Workers on boards - sharp edges

Just a quickie on one of my favour topics - worker representation in corporate governance. First up a bit of politics: Once again the main opposition parties (including the SNP) went into the election advocating an extension of worker representation on boards.

There was nothing in the Conservative manifesto, but obviously it was the Conservatives who sought to amend the UK Corporate Governance Code to promote worker directors amongst other options. In addition, there are voices on the Right who want to reinvigorate this objective, something I'll likely to come back to in another post.

Meanwhile polling on the topic shows that the public - regardless of how they vote - support worker representation on boards. My basic point is that this remains a politically attractive policy, even though it is opposed/feared/detested (delete as appropriate) by many corporates and a number of  investors.

It's also starting to creep up the agenda in the US, largely because both Sanders and Warren have made commitments to put workers on boards. Interestingly, there have now also been a handful of shareholder resolutions seeking to appoint worker directors - at Alphabet, Microsoft and Fedex. Needless to say these haven't been successful, but they do start to change the dynamics of the argument.

As I've bored on about plenty of times, I'm not sure it's going to look great having asset managers blocking workers getting a greater voice in corporate governance. To date this has simply been a policy argument and as such has largely been in the shadows, but now we can actually see how Asset Manager X voted on appointing an employee director at ABC Inc the discussion has the potential to get quite a bit sharper.

If you trawl the voting records of asset managers you can already see some voting decisions. I had a look last night at a handful of big managers, all with a decent/good profile in the ESG world, and they all opposed all three resolutions at the US companies named above. Obviously it's a legitimate position to oppose worker representation in corporate governance, but equally it's a legitimate position to support it, and I think the managers of capital are currently way out of step with the views of those that capital belongs to. I doubt that will continue uncontested.