Tag: Tax

Corporate Responsibility

Tax to rise in 2013? (Up the ESG controversy agenda)

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 January 2013 saw a private research provider – other research providers are available  – publish its top 10 list of   The Most Controversial Companies of the year 2012   –  analysing alleged breaches of international standards relating to 10 global companies as reported in high profile news stories. – other research providers are available

 Labour standards figure prominently as ever and the 2012 list is headed by the huge death toll in the Tarzeen fire http://www.laborrights.org/news/coverage-of-the-tarzeen-fire  Given that UK companies and media coverage feature strongly in this assessment, the tax debate originating in the UK and spreading  globally since the turn of the year, may feature prominently in the 2013 report?

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Responsible & Ethical Investment

Responsible Investment (RI) must both be mainstream and need the help of more niche ethical investors

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Responsible Investment(RI) as it is understood today as an increasingly mainstream expectation – see http://www.unpri.org  or http://www.uksif.org, ASRIA etc  – would not exist without generations of active ethical investors using their power as citizens, consumers and investors, to make their points.  Often succeeding in having an impact far beyond their size in raising an issue up the media and policymaker agenda.

The 2007 credit crunch and failures in regulation (or the deliberate absence thereof)  underpinning the contemporary global financial crisis makes it clear that there is still some way to go before the financial services industry meets all the reasonable needs of its customers and beneficiaries (among whom would be most people reading this) when  it invests money on their (our)  behalf.    PMCRreview article Niaz Alam

Hence there is still much to be said for active groups of smaller deeper/ traditional ethical investors who are often the first to raise key ESG issues – and avoid the downsides when risks become more apparent… So even though the common goal of all RI practitioners is to improve impacts against ESG standards across the board and to mainstream good practice, it is perhaps short sighted to dismiss ethical/moral choices as always a niche/minority activity.  The end of 2012 and start of 2013 for instance saw the tax debate originating in the UK spread  globally (after many years of diligent campaigning and being overlooked by much of the media except for Private Eye)

Whilst hugely valuable and influential, ethical choices by individuals, such as choosing an ethical bank account, or buying goods certified as organic or fair trade will almost by definition always at first be a minority choice.  There is also often a moral dimension – who is more useful for the good of wider society, an investor who avoids holding shares in a tobacco company because they do not want to profit from the harm inherent in the product, or the citizen who campaigns democratically for the government to discourage use by raising taxes?   (One answer by the way is that someone could be both.)

In order to get away from such accusations that ethics are an optional or niche factor, some responsible investors are focusing on integrating ethical factors into mainstream investment choices by for example incorporating reference to international human rights law and ILO conventions within their statements of investment principles. For example the Norway Government pension fund (commonly referred to as the Norway Oil Fund and one of the world’s largest sovereign wealth investors), sold over 350m USD of shares in Wal-Mart in 2006 because it was not satisfied with the company’s responses to allegations that its operations may have breached the spirit of international conventions on labour rights and freedom of association.

This approach has gained widespread endorsement with the growth of the UN Principles for Responsible Investment (PRI), an investor-led coalition  that seeks to  “help investors integrate the consideration of environmental, social and governance (ESG) issues into investment decision-making and ownership practices across all asset classes and regions…”  By the end of 2012, assets reported under management by PRI signatories stood at more than $32 trillion USD ( that is to say 32000 billion USD or 15% of the world’s investable assets).

Some fear that Responsible Investment principles – if not adequately implemented and monitored for example with the help of  improved disclosure and transparency (as is indeed now being required by UNPRI,)  may be lost in the wider picture or treated as an optional extra- while others such as UKSIF http://www.thecityuk.com/blog/date/2011/07 argue that it is essential that all investors adopt an RI approach as  sustainable finance is essential and integral to the necessary global transition to a more resilient resource-efficient economy.

Of course, as with all good intentions, in the long run, it is not the words on paper that count so much as how they are put into practice.

Books and recomendations, Corporate Responsibility, Corporate Responsibility/Compliance

Corporate responsibility – from the Industrial Revolution to 2013 and beyond

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Whilst some of the contemporary debate about Corporate Responsibility (CSR) may appear new to some, it is worth remembering that debates about environmental and social impacts in business are at least as old as the industrial revolution itself. Even in the 19th century, some employers made a business case for improving the living conditions of workers and in early 20th century Michigan, Henry Ford argued that raising wages so that the workers who made his cars could also afford to buy them was good both for his workers and his company.

Conscientious citizens have long used their influence as consumers and investors to influence the private sector.  Although boycotts can be counter-productive and are often limited in their effect, they can have huge symbolic power as Gandhi famously demonstrated.  The 1970s and 1980s campaigns against investment in apartheid South Africa and some of the Western multinationals operating there, greatly increased global public and media interest in concepts like ethical investment and corporate responsibility.

Key CSR issues and the UN Global Compact Principles

CR – the Business Case (1)

http://www.crguk.org/

http://www.csrcentre-bd.org/

Although hugely valuable and influential, ethical choices, such as choosing an ethical bank account, or buying goods certified as organic or fair trade are almost by definition always at first a minority choice.  There is also often a moral dimension – who is more useful for the good of wider society, an investor who avoids holding shares in a tobacco company because they do not want to profit from the harm inherent in the product, or the citizen who campaigns democratically for the government to discourage use by raising taxes?   (One answer by the way is that someone could be both.)

Nonetheless, even though the common interest of practitioners is to improve impacts against ESG standards across the board and to mainstream good practice, it would be short sighted to dismiss ethical/moral choices as always a niche/minority activity.  The end of 2012 and start of 2013 saw the tax debate originating in the UK spread  globally (after many years of diligent campaigning and being overlooked by much of the media except for Private Eye)