The government has been accused of backtracking on its pledges to tackle corporate “fatcat” culture after it announced a set of business governance reforms.
The plans include measures on pay ratios and worker representation, issues where the co-op movement has been actively campaigning.
But critics say they fall short of pledges made by Theresa May during last year’s campaign for leadership of the Tory Party.
The measures, set out by business secretary Greg Clark, will:
- Force all listed companies to reveal the pay ratio between bosses and workers
- Publish the names of all listed companies with significant shareholder opposition to executive pay packages on a new public register
- Seek to ensure employee voice is heard in the boardroom.
For worker representation, the code asks firms to assign a non-executive director to represent employees; create an employee advisory council; or nominate a director from the workforce.
But this will follow a “comply or explain” basis, meaning the measure is not mandatory as long as a company explains why it has not followed the guidance.
Frances O’Grady, general secretary of the TUC, said the proposals were “feeble” and accused the government of climbing down from making the measure mandatory.
She said: “The prime minister’s pledge to put workers on company boards has been watered down beyond all recognition. This now amounts to little more than a box-ticking exercise.”
James Wright, policy officer at Co-operatives UK, said: “Top-down tinkering with company law and corporate governance for large businesses can make improvements at the margins.
“But in terms of creating a genuinely inclusive economy – one that offers more opportunity, power and a share of wealth for workers and communities – government needs to be bolder and smarter.
“For one thing it could start with what we already have – 7,000 co-ops – and make it easier for people to run existing, and establish new, co-ops.”
He added when it comes to developing practical systems of governance that give voice to a range of stakeholders – such as workers, customers and communities – policymakers and big business “can certainly learn a lot from the co-op movement”.
“The detail of the government’s decisions on changes to governance codes and company reporting may need more careful analysis in terms of what the co-op movement needs to do in response,” he said.