City minister calls for ‘responsible capitalism’ in financial services sector
The UK’s financial services sector should move toward a more “responsible” form of capitalism that takes into account a broader ranger of interests and not just shareholders, according to City minister John Glen.
Glen wrote today that the Square Mile was “ideally placed to showcase this responsible capitalism” through, but that firms should “reject some of the worst excesses of what critics have termed as ‘woke capitalism’”.
There has been a major push among the financial services industry in the past decade to report and measure Environmental, Social, and Corporate Governance (ESG) initiatives and move to a stakeholder model of operating.
This is in contrast to the direction corporations chose in the 80s and 90s when the shareholder model for companies – which prioritised how much money was made for shareholders and nothing else – was in vogue.
However, consulting firm Mazars found last year that of 30 major banks – such as Barclays, BBVA, Citi, Credit Suisse, Santander and UBS – that there was “limited evidence” of ESG being initiatives being implemented in a meaningful way for more than half of them.
Writing for the Social Market Foundation think tank, Glen said that Covid-19 should accelerate the UK’s movement to a more “responsible capitalism”.
“Recognising that we must harness the power of the market to revitalise the economy and fund world-class public services, while ensuring that corporate actors recognise their obligations to society,” he said.
“I know that our world-leading financial services sector is ideally placed to showcase this responsible capitalism and help build an inclusive, stakeholder economy. In recent years, our leading companies have increasingly recognised their obligations to society as well as to their shareholders.”
He added: “The ESG, responsible capitalist agenda needs to focus on inclusivity, not a divisive,
identity politics-driven agenda that can be too easily caricatured as catering to a
metropolitan elite and ignorant of the world outside the M2.”