The battle over political values in the boardroom

The modern chief executive officer has to talk and embody values as much as profits.

The modern institutional shareholder and the modern company recruit want to know that they can be comfortable with those values.

Dame Alison Rose, NatWest CEO, has now resigned after admitting she had made a mistake in speaking to the BBC about Nigel Farage's relationship with the bank.

Yet her departure also brings into focus the potential pitfalls if companies become too picky about customers and whether they align with those values.

Dame Alison's predecessors at NatWest, when the whole group was under the Royal Bank of Scotland brand, focused on maximising shareholder value by more conventional means.

Fred Goodwin did that in buccaneering and bullying style, trampling over the older canny values of conventional Scottish finance with the goal of creating a global giant. It crashed, hideously, and the British taxpayer had to bail it out.

The next two chief executives, Stephen Hester and Ross McEwan, spent much of their time apologising, clearing up the mess and trying to return to vanilla-flavoured banking. They shrank the global bank, with $2.2 trillion in assets, to one focused on the UK, while preparing it for the gradual sale of the Treasury's 82% shareholding. That is now around 42%.

One could argue that shareholding was influential in the departure of Dame Alison at 01.45 on Tuesday morning, after Downing Street and the chancellor expressed "significant concerns" about her handling of the controversy over Nigel Farage's account with NatWest's private banking division Coutts.

But ministers could have weighed in to any other bank in the same position, and without having a shareholding. They are calling in bank executives to warn them against account closures.

This is political. And corporate Britain should be on notice that it could be coming to other sectors, boardrooms and executive suites.

The issue relates to other news stories around climate change and culture wars.

NatWest - or as it then was, Royal Bank of Scotland - was a major financier of fossil fuel extraction around the world. It was heavily involved in developing the North Sea industry.

In recent years, however, it came under pressure to pull out of the industry. Campaigners reckon that oil and gas can be squeezed dry by pressuring institutional investors and the banks behind the industry.

So when the Cop26 environment summit came to Glasgow, Alison Rose was prominent in the agreement between governments and major financial institutions around the world to dedicate trillions of pounds to financing the great energy transition.

She resisted pressure to pull out of oil and gas, conceding only that NatWest would stop funding coal.

Her reasoning, when I interviewed her last year, was that NatWest will only finance them if they have a credible plan to reduce emissions and to invest in renewable power. If banks like NatWest aren't doing that, she reasoned, the same companies will get their finance elsewhere, without such conditions.

Dame Alison also defended the continued funding of farming, where it too can be linked with global warming. The bank's agriculture relationship managers were being tooled up with advice on how to reduce emissions down on the farm, she said.

You can see how conversations like that could influence other thinking within the bank. If oil companies and farmers are at risk of being red-lined as too toxic, because they don't meet NatWest's carbon-reducing targets and values, perhaps it could lead to discussion of other customers.

Responding to a briefing, reported on BBC news outlets, that indicated he was being pushed out of Coutts because his finances did not meet the criteria to be within its high-income, high-wealth clientele, the former UKIP leader and MEP released a leaked document which said, in highly unflattering terms, that his views were "not in line with our views or our purpose".

"Purpose" has been one of Dame Alison Rose's favourite words, and it has come back to bite her. She has emphasised that NatWest, under her leadership, is not banking for the sake of money but to make a difference and to fulfil a sense of purpose about what it can achieve for customers and for wider society. That thinking was driven through the organisation.

Other chief executives talk in similar terms. That bank crash in 2008 hit public trust in business and in business values. It influenced the current generation of leaders with a need to show that corporate values are in sync with customer views and with society.

Pressures come from outside lobbying, from regulators, from government, from investors and, importantly, from their own staff to show they are being diverse and inclusive, and working towards shared targets for reduced carbon emissions.

Increasingly, auditors, business consultants and lobbyists are having their links to controversial clients challenged through the media. Retailers face pressure to review their supply lines in favour of ethical sourcing.

But making those changes risks a backlash.

This goes beyond the case for a right to bank. Mr Farage has said that NatWest and Dame Alison's problems were rooted in their move towards inclusion and diversity, and says her exit is only the start of an assault on "woke" values in the financial sector.

That reflects a strand of conservative opinion that big business has become too liberal. It has become a major issue in US politics.

Where once companies were assailed from the consumer movement led by Ralph Nader, they are now under attack from the right, and not on their products but their values. Some legislators are trying to ban business from taking an inclusive stance on gay, trans or abortion rights.

These politicians see mileage in the so-called culture wars. Their targets are not just, as they used to be, political opponents at national or more local level, but companies.

Chief executives wanting to talk and embody values may find it difficult to answer back.