More than one-fifth of shareholders who participated in Kingspan annual general meetings (agms) in 2021 and 2022 could not bring themselves to vote in favour of the re-election of the insulation group’s chief executive Gene Murtagh. Most abstained from casting ballots, in line with recommendations from Institutional Shareholder Services (ISS), one of the world’s leading advisory firms to investors on corporate governance issues, after Kingspan was the subject of embarrassing revelations about its UK insulation board business during the inquiry into the deadly 2017 Grenfell Tower fire in London.

“The Grenfell Tower Inquiry has raised serious questions into the corporate culture at Kingspan and reputational damage has been incurred,” ISS said in a report in 2022 ahead of that year’s meeting. “It is reasonable to hold the CEO ultimately accountable.”

ISS has since changed its stance, giving “qualified support” in the past two agms to the chief executive of 19 years, son of Kingspan’s founder Eugene Murtagh. In doing so it acknowledged a number of conduct and compliance reforms Kingspan had undertaken but added that the matter would be revisited once the final inquiry report came out.

The almost 1,700-word tome was published on Wednesday, concluding the disaster at the council block in north Kensington was the result of “decades of failure” by central and local government, regulators and the city’s fire brigade as well as “systemic dishonesty” of companies – including Kingspan – whose products were used on the facade system of the tower during a refurbishment completed a year before the inferno.

The chair of the inquiry, Sir Martin Moore-Bick, was scathing of Kingspan in its final report for falsely claiming that a form of K15 had successfully passed fire tests that allowed it to be used on the external walls of high-rise buildings more than 18m in height. Tests performed in 2007 and 2008 on systems incorporating the K15 boards were “disastrous” it said, but Kingspan did not pull the product, despite its own concerns.

The story of Kingspan developing and marketing K15 for use on high-rises between 2006 and 2019 “is one of deeply entrenched and persistent dishonesty on the part of Kingspan in pursuit of commercial gain coupled with a complete disregard for fire safety”, it concluded. Its creation and domination of a false market for insulation in UK high-rises had actually led to Celetox embarking on its own dishonest scheme to play catch-up, it said.

Kingspan's CEO: Insulated From Accountability?

As damning as the findings on Kingspan are, the most egregious conduct of employees of the group had already been aired years before the final report was published at 11am on Wednesday. A former manager at Kingspan’s UK insulation unit, Philip Heath, became an ignominious poster-boy for the companies at the centre of the inquiry during hearings in late 2020. It emerged then that he had emailed a friend in 2008, when a contractor was asking awkward questions about K15′s safety, saying they were “getting me confused with someone who gives a dam [sic]”.

The reaction of Kingspan’s share price on Wednesday tells its own story. Within half an hour of the report’s release it had rallied 4 per cent (even if it subsequently fell back, amid a weaker wider European market). If anyone thought there’d be a groundswell questioning Murtagh’s position, there are no signs of it this week among the most influential group of all: Kingspan’s investor base.

Investors' Focus: Profits Over Principles?

Aside from the fact that his father is the largest shareholder (14.9 per cent), those who have remained on board throughout the multiyear inquiry have had to assure themselves – and their firms’ clipboard-wielding ESG officials – that Kingspan’s reforms have been deep enough and that failings were limited to individuals within the UK insulation business.

Market sources say there has been a large turnover of investors at Kingspan since the inquiry started – beyond headline-grabbing instances in 2021 of the likes of former top-four shareholder Baillie Gifford, as well as Liontrust Asset Management and WHEB Asset Management selling down their holdings. BlackRock, Allianz Global Investors and FMR have remained among its largest investors ever since the fire.

Perhaps the best form of insulation for Murtagh can be found in what really matters to big investors. Trading profits at the group are on track to top €900 million this year, up 165 per cent from the outturn for the year before the fire, as it benefits from growing demand for insulation products amid a global race to net-zero carbon emissions. Its shares, meanwhile, have advanced more than 155 per cent since the night of the Grenfell disaster, resulting in a market value of more than €14 billion.

Kingspan's Continued Resistance: A Missed Opportunity for Change

Kingspan has yet to meet a commitment to contribute to remedial plans to make buildings fitted with flammable cladding and insulation safe, more than a year after a direct request from a former government minister. It comes after the inquiry into the Grenfell Tower fire admonished the construction materials supplier over its “persistent dishonesty” over fire testing, certification and mis-marketing of popular insulation product Kooltherm K15. The company said it is awaiting the establishment of a “workable solution”.

As for ISS? It won’t form a view on the chief executive until just before next year’s agm. While the inquiry’s findings have cast a shadow over Kingspan’s reputation, it seems the company’s financial success and its CEO’s position remain largely unscathed. In the face of a tragedy that claimed 72 lives, the lack of accountability and the apparent indifference of investors raise serious questions about the priorities of corporate governance in the face of ethical lapses. Is profit truly the only insulation that matters?