Mark Goyder is a senior advisor to the Board Intelligence Think Tank. He’s the founder of Tomorrow’s Company and co-author with Ong Boon Hwee of Entrusted: Stewardship for Responsible Wealth Creation.
Are there difficult environments where aggression and bullying are the only way to get results? This question was raised in the Financial Times this week following the downfall of Andrew Cuomo, Governor of New York.
The investment world is not always noted for its patience. Instead, empire building; cynicism; short-termism; opportunism; sharp elbows; testosterone, and a “greed is good” mentality are often assumed to be the norm, especially in a period full of takeover activity.
Yet, before we pass judgement let’s remember that the nastiest are often the noisiest, while the achievements of the quietest too often go unappreciated.
Simon Fraser, who has just died after a short illness, was an understated hero and I have special reasons to celebrate his impact.
It was in the early 1990s that I first became curious about the investment world. I had spent the 80s working in a manufacturing company whose ownership veered from subsidiary of a listed UK household name through private equity-backed management buyout through London flotation to takeover by global giant.
Then in the nineties my mentor Charles Handy inspired me by asking, “what is a company for?” Having thought more deeply about that, Tomorrow’s Company and I began to ask the same question about investment and the City of London. What was its purpose?
Move on a decade, and with Sir Richard Sykes and the Tomorrow’s Company Restoring Trust Inquiry I was now working with the investment community to answer that question.
By 2008 we were arguing that a new — and very old — concept should lie at the heart of investment — stewardship. Owning something means obligations as well as rights. Investors will do well when the company is well stewarded by owners and directors determined to pass it on in better condition. The fragmentation of listed company ownership left these stewardship obligations unfulfilled. The behaviour of investors needed to be guided by stewardship principles.
In 2009, Sir David Walker in his report into the governance failings of our banks confronted the problem and suggested a stewardship code. The earliest versions that emerged, drawn from existing investment industry guidelines, were painfully weak, but in the 2020 Stewardship Report (2012) leading investors working with Tomorrow’s Company described a more ambitious view of the stewardship possibilities.
In 2011, Vince Cable in the new Coalition Government had set up the Kay Review into UK equity markets and their impact on the performance of UK companies. Later in 2012, Professor Kay suggested the setting up of an investor forum to carry forward this agenda.
I was sceptical. Would the investment industry take this seriously, or would the Kay report follow many previous examples of analytically sound reports that led nowhere?
I was also anxious. The stewardship agenda meant so much to me and to Tomorrow’s Company after a decade of work: would the industry be serious and seize the moment?
Enter stewardship’s quiet hero.
As the respected former CIO of Fidelity International, Simon Fraser was asked to lead the setting up of the Investor Forum. I hadn’t met him. Rupert Phelps, a friend and champion of family business stewardship, had been at university with him and introduced us.
Fraser was anything but arrogant. He was thoughtful, respectful, approachable. He listened to all the competing voices. He understood the difference between engagement and stewardship. He was thorough. The Forum was set up the right way — with a legal form that guaranteed its independence from the self-interest of trade associations which might otherwise have too much influence on it. He recruited Andy Griffiths, who has remained the Forum’s dedicated and effective executive director to this day.
I asked one of the early pioneers from the 2020 Stewardship group about her impressions of Simon:
“I knew him through the Investor Forum. He was a lovely man. Quiet and humble. I often wondered how such a nice person managed to become so successful in the City! . . . There are lots of successful people in the City but successful and nice is much rarer!!!”
A colleague on the Forum’s Board said:
“I always thought of him as incredibly thoughtful, measured, with a very inclusive working style.”
Paul Lee who worked with Simon at the Investor Forum said:
“The City has lost one of its remaining gentlemen. He was quiet and thoughtful, ceaselessly polite. His role at the Investor Forum was remarkable; few chairs are as passionate and engaged — he played a key role in delivering the Forum's success.”
In its 2020 Annual Report the Investor Forum tells us that it represents over 30% of assets under management in the FTSE 100. Since it started work in 2015 there have been 40 formal engagements with boards where change was considered necessary. 42% of these were about improving governance; 36% with changing the company’s priorities, and 22% dealt with structural challenges whose result could improve value creation. At the same time, it has been involved in getting companies to disclose their climate impacts in support of the Task Force on Climate Related Disclosures.
In Simon Fraser’s last chair’s statement, in January 2021, he revealed how fully he had embraced the widest vision of stewardship, and the contribution to be made by the Investor Forum to promote a better capitalism:
“The corporate world still needs to convince the broader population that it can become part of the solution to society’s problems, rather than being seen as the problem. Having a clear corporate purpose is just the beginning of the journey towards running a business for all stakeholders.”
In the last few years, we have seen something remarkable — the widespread acceptance by asset managers and pension funds and insurance companies that they had a stewardship responsibility to influence companies towards being a force for good in society, with the next generation in mind, and that, to fulfil it properly in a fragmented listed company market, competitors needed to work together in new ways.
No one has done as much as Simon Fraser to make this happen.
Let us praise decent, effective women and men who may never have been famous — but certainly deserve to be.