Labour leftwinger says shareholders should be made more accountable to the people whose money they look after
Labour leftwinger Jon Cruddas has joined the debate on responsible capitalism by calling for all shareholders to be forced to disclose their voting practices at company annual general meetings. He said big shareholders, who manage millions of people's pension savings, have to be made more accountable to the people whose money they look after.
He was speaking before an announcement on Tuesday by the business secretary, Vince Cable, on tackling executive high pay. Cruddas said only 18 pay packages had been voted down in the past decade. There is still last-minute lobbying going on in advance of the announcements.
Cruddas also called for a reform of shareholders' duties to pension savers, saying it needs to be made clear that they can and should act responsibly. Currently, shareholders often believe that their only duty to savers is to maximise short-term profit.
Cruddas said: "Making companies more accountable to shareholders will not be enough to tackle 'crony capitalism': shareholders themselves must also become more accountable to the ordinary savers whose capital they invest.
"This means much greater transparency about what is being done with our money. It also means clarification of investors' duties: we cannot have responsible capitalism if the capitalists think the law prohibits them from acting responsibly."
Christine Berry, chair of the campaign group FairPensions backed Cruddas. She said: "Government moves to give shareholders greater powers are to be applauded. But to paint this as a solution in and of itself, when we know shareholders often do not use the powers they already have, is either naive or disingenuous.
"This does not mean shareholder power is a 'dead duck'. The big investors who manage our savings can and should be more responsible and accountable when it comes to their exercise of voting rights. The focus now needs to move on to how we make this a reality."