internal policies and culture reflect the principles being promoted externally.  
  • Next, ensure you align your ESG ambition with your central business strategy. Effective integration of Environmental, Social, and Governance (ESG) initiatives seamlessly helps prevent ESG issues from being sidelined and underscores the organisation’s commitment to holistic responsibility.  
  • Resist the urge to jump on the bandwagon by contributing temporarily to a cause merely because it is popular. Authentic activism requires a sustained commitment to causes that align with the organisation’s core values.  
  • Include representation in your advertising by including marginalised groups consistently in marketing campaigns, avoiding the pitfall of exploiting social movements for profit without genuine contributions to positive change.  
  • Backup any social impact claims with evidence by setting measurable targets, track their progress, and transparently report on the results to build trust with stakeholders.  
  • Finally, ensure transparent reporting as accountability is vital. Organisations should be transparent about their social initiatives, acknowledging both successes and challenges. Stakeholders value honesty over misleading information.  

As businesses increasingly recognise the importance of contributing to societal well being, the pitfalls of bluewashing come into sharper focus. While many principles align with those for greenwashing, it is essential to recognise the nuances and be vigilant against performative activism. Striving for authentic social initiatives, underpinned by transparent reporting and evidence backed claims, not only safeguards against bluewashing but also fosters genuine positive impact. In an age where stakeholders demand authenticity, organisations must prioritise purposeful action over token gestures to drive meaningful change. 

 

Whilst bluewashing covers a broad range of social topics there are further ‘sub-types’ of bluewashing which highlight specific social groups or issues. Ebonstone explores more shades of corporate washing.   

Greenwashing, a term that gained traction in the era of climate consciousness, involves companies portraying an environmentally friendly image without making substantial changes to their practices. Accidental or not, investors and auditors are becoming more meticulous in their review of reports and disclosures, meaning companies need to ensure the clear communication of a well understood internal environmental efforts.   

Failure to live up to your own hype can lead to accusations of greenwashing and further damage to reputation. For example, BP’s Campaign in 2000 where they rebranded as ‘Beyond Petroleum’ suggested a commitment to renewable energy. However, the company continued to heavily invest in fossil fuels, leading to accusations of greenwashing and a significant blow to its credibility after the Deepwater Horizon oil spill in 2010. 

Purplewashing specifically centres around the disingenuous embrace of diversity and involves companies exaggerating their external commitment to diversity and inclusion, whilst concealing discriminatory practices towards female equality or empowerment. We find an example in Google’s diversity crisis in 2017, where Google faced a public relations crisis when an internal memo surfaced, revealing discriminatory views on gender diversity within the company. This exposed a stark contrast between the company’s purported commitment to inclusivity and the reality of its corporate culture. 

Rainbow washing involves the profiteering from token LGBTQ+ support and occurs when companies exploit LGBTQ+ symbols and messaging, especially during Pride Month, without making substantive efforts to support LGBTQ+ causes within their culture. You may recall an example in 2019 when H&M faced backlash for its Pride themed collection after revelations about the harsh working conditions in its supply chain. Critics accused the company of rainbow washing, arguing that it was using LGBTQ+ symbols to divert attention from its labour related shortcomings. 

Woke washing occurs when companies adopt superficial or insincere social justice stances to appeal to socially conscious consumers in order to promote its brand. Sometimes referred to as ‘performative activism’, woke washing is often seen as hollow social activism where an organisation jumps onto the bandwagon of a particular cause, but withdraws support once it is no longer in the spotlight or of further benefit to its’ image. 

In 2017, Pepsi’s ‘Live for Now’ ill fated advertisement featuring Kendall Jenner attempted to capitalise on social justice movements. The commercial was widely criticised for trivialising real world protests, highlighting the dangers of woke washing and inauthentic attempts to align with social causes. 

Red washing, whilst similar to woke washing, involves companies using marketing strategies to align themselves with social ideologies or causes specifically within a political sphere or towards indigenous groups. It occurs where symbolic support lacks any authentic effort to minimise the discrimination face related to the topic. 

In 2020, Facebook faced scrutiny for allowing misleading political advertisements on its platform. The company was accused of red washing, as its commitment to fostering democratic discourse clashed with its tolerance for deceptive political messaging. It can also occur where businesses are promoting the rights of local indigenous people whilst simultaneously denying job opportunities (unfairly) to those same people they claim to support.  

Sports washing distorts a positive image through sports affiliation and involves leveraging sports associations or sponsorships to distract from negative corporate practices. This can occur at national level where a country will host an international sporting events to move attention away from their own political or social issues.  It can also happen when an organisation financially supports or sponsors prevalent sporting events or teams in order to benefit from the positive perception of sport, deflecting attention from various issues such as human rights neglect in the supply chain, corruption or negative environmental impact, etc. 

