Finance directors need to look beyond statutory codes and financial accounting measures if British business is to get to grips with sound corporate governance, one of the City's biggest institutional investors warned yesterday.
Speaking at the FD’s forum aboard the P&O cruise ship Arcadia, Hermes Lens Asset Management commercial director David Pitt-Watson said financial directors needed to do far more than simply adhere to Cadbury and other corporate governance codes.
‘The is a danger these (codes) can become huge box-ticking excersises,’ he told financial directors.
Urging listed companies to build up dialogue with institutions like Hermes, which has £50bn under management, Pitt-Watson said big investors were not ‘governance anoraks’. But he said a virtuous circle involving workers/pension holders, pension fund trustees, investment managers and the company itself needed to be established and would work in everybody’s interest acknowledging that this would pull FD’s in differet directions, Pitt-Watson said would need to be managed.
‘The FD needs to balance loyalty to the CE, loyalty to the board and loyalty to shareholders,’ he told deldgates.
But he added: ‘The traditional role of the FD, which is internal to the firm, is a larger part of the role and crucial to governance.’
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