Kingspan PLC (LON:KGP ) has seen one of its long-term investors sell out due to the issues that emerged during the Grenfell Tower inquiry.
WHEB, a sustainable investment specialist, had held shares in the building materials firm since May 2014 but said the inquiry had highlighted “a culture of seeing UK regulation as an impediment to doing business” within its UK arm.
The Ireland-based group was heavily criticised by witnesses at the inquiry into the 2017 fire in west London where 72 people died.
Kingspan has always insisted it had no role in the design of cladding used on Grenfell Tower and that the K15 product it supplied for the building only constituted 5% of the insulation used.
“It was used without Kingspan’s knowledge in a system that was not compliant with the buildings regulations and was unsafe,” the building materials group has said repeatedly.
In February, chief executive Gene Murtagh also apologised for what he said was “unacceptable conduct and historical process shortcomings, involving a small number of employees in our UK insulation boards business.”
Kingspan has since introduced new processes in its insulation boards division and that has helped its share price recover from 57(euro)c in February to 71.3c today.
In its March 2021 investment advisory committee minutes, WHEB said that while the recent initiatives were impressive the “core issue of culture remains, in our view, largely unaddressed by the company”.
“Compounding this concern was the decision by the company to appoint the CEO’s brother to the Board,” said the minutes.
“This appointment was announced with the annual results in late February. In our view, this was a missed opportunity to make board appointments which present the clearest possible signal of independent governance.”