Regular followers of Financial Regulation Matters , and those interested in the development of the credit rating industry, know that there has been a concerted and purposeful effort from the rating agencies to integrate the concept of ESG (Environmental, Social, and Governance) into their credit risk assessments. This began with some takeovers of ESG-date providers, and was solidified, in theory, with the major rating agencies’ connection to the UN-supported Principles for Responsible Investment initiative (PRI). However, since then there have been a number of claims raised against the rating agencies, most noticeably concerning how the rating agencies transmit how they are considering ESG-related factors, and to what extent. Research has shown that, majoritively speaking, the agencies consider the “G” element to be the most ‘material’ aspect usually, with little being confirmed regarding the ‘materiality’ of the “E” and the “S”. Yet, with the recent events across the western world be...

In yesterday’s Financial Times , the newspaper ran with a headline that ‘ Leading UK companies at risk of falling short of gender targets ’. Here in Financial Regulation Matters we have discussed the issue of gender diversity within the business arena on multiple occasions, and in relation to a number of different jurisdictions ( here , here , and here ). However, upon reading the article it quickly becomes clear that there are competing narratives at play, whilst there are also narratives and important issues that are not included in the discussion. In this post we will look at the highlights of the article but also the wider issues. The article is based upon the latest report from the Hampton-Alexander Review , a review set up to build on the work developed by the Davis Review . The Davis Review compiled evidence from 2011 onwards regarding the composition of Boardrooms in the largest of FTSE companies (100, 250, and 350) and, in 2015, declared that much improvement had been ...

In Financial Regulation Matters , we have looked on a few occasions at the issue of gender in relation to the world of business ( here , here , and here ) and to a lesser extent the issue of race ( here ). However, in today’s post we will be examining recent developments coming from the Institute of Directors (IoD) that bring both of these issues sharply into the limelight. After gaining a better understanding of the IoD and what its role is, the two issues will be examined to gain a better understanding of the problem facing the business arena, all for the aim of providing context to the revelations that are making the headlines at the moment. The Institute of Directors was founded in 1903 and, after just three years, was awarded a Royal Charter for the purposes of supporting, representing, and setting standards for business leaders across the country . The Royal Charter was the basis of the IoD establishing and implementing four key ‘principals’ , which include: (Better Direc...

Today’s post reacts to the recently published Parker Review , which is a final report led by Sir John Parker in association with Ernst & Young and Linklaters. The report, entitled A Report into the Ethnic Diversity of UK Boards , aims to shine a light on the issue of representativeness on FTSE Boards, with a specific focus on FTSE 100 Boards, and then prescribe some recommendations which it hopes will have a positive effect in this particular field. So, in this post, we will take a closer look at the Report and assess whether it may achieve its aims and, more importantly, whether its aims are even useful or correctly constructed in the first place. We have looked at this issue of representativeness at Board level before here in Financial Regulation Matters , but mostly from a gender-related viewpoint ( here and here ). However, as the Parker Report states in its preamble: ‘ U.K. Boards have made great progress on gender diversity but we still have much to do when it comes t...