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Many UK companies ignore ‘social’ aspect of ESG agenda, think tank warns

Asset managers accused of stagnant voting on ESG resolutions

Many of the UK’s biggest companies are ignoring the “social” aspect of the ESG agenda by failing to pay attention to poverty, a think-tank has warned.

James Kirkup, director of the Social Market Foundation, accused Britain’s biggest companies of “ignoring the S in ESG,” as he called on FTSE 100 firms to do more to tackle poverty.  

More than half (53 per cent) of FTSE 100 companies completely failed to mention the word poverty, in their annual reports for the financial year 2019-20, new research from the Social Market Foundation (SMF).

In reporting on their ESG activities, Britain’s biggest companies were 64 times more likely to discuss climate issues than they were to use the word poverty in their annual reports.

Major companies were also 176 times more likely to mention the word governance in their annual reports, than they were to mention poverty when reporting on their ESG activities.

“The ESG agenda has the potential to do real good for the world. But the immediate social aspects of that agenda are too often ignored.”

SMF director James Kirkup

The research has led to claims that FTSE 100 companies are overlooking the S in ESG, by failing to fulfil their social obligations, despite committing to other aspects of the ESG agenda.

“If companies are seen to promise to do good but won’t address something as fundamental as poverty among their workers… the public and those who invest their money will start to wonder if ESG really means anything,” Kirkup said.

Poverty

The comments come as figures from the Joseph Rowntree Foundation show that there are now 14.5 million people living in poverty in the UK, including 4.3 million children.

Manny Hothi, Chief Executive at Trust for London, said: “Businesses play an important role in tackling poverty in London, especially when we look at the ongoing increases of in-work poverty. It’s disappointing that many companies do not yet see poverty as part of the responsible business agenda.

This month, polling by Hanbury Strategy showed that 70 per cent of Britons think major companies should focus on improving the lives of their staff, instead of focusing on wider social issues.

More recently, Fundsmith equity manager Terry Smith accused Unilerver of having “lost the plot” in prioritising purpose over profit.

This week, Blackrock CEO Larry Fink came out in defence of ESG values as he argued that stakeholders need to know “where we stand on the societal issues intrinsic to our companies long-term success.”


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