Governance
The way companies are run matters.
If companies are badly run, this affects their profitability, thus making them an investment risk.
For instance, organisations which fail to keep proper track of their accounts can get into financial difficulty or even go bust, causing a loss of jobs and services which also damage the wider community.
A lack of diversity on governing boards can lead to inward thinking that stifles innovation. Lack of robust oversight over senior posts can lead to unchallenged, poor, and sometimes costly, business decisions. Some of these poor business decisions can also result in events that may damage our environment such as huge oil spills.
What we’re doing for good governance
We work with companies to help improve how they are run, from the strength of their corporate strategies to the independence of the auditors checking the numbers. As shareholders, we also use our voting rights to hold companies to account, and are seeing our engagements contributing to positive outcomes such as:
- Stopping consumer goods giant Unilever from abandoning its UK headquarters
- Pushing automaker Tesla to split the roles of CEO and board chairman, to avoid excessive concentration of power in the hands of a single individual
In recognition for our collaborative, pragmatic approach, for four consecutive years, Legal & General was voted ‘Best in Investor Engagement’ by UK company secretaries.