Environmental and social issues can be just as vital to company success

The nosedive in Lonmin’s share value over the last week is proof that the environmental, social and human rights activities of companies are linked to their financial value.

Companies have traditionally been less willing or able to make a business case for their social obligations – to people, communities and wider society – than they have for their responsibility to the environment.

Moral commitments to the environment can often have tangible cost benefits; urging customers to switch off lights and appliances reduces gas and electricity bills for customers, while asking people to switch off taps or use the same towels for an entire hotel stay conserves water and lowers costs.

By contrast, exercising due diligence, conducting human rights impact assessments, consulting with and adjusting large scale projects to meet the needs of local communities and paying the living wage are all more difficult to sell to a board because the short-term advantages and profit-making potential are less obvious. What is obvious is that such measures can engender a significant cost in the short-term.

The solution - long-term cost benefit analysis - is discouraged by the nature of our financial markets but increasingly companies are beginning to discover that the benefits of long-term responsibility are no less tangible and significant when they arise: costs such as delays and disruptions of operations; problematic relations in local labour markets; insurance and security; reduced output; diverted staff time and, perhaps most significantly in this case, reputational damage.

This week’s events at Lonmin demonstrate that the markets understand this too.  There is an increasing recognition that environmental and social factors can have a material impact on returns and should be a greater priority for companies.  In the aftermath of the financial crisis, few would dispute the need for more forward-thinking and long-term planning from multinationals and for greater cognisance of the wider impact of business. The Gulf of Mexico oil spill, which forced BP to cancel its dividend for the first time since the Second World War and to report its first annual loss in nineteen years, demonstrated that environmental and social issues can be vital to company success.

Yet there remains doubt in the private sector, and particularly among investors, that Government is willing to offer the expertise, support and clarity to business about their social obligations and how to meet them. Companies who are leaders in social responsibility complain that the playing field is tilted against them, and want to see greater rewards from Government for good behaviour, and greater sanctions for rule breakers. Successive governments have failed to do this.

In May this year I tabled an amendment to the Financial Services Bill, which would have sent a clear signal to companies like Lonmin that such behaviour would not be accepted by the London Stock Exchange. In October, colleagues in the Lords will put forward similar amendments that will clarify the purpose of the stock exchange, allowing the new regulator, the Financial Conduct Authority, to take into account an applicant’s respect for human rights and sustainable development in protecting the integrity and respectability of the exchange.

Richard Lambert, former Director-General of the CBI, wrote in an opinion piece for the Financial Times in June 2011: ‘It never occurred to those of us who helped launch the FTSE 100 index 27 years ago that one day it would be providing a cloak of respectability and lots of passive investors for companies that challenge the canons of corporate governance, such as Vedanta, ENRC, Kazakhmys, Fresnillo. Perhaps it is time for those responsible for the index to rethink its purpose.’

The government has been handed an opportunity to correct the market failure that led to the death of 34 miners last week. It is widely accepted that a more sophisticated understanding of investment risk – one which takes longer-term sustainability issues into account – is urgently required.  If this Government is serious about its commitment to responsible capitalism and sustainable development, both companies and their investors must be engaged in the debate and the stock exchange is uniquely positioned to facilitate this process.

Lonmin's Marikana platinum mine. Photograph: Getty Images

Lisa Nandy is the MP for Wigan. She was formerly Shadow Secretary of State for Energy and Climate Change.

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I could have sworn that the Lincoln City striker was my dustman...

Watching a game on tenterhooks to see if the manager picks his nose.

Too busy thinking about other things, so didn’t at first realise that I was witnessing possibly the greatest event in the history of civilisation. Or since 1863, when the FA was formed.

I had tuned in to watch Burnley v Lincoln City for the pleasure of seeing if the former’s manager, Sean Dyche, is ever going to pick his nose in public. His hand goes up to his nose every 30 seconds, gives it a rub, then when he’s about to start poking around inside, he thinks better of it, only to start again a minute later. He clearly can’t help it – it’s a nervous tic, which all managers have, though some hide it better.

Then I started studying the Lincoln team, none of whose phizogs, mannerisms or walks I know. By this stage in the season, I am pretty familiar with every regular Premier player, having grown accustomed to his face, his smile, his ups and downs. When it’s a Cup match with a team from a lower division, in this case a non-League team, the players are strangers. I would not recognise any of them in my porridge.

Then I saw someone I swore was our dustman, large and beefy, with Bobby Charlton hair. I thought he must have wandered on to the pitch from the burger bar – but, no, he was a Lincoln forward, the 16-stone Matt Rhead. Even on the couch, cradling my Beaujolais, I could hear Burnley fans shouting, “You fat bastard.”

Lincoln’s captain was called Waterfall, another player I hadn’t come across before, one of those footballers who spend their whole life in the lower divisions, becoming local legends, if they last long enough, but completely unrecognised elsewhere.

I googled his first name, and oh, my God, it’s only Luke. Luke Waterfall, how romantic is that? Straight out of Mills & Boon. Did he assume that name when he went into show business, Lincoln City Division?

I started thinking of all the fab new names in football, a source of endless reverie when the game is dull. I’m allowed to do this when watching on my own. When watching with my son or anyone else, I impose house rules, which state that all conversation must be linked directly to what is happening on the screen.

Jesus at Man City, what a gift from, er, God for the headline writers. He arrived in January for £27m, a bargain already, especially if he continues to work miracles, har, har. It says “Jesus” on the back of his shirt. His first name is Gabriel, after the archangel, presumably. The sub-editors will have fun with him for years – “Jesus saves”, “Jesus wept”.

I remember waiting in the 1970s when the Scottish player Gerry Queen joined Crystal Palace. I knew that events would turn him into a headline. Then he got a red card: “Queen sent off at Palace”.

The all-time classic football headline was used in February 2000, when Inverness Caledonian Thistle beat Celtic 3-1. The result, one of the biggest upsets in Scottish football, led to the Sun headline

Super Caley go ballistic

Celtic are atrocious

In a lifetime of subbing, you don’t get many occasions when all the planets align so exactly.

The new names that I’ve been enjoying this season include Dunk at Brighton. Haven’t noticed him walking into a headline yet, and I can’t imagine what it will be – something to do with “Dunking donuts”, or “Dunk and disorderly”?

I’ve always liked Robert Snodgrass, now at West Ham. His name sounds so Dickensian. And Southampton’s Virgil van Dijk – wow, my Hollywood hero. Harry Winks at Spurs: what a shame he wasn’t given shirt number 40. When Jeffrey Schlupp appeared in the Leicester line-up last season, I couldn’t wait to decide if his name would fit a verb, a noun, a term of abuse, or a form of semi-sleeping, such as the way I schlupped on the sofa watching Burnley v Lincoln.

Then, blow me, I was wakened violently from my reveries. Just before the end, Lincoln scored – making them the first non-League team to reach the FA Cup quarter-finals in 103 years. And I was watching, sort of . . . 

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 24 February 2017 issue of the New Statesman, The world after Brexit