The Malta Independent on Sunday
Malta’s ‘best ever’ corporate governance conference
The chairman of the Institute of Directors Malta Branch (IoD), James J. Satariano, has praised ecoDa and EY for the success of the 20th European Corporate Governance Conference held at Le Méridien as part of the Maltese EU Presidency programme. Mr Satariano said it had been a challenge for IoD Malta to organise the most important corporate governance event in Europe during 2017, but that everyone had come out with flying colours.
The conference co-organisers, the European Confederation of Directors’ Associations (ecoDa) led by Secretary General Béatrice Richez-Baum, had been invaluable in helping to identify a top tier group of speakers together with Elizabeth Krahulecz, Director, Head of EMEIA Regulatory & Public Policy Brussels Office, EY, who were the main sponsors for the conference. Paragon Europe from Malta was a co-sponsor and received a presentation gift for its support at the end of the conference from conference host and moderator Edwin Ward, Director at IoD Malta.
The conference had a series of five panels that explored longterm value creation; rebuilding trust with corporate governance; corporate governance and CSR; digitalization and innovation, and, a final panel ‘The 20th European Corporate Governance Conference: A milestone for Corporate Governance history’ that featured among others Stephen Martin, Director General, IoD UK.
One of the notable conference panels on long-term value creation included Mark Goyder, CEO, Tomorrow’s Company; Florence Bindelle, Secretary General, EuropeanIssuers; Marcello Bianchi, Member of the Bureau of the OECD Corporate Governance Committee and Deputy Director General, Assonime; Kiyomi Saito, President, JBond Totan Securities Co., Ltd; and Peter Swabey, Policy & Research Director, ICSA Governance Institute. Mark Goyder made an impassioned plea for greater en- trepreneurship and less regulation, stating that the company was the building block of wealth creation and had been the engine of the economy for at least two centuries. He said that, in simple terms, the issues are to get companies investing and stimulate them and their owners to think as long-term stewards not shortterm extractors of value. Secondly, to mobilise abundant capital and put it to good use in the places and in the companies where it will make the biggest positive difference such as research and development, renewable energy and human talent. Thirdly, to accentuate the positive meaning that it’s better to risk one or two scandals if that is the price to pay for the creation of five globally competitive high growth companies.
Mr Goyder categorically stated his belief that our economy and society and the wealth of our citizens are only as good as our companies, and the companies that all our policies will encourage should have clear purpose, strong values, a commitment to successful stakeholder relationships and a long-term approach. The danger of current government and EU policy, he said, is that through its actions it unin- tentionally promotes or facilitates companies which focus on the short term.
The EU and national governments do this through their procurement policy; for example, government buys too short-term and focuses on price, not value or quality. Its approach to takeovers still leaves strong listed companies looking over their shoulder and does not strengthen the stewardship authority of company boards. Its inaction on the interpretation of fiduciary duty means layers and advisers still tie pension trustees up in knots by frightening them away from a focus on creating long-term value and needs to be clarified. Its approach to remuneration while it has helped to stimulate action by investment institutions on the pay of directors, asset managers in those investment institutions continue to be paid and incentivised in ways that encourage quarterly capitalism.
Mr Goyder then outlined five points focused on wealth creation: A focus on quality companies: the creation, growth and retention in the EU of the kind of companies we would like to imagine our children and grandchildren starting or working in, investing in the products and services that those same people most need as citizens. This means ensuring that in practice, directors of companies act as stewards of the business and not extractors of short-term value, and it means ensuring prudent companies are not unduly exposed to opportunistic takeover.
It means simplifying the task of starting an enterprise, and ensuring that such businesses have good access to international markets. Investment for long-term success and wellbeing: this means ensuring that in practice every pension trustee, family office, insurance company and state owner of assets understands that they owe a fiduciary duty to set mandates to asset managers that underpin a focus on quality companies. It also means seeking all party agreement on some core policy areas that will help businesses plan long term, starting with apprenticeships.
Challenged by moderator Edwin Ward, Mr Goyder said the government must tilt the balance of incentives and rewards away from day traders and opportunistic asset managers, and towards investors in listed companies who hold shares for the long term in companies they can believe in. A new form of patient capital can be provided by the introduction of investment trusts committed to holding assets in companies for the longer term, and an approach to procurement that prioritises quality companies and long-term success and wellbeing. The government must use its purchasing power to reward companies which care about purpose, values relationships and the long term and which have built a robust and capable business on these foundations.
That means an end to priceonly assessment of bidders for public sector contracts and the introduction of a ‘Trust test’ through which companies bidding for business from the taxpayer can show that they have this focus.
Mr Goyder stressed that ordinary people must have a stake in the success of our companies: this means a conscious bias in favour of employee ownership, and the creation of new forms of institutional investor which would more directly focus their investment in the kind of companies that ordinary savers would like to see their children or grandchildren starting or working in.
Tax advantages might be given to companies which follow the example of Handelsbanken in creating an employee shareholding trust on behalf of their employees. It also means strengthening financial rewards to entrepreneurs who want to build up their businesses and hand them on to their family or their employees, and a weakening of rewards to those who wish to sell the business without sharing the rewards of success with those who have created it.
In conclusion, Mr Goyder said that focus on place within a context of global competition is vitally important: Brexit means that regional and local supply chains will need to be strengthened if global businesses are to locate or stay in them.
This policy will encourage and reward regional initiatives which bring together the combined energies of companies, investors, planners, educators and civil society to work together to strengthen the economy of the area.
Other notable interventions came from the panel on CSR where Madi Sharma, European Economic and Social Committee (EESC) Employers Group and Dr Elona Prroj, Pastor, Director of No Blood Feud, Yes to Life Foundation both received prolonged applause from the 200 delegates for their interventions, the only two interventions spontaneously applauded on the day.
Mr Satariano said, “I am delighted that we were able to partner with ecoDa along with BusinessEurope and EuropeanIssuers to deliver the 20th European Corporate Governance Conference in Malta. It was a resounding success.”