Key Kingspan Executive Retires After Grenfell Revelations
(Bloomberg) -- Kingspan Plc said a key executive will retire within weeks, a day after the Irish manufacturer apologized for “shortcomings” uncovered by an inquiry into England’s deadliest fire in 75 years.
Peter Wilson, 64, will step down as divisional managing director of the Insulation Boards business and as a company director at the end of the year, the firm said on Thursday. Earlier this week, Kingspan acknowledged “unacceptable conduct” at its U.K. Insulation business after revelations at the public investigation into the deaths of 72 people in the 2017 Grenfell tower blaze in London.
The firm declined to comment beyond its statement. Wilson, who joined the company in 1981, declined to comment.
The probe has raised questions about Kingspan’s culture. In a message sent before the tragedy, one worker indicated that the firm lied in marketing material about the safety of one of the products used in the building. Many staff “will be shocked and upset at recent revelations,” Chief Executive Officer Gene Murtagh said in an email to staff seen by Bloomberg News.
Shares of Kingspan fell Friday morning, dropping as much as 10% in early Dublin trading before regaining ground and closing up 0.1%. The stock closed down 12% in Dublin on Thursday, the most since the day after the Brexit referendum in 2016.
Money managers and analysts have been querying the corporate governance standards at the company, a top pick for fund managers looking to buy into environmental stocks. Liontrust Asset Management Plc, which has invested in Kingspan for 15 years, began asking questions of the firm’s management after the fire, and is following what it describes as “serious allegations” emerging from the inquiry.
We have “continued engaging with Kingspan about Grenfell Tower in particular and the fire resistance of the company’s products more generally,” a spokesman for Liontrust, which oversees about 28 billion pounds ($37 billion) of assets, said last week. “Kingspan must meet our sustainable criteria and the highest ethical and safety standards.”
In the email to staff, Murtagh said the system used on Grenfell Tower “was not compliant with building regulations, should not have been built, and was unsafe regardless of the insulation used.”
“Kingspan had no knowledge that its product was being used until after the fire and had no role in the design or planning of the cladding system used on the building,” he said, adding that only 5% of the insulation boards sold for use in the tower were Kingspan’s. Nonetheless, there were “undeniable shortcomings that occurred in a part of our organization that need to be acknowledged and addressed.”
Murtagh’s email came after the inquiry unearthed messages between employees in which they joked about general product safety. “Alls we do is lie in here,” read one message sent before the tower fire.
“Negative headlines on the insulation producers whose materials were used in the Grenfell Tower have recently ramped up” and are expected to continue into early-2021, Jefferies International Ltd. analysts Priyal Woolf and Glynis Johnson wrote in a note on Friday. “Although the inquiry continues, at this stage, we expect the key impacts to be poor PR, for example, brand damage, rather than anything financially material.”
Sustainalytics, a firm that rates companies based on ESG factors, said in a recent note that Kingspan “shows weak product governance management,” referring in part to the use of the firm’s insulation at Grenfell. “Its processes to monitor product quality are unclear.”
The insulation unit has made wide-ranging changes to ensure the correct classification of its products, a spokesman for the firm said.
Wilson’s departure comes as Kingspan competes to acquire Firestone Building Products from Japanese conglomerate Bridgestone Corp. The Irish company is vying with firms including Standard Industries Inc. for the business, which could fetch about $2.5 billion, people with knowledge of the matter have said.
Founded in 1965 by Eugene Murtagh, the current chief executive’s father, Kingspan began as a small engineering and contracting business in the northeast corner of Ireland. Built largely through acquisitions, the company has become a consensus green trade. Its lure is simple: buildings are responsible for about 40% of the European Union’s greenhouse gas emissions from energy use, and insulation can help cut carbon emissions.
Investors are watching the inquiry, which is currently suspended due to a Covid-19 case. Baillie Gifford & Co., which holds the Irish firm in its Positive Change investment vehicle, has raised the probe with the company and will continue to monitor the situation “closely.”
“Rebuilding trust will take time and decisive action,” Murtagh said in the email to staff.
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