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Review NBCC event: "Restoring Tust in Corporations"



In September, Professor Colin Mayer of the University of Oxford spoke to NBCC members about the importance of trust and the roadmap to restoring it when it has been lost. Held at the residence of the Dutch Ambassador to the UK, a summary of that roadmap and the Q&A session which followed is below.


To establish trust in corporations Professor Mayer defined three key areas: sustainability, commitment and diversity.


He defined sustainability not only as environmental but also as corporate regarding the long term strategy and policies of corporations. Sustainable performance is more than financial performance. Research shows that 80% of companies who have sustainable long-term policies have lower costs of financing, better operating performance and a better share price. Those companies tend to be more concerned about long-term developments and measure themselves on a broader set of criteria, not just financial. As a result, they have stronger values, loyal customers, a dedicated workforce and more engaged suppliers. Their cost of capital is also lower.

What is required to deliver sustainable performance?

  1. Clearly defined purpose, what does the company stand for?
  2. Nature of ownership, which should be committed to those values?
  3. Delivery by the board, not only delivery to the shareholders but also delivering on values.

As examples, Professor Mayer mentioned both East India companies; Merchant trading, strong administration, and the invention of permanent capital. These corporations formed the basis of the modern corporation.

Today, Unilever is a good example of a sustainable corporation.


Commitment of the shareholders and the board to the goals and values of the corporation are essential for prosperity. Because of the growth of publicly listed corporations at the end of the 19th and in to the 20th century, committed ownership was eroded by an increasingly broad shareholder base. Private equity firms, hedge funds and foreign investors, which replaced publicly listed shareholder structures, are examples of a low commitment to sustainability. Pension funds have a long term sustainable view, but it is worrying that there is a downward trend in corporate holdings of pension funds from 50% to 15 % of the total investment base. PGGM is an example of a Dutch pension fund which shows another trend by taking a significant stake in corporations of which they support the management in delivering long term sustainability. UK pension funds are largely based on a riskless return: to match the assets with liability bought indexed government securities.


Different corporations need different governance models. Although EU legislation on shareholder engagement aims to increase shareholder commitment, this legislation reduces diversity. Diversity should be increased and not harmonized. The EU should instill values on corporations and legislation to avoid systemic flaws, but avoid micromanagement of a strict regime of execution.

Q&A session

During the Q&A session there was a lively discussion about the challenges faced by the range of companies in attendance regarding long-term views and sustainability due to external and internal pressures. Some remarks: 

  • Sustainability is not in the top 3 of importance to customers and without the loyalty of a customer base it is proven hard to be sustainable.
  • The city is cynical to long-term sustainability, which is difficult to overcome.
  • Long-term objectives are quite often overshadowed by short term - mainly financial - pressures.
  • Companies that started out as a family business often have an inspirational leader keeping the family values and culture in place by making sure all employers feel being part of that company and carrying out those values.
  • Competition law often hampers innovation in the supply chain
  • The corporation should make a difference to its customers and society
  • The value of large corporations for the economy is huge and it is therefore reasonable to give these much attention

EU regulation

The session ended with a discussion on the value of regulation (less is better). In this respect Professor Mayer mentioned the developing regulation on banking as too onerous. He believes it will restrain economic growth as banks build up buffers and stop making capital available to promising start-up companies who need it to expand.

Follow up

The content of this event will be brought to the attention of the Dutch and the British governments and the NBCC will work to coordinate a meeting between them both and Professor Mayer to share his insights in to successful corporations.



The event was organised by the Netherlands Embassy and the NBCC as part of the UK NL Strategic Business Dialogue framework and of the NBCC premier membership programme. Collectively, the focus of these events for 2014-2015, is “Sustainable growth, governance and regulation”.

The September event was hosted by HE Laetitia van den Assum, the Dutch ambassador to the United Kingdom, at her residence.

Professor Colin Mayer, is the Peter Moores Professor of Management Studies at the Saïd Business School, University of Oxford. Professor Mayer is also an Ordinary Member of the Competition Appeal Tribunal and Fellow of the European Corporate Governance Institute. His introductory presentation on ‘Restoring Trust in Corporations’ was followed by an informal round table discussion.






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