Responsible Business

Do Banks Offer Complex Mortgages to Mislead Customers?

Banks are often accused of making money off complex products that consumers don’t understand. In my book, I discuss how 2 million UK households were sold payment protection insurance policies that they’d never be able to claim on (e.g. due to being self-employed), but customers never understood this. Perhaps the most important product that a …

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Do Workers on Boards Protect Jobs in a Downturn?

A hot topic is whether companies should have workers on their boards, to ensure they act in the interest of stakeholders, not just shareholders. This debate was ongoing even before COVID-19 – for example, Theresa May initially suggested that she’d mandate worker representation when she became UK Prime Minister, but then decided against it. It’s …

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The Inconsistency of ESG Ratings: Implications for Investors

(This article was initially featured on the blog for my book, “Grow the Pie: How Great Companies Deliver Both Purpose and Profit”) Investors are increasingly scrutinizing the ESG performance of companies. This is a positive development – if CEOs know that investors evaluate them on ESG factors, not just short-term earnings, they’ll prioritise these factors …

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A Layman’s Guide to Separating Causation from Correlation … and Noticing When Claims of Causality are Invalid

Imagine you’re the Minister for Education, deciding how large to make a school district. Smaller school districts offer parents more school choice. For example, in Boston, there are 70 school districts within a 30-minute commute of the downtown area, so parents with a job in downton Boston have 70 districts they can live in and …

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House of Commons Report on Corporate Governance

Today the House of Commons Select Committee on Business, Energy, and Industrial Strategy (BEIS) published its report on corporate governance, after extensive consultation of oral and written testimony from a wide range of stakeholders. I applaud the Select Committee for such an extensive, thorough job with an issue of national importance, and am personally grateful …

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Long-Term Executive Incentives Improve Innovation and Corporate Responsibility

Executive compensation needs to be reformed. But, most of the calls for reform focus on the wrong dimensions. They focus on the level of pay, or the ratio of executive pay to median worker pay – even though the evidence suggests that low ratios are linked to lower future performance. As I have argued in the Wall Street Journal …

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Does corporate social responsibility improve firm value?

Does corporate social responsibility (“CSR”) improve firm value? When companies make decisions, should they care only about shareholders or should they take other stakeholders (e.g. employees, customers, the environment) into account? This is a decades-old debate, but despite many cogent views on both sides, there’s surprisingly little hard evidence. In 1970, Milton Friedman famously wrote …

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