Riversimple’s model of governance is structured to represent and be relevant to society today, just as our product and service should be relevant and benefit that society.
We have introduced 6 Custodians, each representing a fundamental part of modern life – the Environment, the Customers, the Community, the Staff, the Investors and the Commercial Partners.
How did we come to this solution? As with all aspects of the business, we started with a clean slate. Riversimple MD Hugo Spowers explains:
“The business was founded to address the enormous environmental damage created by personal transport and the original intention was to serve the ‘basket of interests’ so often referred to by economists. The interests of investors are not well correlated with the interests of society and the planet, and we are riddled with market failures, so the intention was to internalise the governance that a more ‘perfect market’ would theoretically deliver; embedding the Purpose structurally in the governance of the company, rather than relying on altruism.
Shareholder value has primacy in UK law, so we felt that the simplest way to deliver that without a conflict of interests was to make the Environment and other key stakeholder groups shareholders, but without equity rights. The Board’s duty is to pursue the Purpose while balancing and protecting the benefit streams of all six stakeholder groups, rather than maximising the value of one. It is essentially a partnership model and you cannot have a partnership in which one partner has control, because then it’s not a partnership.”
These six stakeholder groups are all critical to the success of the business but we cannot hope to maximise the goodwill of five of them if their interests are subordinated to the sixth. There is no inherent conflict between these interests; if the business is designed in this way it will garner a greater level of goodwill than is possible in a single stakeholder entity, delivering a more profitable and more resilient business.
The intention is to make more money from doing the right thing than business as usual makes from doing the wrong thing. Inputs come from various stakeholders, putting in human and natural capital as well as financial and seeking entirely different but non-competitive outcomes. Balancing these interests is better for all concerned than prioritising one stakeholder group.