Jo Swinson has always been one to ask awkward questions. In an article in today’s City AM, she describes asking about corporate social responsibility during a seminar when she was a student:
…my classmates looked at me with puzzled expressions, as if I was rather off-topic.
Gone was the 1960s radicalism of the institution, and instead chasing the highest-paying banking internship was very much in vogue. When, after graduating, I chose a job placement with a small start-up company in Yorkshire on a £12,000 salary, the puzzled looks turned into disbelief.
She sets out three big changes to the way business should operate, putting responsibility to people and planet at their heart:
So, let’s start rewarding investors who are in it for the long-run and limit the powers of those who are in it just to make a quick buck. We can increase voting rights the longer an investor remains with a company, and we can taper the rate of tax for every year an investor keeps their share in the business.
Second, let’s put people at the heart of business. Let’s make it crystal clear that directors have fundamental responsibilities to their employees, their consumers, and the communities on which they depend.
Last, and by no means least, let’s get serious about the fact that we are the last generation that can stop irreversible harm to our planet. Any business that thinks it is immune to the threats we are facing is utterly deluded and is risking its own survival
So let’s make it mandatory for companies to report on their climate risks and to disclose that information publicly. Bank of England governor Mark Carney and Mike Bloomberg’s voluntary initiative on reporting potential climate-related impacts shows what is possible.
You can read the whole article here.
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3 Comments
Totally agree on this.
In this era, where people seem so divided on so many issues, climate change is one of the few issues that cuts through (at least amongst young generations) and has something tentatively approaching a consensus.
Have to say, more and more convinced she is the candidate who can take the part onwards.
I entirely agree with the sentiment in Jo’s article but two of the three suggested steps quoted above are technically very difficult to achieve. The tapering of tax relief is sensible and achievable and could apply to income tax on dividends as well as capital gains on sale.
The directors’ responsibilities suggestion would involve a change to the Companies Act by creating a new set of duties or simply by changing the definition of “success” in the statutory duty to promote the success of the Company. However directors currently owe their duties only to the company itself (for a number of good reasons) so a means of making the wider duty to others enforceable by or on behalf of them would need to be created.
Most difficult of all is voting rights. They are contained in the articles of the company and are in essence a matter of contract between the members. It would not be very liberal to prescribe what the rights must be and it would restrict mechanisms open to investors to protect their position. I don’t think it would be workable or desirable. An alternative might be to require public companies to certify or have certified whether a proposal will have a positive effect on the companies contribution to reduce its impact on the climate, and if not, require it to be a special resolution.
An excellent aim but more thinking needs to be done on how to do it in a way that is workable avoids unintended and undesirable consequences.
What about developing some incentives for entrepreneurs to experiment with novel climate change reducing measures? There’s plenty of scope at present with meat alternatives. Perhaps a dragon’s den sort of approach would work. Anything that would alter our fast food companies’ use of unsustainable animal protein would help.