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John Lewis and CBI object to plans for employees on boards

The retailer has provided written evidence to the parliamentary inquiry into corporate governance.

The John Lewis Partnership (JLP) has criticised prime minister Theresa May’s plans to put more employees on company boards, arguing that this alone would not strengthen corporate governance.

May unveiled plans to have both customers and workers represented on company boards at the Conservative party conference in Birmingham last month. She said existing boards, which are supposed to hold big business to account, are currently ”drawn from the same narrow social and professional circles”.

The business, energy and industrial strategy committee has now published the first written evidence it has received as part of its inquiry into corporate governance.

Submissions have come from organisations including the Confederation of British Industry (CBI), Institute of Directors and trade union Unite, as well as from JLP, which employs 88,900 permanent staff across John Lewis and Waitrose.

JLP argued that its approach to corporate governance is effective thanks to the company’s wider democratic structure and ownership model. The partnership is owned by its employees or “partners”, five of whom sit on its council.

“We do not believe that encouraging or mandating employee representation on boards will, in isolation, create a strong system of corporate governance,” the retailer said in its submission to the inquiry.

CBI argued that the structure of unitary boards should be maintained and employee representation should not be mandatory.

It suggested requiring big businesses to report on how they have secured employee engagement on a “comply or engage” basis.

This would allow an individual firm to make a judgement about the merits of employee representation based on the suitability of its business practices, giving more flexibility.

 

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