KEN COSTA: The ‘g’ of governance needs to focus on generosity

The media has always prided itself on exposing questionable behaviour in the business and financial world. The Daily Mail has fought many campaigns taking to task leaders of businesses whom the paper believed acted in ways that oppose the interests of shareholders or policyholders. The recent LV campaign is a case in point.

It’s essential that poor decision-making, incompetence or malfeasance at the top of any organisation is exposed.

Company bosses and their advisers must have their feet held to the fire, apologise and, if necessary, take the financial penalty.

A seat at the top table: Can business leaders find redemption after a fall from grace?

But as we approach Easter, a thought occurs to me. Can business leaders find redemption after a fall from grace?

After all, the essence of the Easter message is: ‘There is a second chance.’

My worry is that there is no opportunity to make one’s way back and make good. Something tells me that in British public life our famed tolerance doesn’t extend as far where business and finance are concerned. In the US the stigma of bankruptcy is not the end of a career if genuine recompense is made.

Perhaps more importantly, we have found that while 60 per cent of all US start-ups fail, the majority of entrepreneurs who ‘go again’ succeed in their second venture. Would they get such a second chance here?

I wonder if we are less forgiving on this side of the Atlantic, and is this indicative of a mindset that discourages adventuring talent? I am not talking about ‘rewards for failure’, where richly remunerated business folk are packed off with generous payoffs. I am talking about the potential for wealth creators or talented executives to be allowed to apply those skills again.

If a business leader has ‘fessed up’ and taken their medicine by resigning, in what circumstances can they expect to return to the world of commerce? Can a business person ever move on from a mistake after admitting it and receiving punishment?

Clearly there can’t be hard and fast rules, but let me search for some examples. When respected banker Antonio Horta-Osorio undertook private travel against Covid rules, he was called to task by his employer Credit Suisse and resigned.

I would like to have seen the board not accept his resignation, allow his ‘mea culpa’, perhaps with an accompanying fine or substantial donation to charity, and move on.

Certainly, I would like to think he will be welcomed back into banking circles when a new senior role becomes available. Or will there forever be a black mark against this talented banker?

What about Steve Easterbrook, the McDonald’s chief executive who was fired after consensual sexual relationships within the company? Can he expect to resume a career elsewhere, or will the stigma remain with him?

Can companies be forgiven for past actions? Look at BP and Shell. Is it right for the ultras in the green movement to refuse to acknowledge their efforts in the renewables field and their climate neutrality goals?

Some in the environmental, social and governance lobby seem intent on punishment for past sins. The ‘g’ of governance needs to focus on generosity in rewarding a well-intentioned change of behaviour.

The message of Easter is surely that while there is judgment there must also be grace, and a balance must be found in all walks of life. Happy Easter to all.

Ken Costa is co-chairman of Alvarium, the private wealth adviser and merchant bank. He is the author of two Easter books – Strange Kingdom and Joseph Of Arimathea.