‘Balancing act’ challenge for businesses in region

KPMG’s Yorkshire & Humber Business Instinct Survey found that many firms are facing pressure to respond to concerns about executive pay. They must also deal with new regulatory burdens, such as anti-bribery and corruption legislation.

Chris Hearld, KPMG’s Leeds office senior partner, said: “After the turbulence of recent years, the region’s businesses will be forgiven for seeking calmer waters in 2013. There are indications that in economic terms at least this may well be delivered.

“The region’s economy has stabilised and while we would all welcome more dynamic growth conditions, stability is businesses’ most critical ask.

“However, there are winds of change around business behaviour, stemming from political, regulatory and consumer pressures. Risk management should be moving up the boardroom agenda in 2013 as scrutiny and expectations of good corporate governance and citizenship, as well as commercial success, will only increase during the year.”*

A recent KPMG survey found that two thirds of the UK’s largest 100 companies are providing reports about their corporate responsibility activity. However, the survey also suggests that sustainability strategies are in their infancy.

For example, while most of these large companies are concerned about the issue of global water scarcity, few of them have devised a long term water strategy to respond to this risk.

The anti bribery and corruption legislation is a “behavioural game changer” for many firms, according to KPMG.

As companies forge overseas alliances, they are placed at greater risk of being exposed to attempts to bribe them.

Concerns about the high levels of executive pay aren’t going away, according to KPMG’s Guide to Directors’ Remuneration.

This suggests that 2012’s “shareholder spring” may have just been a rehearsal for the real flexing of shareholder muscle on pay, which is likely to come this year and in 2014, when a large number of long term incentive plans face renewal.

Recent negative headlines about the tax affairs of multinationals, showed that big businesses must be prepared to discuss their tax payments, structures and policies.

Mr Hearld added: “Yorkshire’s corporate leaders can certainly expect more, and broader, issues than ever before to be on their plate on 2013.

“That said, the benefits of implementing responsible business practices are wider than simply being a good corporate citizen. They help the bottom line.”

If you behave responsibly, risks are reduced, costs are lowered and your company’s reputation is enhanced, according to Mr Hearld.