Qatar’s FIFA World Cup Controversy in 2022 provides an example where Qatar faced allegations of human rights abuses in the construction of facilities in preparation for the FIFA World Cup. Critics argued that the country engaged in sports washing by using the tournament to deflect attention from its human rights violations. 

Ultimately, the spectrum of washing practices within the corporate world is vast and varied, showcasing the lengths to which companies go to shape public perception. Governance failings associated with these tactics highlight the need for increased transparency, accountability, and authentic commitment to positive change. As consumers become more discerning, it is crucial for companies to move beyond the art of illusion and focus on genuine ethical practices that align with their professed values. Only through sincere efforts can businesses hope to build lasting trust and credibility in an era where authenticity reigns supreme. 

If any part of this article has raised a question for you and your organisation, please contact the team here at Ebonstone to talk it through. We’d be happy to help. 

 

 

The Path to Net Zero: Is your organisation on track? 

February 2nd, 2024 by

How strong is your governance framework when it comes to achieving net zero targets?

It’s understandable that our collective net zero agenda may have taken a back seat in recent years whilst the effects of economic change, global conflicts and pandemics have been at the forefront of attention. However, as the world collectively strives towards a sustainable future, there is renewed, growing urgency to address climate change from governments, businesses, and individuals alike.  

In the UK, the commitment to achieving net zero carbon emissions by 2050 has set the stage for a transformative journey, but are companies really doing all they can to ensure best intentions are delivered? Ebonstone explores the responsibilities and issues that companies of all sizes operating in the UK should consider in their role towards the transition to net zero, with a particular emphasis on the relevant corporate governance issues that play a pivotal part in this monumental shift. 

We’ll start with the issue of carbon neutrality commitments. One of the foremost responsibilities for companies is to establish clear and ambitious targets for achieving carbon neutrality. This involves not only reducing direct emissions but also addressing the broader scope of indirect emissions throughout the supply chain. To ensure a genuine commitment to carbon neutrality, companies must integrate transparency and accountability into their governance structures. Regular reporting, third party audits, and engagement with stakeholders become essential elements to demonstrate progress and maintain credibility. 

The next issue relates to supply chain sustainability. The journey to net zero extends beyond a company’s direct operations to its entire supply chain. Businesses need to collaborate with suppliers, urging them to adopt sustainable practices and reduce their carbon footprint. Here, effective governance requires companies to implement mechanisms for assessing and managing the environmental impact of their supply chains. Governance structures should include policies, risk assessments, and compliance frameworks to ensure sustainability standards are met throughout the supply network. 

We meet the next hurdle when it comes to investment in renewable energy and technology in order to innovate. Companies must invest in renewable energy sources and innovative technologies to transition away from fossil fuels. This not only helps achieve carbon reduction targets but also fosters innovation and resilience in the face of changing market dynamics. This is where strategic decision making corporate boards play a crucial role in driving the transition to net zero by making informed and strategic decisions regarding investments in renewable energy and technology. Governance frameworks should facilitate ongoing evaluations of the risks and opportunities associated with these investments. 

In addition to these issues, companies must foster a climate conscious culture through the engagement and education of their staff. Transitioning to a net zero economy requires the active participation of employees, so priority should be given to engagement and education programs to empower their workforce with the knowledge and skills necessary for sustainable practices. The governance challenge here ensures inclusive decision making. Governance structures must embrace inclusivity, ensuring that employees are involved in decision making processes related to sustainability initiatives. This not only promotes a climate conscious culture but also enhances overall corporate governance by incorporating diverse perspectives. 

Finally, companies must remain vigilant and adaptable to evolving regulatory frameworks related to climate change. Staying compliant with environmental regulations and actively participating in advocacy efforts for progressive policies become integral components of responsible corporate citizenship. This is where risk management and adaptability come into play and corporate boards need to integrate risk management strategies that encompass regulatory compliance. Governance frameworks should emphasise adaptability to changes in environmental policies, ensuring that the company stays ahead of regulatory requirements. 

In the race towards a net zero future, the responsibilities of companies in the UK extend far beyond profit margins. The transition demands a holistic approach, involving strategic decision making, supply chain collaboration, employee engagement, and regulatory compliance. Effective corporate governance is the linchpin that holds these responsibilities together, fostering a culture of transparency, accountability, and adaptability. As companies navigate the path to net zero, the integration of sustainable practices into their governance structures not only aligns with environmental goals but also safeguards their long term viability in a world increasingly shaped by the imperative of climate action. 

If you would like to discuss or assess your approach and control measures towards ensuring an effective net zero strategy, please contact the Ebonstone team – we are proud to be a certified B-Corp company and always welcome the opportunity to discuss ESG strategy and help other businesses embed best practice and process.