Home > CBI fights for existence as governance failures unravel business body 

CBI fights for existence as governance failures unravel business body 

April 2023


close up of smashed glass

Sometimes, it would seem, reputational damage can be just too much to recover from.The CBI (Confederation of British Industry) claims to represent 190,000 businesses and is arguably the most prestigious and influential lobby group for the British business community and the interests of UK PLC. 

Or at least it was.

Now the business body has called an EGM in June which will discuss with what remains of its membership just what its future purpose and role should be, if anything. 

What started as a crisis has turned into a full scale meltdown after the UK’s biggest companies started abandoning the scandal-rocked British industry body on Friday 21 April, suspending or terminating their membership hours after additional allegations of rape and sexual harassment were made against CBI staff. 

Some have suspended membership, others have quit the CBI completely. 

Among the prominent companies to cut ties with the CBI are Accenture, Arup, Aviva, BMW, Fidelity International, Phoenix Group, Sage, Virgin Media O2, Tesco, Sainsbury’s, Marks & Spencer, B&Q owner Kingfisher, Lidl, plus Asda – which was one of the first companies to pause its engagement with the CBI – and consumer-facing groups such as Unilever, Reckitt Benckiser, Diageo and Rolls Royce. 

Tech giants Meta and Uber have also suspended membership, along with a host of financial institutions, oil and gas giants, plus landlords The Crown Estate and British Land. 

The list grew with each new Twitter update following the fresh allegations and, by the weekend, included the Labour Party plus 66 businesses. 

CBI appoints law firm to investigate 

The CBI has now hired law firm Fox Williams to independently investigate a host of allegations reported to UK media group The Guardian, including shocking allegations by a woman who says she was raped by two male colleagues when she was working at a CBI overseas office. 

The revelations mark the second allegation of rape involving CBI workers after another staff member claimed she was raped by a manager on a 2019 summer boat party on the River Thames in London. The City of London Police has launched its own investigation into these allegations. 

The CBI had already dismissed its director general Tony Danker, whose conduct was part of a separate investigation by Fox Williams, related to allegations about his behaviour and not the further revelations. 

Danker had come out swinging, claiming to be the “fall guy” in an interview with the BBC over the further allegations that were unconnected with his own conduct and lamenting his “trashed” reputation. 

Attempting to stem the mass desertion from the body, which may well be irreparably damaged by the volume and severity of the accusations, the return of former CBI chief economist Rain Newton-Smith from Barclays had originally been fast-tracked. 

The intention was that she would assume the vacated director-general’s office within days. 

However, the CBI has now announced that it is to mothball its operations until June, 

suspending all membership and policy activity until an extraordinary meeting in June, when members will vote on its future and purpose. 

CBI mothballs activity 

Earlier in April, the government suspended its relationship with the CBI over the initial allegations and the board said in a statement that “much needs to change” for it to win back the trust of businesses. 

It plans to spend the next two months before the EGM speaking to staff, businesses, experts and others about its future role. 

“This work and the cultural reform will be the entire and urgent focus of the organisation over the coming weeks. We are taking steps to address our failings but recognise these are not yet sufficient to sustain the confidence of our colleagues, members and of the broader business community,” the CBI said. 

One of those first actions will undoubtedly be to carry out a fundamental review of its governance. While the allegations go way beyond the issues and challenges that companies which do not have robust procedures in place normally encounter, once again at heart many of the issues are around corporate culture and reporting. 

Without transparency and clear responsibilities and processes in place, organisations can find themselves fundamentally unequipped to handle such challenges – especially of the magnitude that the CBI faces. 

For the CBI the cost could be high indeed, quite possibly resulting in the winding up of an organisation founded in 1965 but now, on every level, perhaps simply out of time.