City and business 'need to talk'

A lack of trust between business leaders and investors is threatening the reputation and fortunes of major UK companies, according to a survey.

PR consultants Blue Rubicon questioned nearly 100 institutional investors and fund managers, about whether major UK firms did a good communications job.

But only 3% said firms made an effort to keep up a good dialogue.

Confidence in top companies has been eroded in recent times in the wake the collapse of Enron and Parmalat.

Rude awakening

While investors were frustrated over the communication skills of bosses, business leaders themselves seemed more confident.

Exactly half of company bosses surveyed in Blue Rubicon's Trust in the City Report 2004 reckoned that firms did a good communications job, confounding the view of the majority of investors.

"CEOs who believe their tenure at the top will be judged simply on their track record and financial performance are in for a rude awakening," Blue Rubicon said.

"Trust is at a premium and numbers alone cannot build trust between companies and investors."

Asked which issue would most damage a firm's reputation, some 62% of investors polled said lack of financial transparency.

'Peace talks'

In an effort to build bridges, business leaders and institutional investors are meeting on Monday, 29 March, for formal "peace" talks.

CBI director-general Digby Jones will meet Dick Saunders, chief executive of the Investment Management Association, together with more than a dozen fund managers at a special dinner in London.

The summit has been triggered by growing anger from UK boardroom over the rising influence and activism of institutional investors.

Business leaders were recently rattled by the ousting of Michael Green from Carlton in a rebellion led by a fund manager at Fidelity.

And only last month fiery institutional investors forced Sir Ian Prosser to stand down as chairman-elect of J Sainsbury.