Isle of Man
Good evening. I should like to thank our honoured guests and members for attending our annual dinner tonight. And it was such a relief this morning to see the sun shining with not a snowflake to be seen.
Thanks to Ganly Tipper for sponsoring the President’s drinks reception and all the sponsors of our student awards. I can advise that this our 41st anniversary as a Branch and I am pleased to welcome Ralph Thomas, our first President, together many past presidents.
Also a special thanks to the wonderful staff here at the Comis for providing such excellent food and service.
In 2004 when as a newly qualified chartered secretary I was full of enthusiasm as to how I could use my qualification. Two years later Company Legislation changed and there was no longer a requirement for Private Companies to appoint a Company Secretary. Of course, I agreed with ICSA as it then was, that this was a backwards step, and so it was proved. The role itself remained but many companies tended to think a qualified chartered secretary was a luxury they could dispense with.
Between then and now we have seen many corporate failures, including the crash of 2008. Indeed since I originally prepared this speech we have seen the failure of SVB, Credit Suisse, the CBI and sadly a massive failing within the Island’s Government and Manx Care. We have lived through years of austerity and now find ourselves in yet another financial crisis. I recently read a book on the 2008 crisis and there was one story that particularly struck a chord with me.
Lehman Brothers was days away from bankruptcy, the US treasury, the federal reserve, the leading banks, Barclays and others had finally come up with a solution. A deal had been agreed for Barclays to buy Lehman. Lehman would be split in two. Barclays buying the “good” the “bad” reluctantly split between the major US banks. They had been working all hours for days on end, exhausted but pleased with themselves.
Only there was a major problem. The Barclays board had not been consulted, but amazingly that was not the issue. The CEO knew he would gain their approval hmm. No, not one person in that room had considered the Financial Services Authority in London and the requirements of the regulator before the deal could be approved. The FSA called the President of the Federal Bank of New York to raise concerns they didn’t know the deal was being contemplated, in addition for the deal to proceed Barclays required shareholder approval under UK listing rules. The Americans assumed the UK would support the transaction. The deal was dead and the Americans blamed the British.
This story merely highlights the worst that can happen in the absence of a governance professional, someone from this room, who would have stood up and said no. Someone who was aware of the requirements in London and informed everyone else at the outset. That is what we do. We are often the unpopular voice, raising concerns and highlighting issues before they become insurmountable.
What I always find amazing reading about corporate failings is the lack of good Governance. There is always a dominating managing director who takes charge. A genius who will extract maximum profits, often pushing the law to the limits. Perhaps even bending the law a little to engineer complex accountancy solutions, as with Enron, or defeating emissions tests as with Volkswagen. Others go with the flow. Caught up with the bonuses and executive pay that goes hand in hand with rising profits. There is no incentive to speak up, often those that do are dismissed, as we sadly saw here with Dr Ranson.
We as Governance Professionals must have the courage to provide sound advice and stand our ground if necessary, even when faced with the opposition of the board. We need to ensure the structures are in place to identify and deal with problems as they arise. The role of the Governance Professional can therefore be very stressful and isolating.
That was one of the major reasons behind Council’s initiative to establish a wellbeing committee. The Committee is there to support members and provide an ear to listen if required. The Committee is committed to preparing a quarterly newsletter and holding wellbeing CPD events during the year. We have received the backing and support of London and hope to build on our work this coming year.
It is timely that the dinner was rescheduled for tonight, the final day of Mental Health Awareness week. This year’s theme was anxiety and hopefully your workplaces have marked the event on some way. If not, why not start a conversation with friends and colleagues about anxiety.
Due to work commitments two of our committee have stood down, replaced by two more enthusiastic members. I would, however, like to make a brazen appeal to anyone here who would wish to join the committee and support this invaluable work.
I mentioned the financial crisis and the efforts to rescue Lehman Brothers. What was also particularly striking about that example, and again is oft repeated in corporate failings, was the long hours everyone worked. We often expect some people to work long hours to get the job done, none more so that our CEOs. Yet when we work all hours we make mistakes. We become inefficient, and we do not recognise the effects long hours have on us. If those bankers had taken a step back, allowed themselves a weekend away from the office they might well have come up with better solutions – or not got in the mess to start with.
I mention wellbeing as it forms a vital part of ESG. Hopefully the leaders of all organisations here have ESG as a standing board agenda item by now. If not, it should be considered as soon as possible. I started by saying in 2006 the Companies Act removed requirement for a private company to have a secretary. We have now come full circle as Environmental, Social and Governance is very much here to stay.
The Institute recognised the fact in its rebranding, the Chartered Governance Institute and its members becoming Chartered Governance Professionals. The G in ESG is about us and the advice we provide to the board. Governance professionals, you, are needed now more than ever, and that demand will only increase as we approach the Zero emissions target of 2050. We must act on ESG issues now because it will be too late if we wait until 2050. We are at the vanguard and must learn to speak up. Tell our employers about our skill set and show how we can make a massive difference to our workplace. Companies who do not act will increasingly find it harder to employ the best candidates. Banks and investors will base decisions on a company’s ESG credentials, suppliers and clients will have their own ESG targets and question the organisation’s credentials. Ultimately the Government will legislate.
There is a lot of greenwashing with organisations making statements that do not hold up to scrutiny. This could well be the next big corporate scandal and already firms are receiving heavy fines. Again, governance is key and we are the individuals to ensure accurate reporting, with proof to back up the statements in our reports.
So, for all those studying today, you have chosen a progressive profession to enter, and one where the skills and knowledge you pick up through your studies will be invaluable to the organisation you work for. You will be the Governance Professional leading on ESG.
I would now like to thank our council and our Past President Chris Bolt for all the hard work they have put in with the organising not just today’s event and the CPDs but working behind the scenes in promoting our profession.
And on that note, I would like to move on to the student awards. Our students have once again excelled this year and as is becoming almost traditional at these awards one of our students has received the award for the highest result sat of all candidates worldwide. A fantastic achievement and a testament to the hard work and dedication put in.
I would now like to pass you over to Neil Newman director of the CGI to present the awards.