Funds take the high road
AVIVA, rapidly followed by Aberdeen Standard, has run up the fashionable environmental, social and governance (ESG) flag over the prospective £ 8.8bn Deliveroo float.
It is good to know these fund managers, along with Legal & General and M&G, are taking seriously their responsibility towards the working conditions of Deliveroo riders. It would be terrific if founder Will Shu was listening.
Before we award them a sainthood it is worth knowing that as of the end of last year Aviva was an investor in Uber, which has just been told by UK Supreme Court to put its drivers on the payroll. It is also disturbing that Aviva has, in the past, been a big backer of New York raider ed Bramson’s Sherborne, which dismembered electra, a venture capital firm that backed UK startup technology and waged war against Barclays’s investment banking arm.
Aberdeen cites its decision not to hold shares in Boohoo as evidence of ESG credentials. In many ways, for ESG activists to sell the shares is the wrong thing to do. It deprives the funds and their investors of the chance to change matters by engaging with management or speaking out at annual general meetings.
In pre-merger days, the old Standard Life’s governance guru Guy Jubb intervened at the annual meeting of the biggest beasts, including Shell, to expose governance breaches.
Instead of scoring easy media points, it would be far better if UK fund managers spent more time investigating ESG failings. The destruction of the sacred 46,000-year-old Juukan Gorge cave in Australia by rio Tinto, which cost both the chairman and the chief executive their jobs, was down to the assiduous work of the Australian Superannuation fund working with first Nation groups.
The idea that Aberdeen Standard should smother itself in piety for not investing in Boohoo should also be resisted. It was brave reporting by Paul Bracchi of the Daily Mail and journalists from The Sunday Times that exposed horrendous conditions in sweat shop textile factories, some of which had familial connections to executive chairman Mahmud Kamani. It was these investigations which led to the stinging report by Alison Levitt QC and the changes just revealed. As result of her work, the UK supply chain has been narrowed down to 78 suppliers and 100 audited factories. Previously, it was using 200 main suppliers and 300 sub-contractors.
There is still a long way to go in terms of cleaning up the group’s governance and checking the overseas supply chain. But a better course has been set including regular reviews by retired judge Sir Brian Leveson.
None of this was achieved by chest beating.
No Minister
FORMER prime ministers often take on roles advising finance. Tony Blair has the title of ‘senior adviser’ to JP Morgan. John Major, a former banker, does work for Credit Suisse and private equity firm Carlyle and even Gordon Brown sits on the advisory board of the Pimco bond fund controlled by insurance behemoth Allianz.
The list of political leaders lending their advice to finance firms is used by friends of David Cameron to suggest there is nothing out of the ordinary in his activities. The former Tory prime minister sought to persuade the Government that Greensill Capital might have a larger role to play in the country’s Covid-19 loan schemes.
There is a very important difference. With the possible exception of £180bn Carlyle, all of these other entities are tightly regulated, with accounts audited by the top firms and a high level of transparency. Greensill has none of these characteristics. It is an unregulated shadow bank, with opaque accounts, engaged in financial alchemy with a dangerous dependence on serving one client, the equally complex metals group GFG Alliance.
Greensill failed the ‘smell’ test. That is why Cameron should not have become involved or asked for special treatment.
Horror film
CINEWORLD had better hope that lockdown and streaming hasn’t killed the appetite for the silver screen, the James Bond movie No Time To Die and huge beakers of popcorn. A £2.2bn loss in 2020 makes it one of the biggest leisure losers from the pandemic and has left it with a Matterhorn of £6bn of debt four times its current market value. Any delay in reopening its regal Cinemas chain in the US next month and Britain and the rest of the world in May could bring down the final curtain.