The intersection of conduct culture and company value
A research extract
The ethical conduct, trustworthiness and ‘social licence to operate’ of a company matter to the community and consumers, especially in a post-GFC world. But what about shareholders? They want their investments to perform financially, but such community expectations have meant the days of performance at any cost are long gone.
Instinctively we know that reputation and brand is valuable. Today, we know a poor conduct culture or an absence of ethics at a company will result in its social licence to operate being revoked. This diminishes the company’s reputation and brand, and ultimately its value.
Regnan recently partnered with Dr Darren Lee to understand how our ESG scores have been reflected in the financial performance of the companies assessed. Testing of our scores on ethical conduct against share price performance yielded notable results. Those companies deemed to manage conduct culture well significantly outperformed those companies with low scores, confirming the intersection of conduct culture and company value.