Inflation Hurts The return of inflation across the world - in energy, in food, and in most goods and services - has erased many business assumptions of recent decades and presents a major challenge for Boards. Though rates of inflation vary - the US rate appears already to be falling - there’s still the tough business of ensuring that margins survive cost inflation. Pricing power is at a premium, and more holistically there are significant ESG implications.
Fidelio’s recent webinar 'The Board & The AGM Season' with Cas Sydorowitz, Global Head of Activism and M&A at Georgeson, identified the cost-of-living as a major theme for the next AGM season, and in recent Board Evaluations we have seen clear evidence that Boards are taking this issue seriously. Boards and companies are increasingly alert to their accountability to stakeholders, and in this Overture, we explore the Board’s response to inflationary pressures on employees and consumers.
Key takeaways regarding the cost-of-living crisis, include:
Employees – shareholders care how employees are being supported through the crisis and the key lever for shareholders to express their concern will be the vote on executive pay
Customers and consumers – companies will want to be perceived as part of the solution not the cause of the problem – a critical distinction for stakeholders
The Board – the Board has a key contribution in ensuring that against this inflationary backdrop stakeholders, including shareholders, are treated fairly and that company has a clear narrative to support this
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