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Money Under the Microscope It Used to Be Enough to Provide Employment and Pay Your Taxes, Says Mark Williamson , but Now a Clean Conscience is De Rigueur As Well

Posted on: Tuesday, 18 October 2005, 06:00 CDT

By Mark Williamson

ONCE upon a time, so long as businesses made the odd donation to charity or sponsored the local football club, they probably felt able to attend to profitmaking without much fear of interruption.

Nobody expected them to take on responsibility for anything beyond providing employment and paying their taxes.

But in a world in which technologies such as the internet allow people to subject corporate behaviour to ever closer attention, being seen to be a good citizen has been pushed onto the agenda in all Britain's boardrooms.

Anyone who runs a food or drink company can tell you that a consequence of the increasing interest in corporations has been that expectations of what they should be responsible for have increased dramatically.

People have been eating themselves into flabby illhealth for ages, with orwithout the assistance of fast food restaurants, but eating and obesity has recently become a hot political topic.

This was obvious at last month's Labour Party conference when Ruth Kelly, education secretary, "banned" fast food in schools in response to the televisual campaigning of Jamie "School Dinners"Oliver.

A seemingly brazen attempt to play to the television-watching masses, the gesture provoked a degree of irritation among industry players.

This was not because they felt under attack but because they have been working on making food healthier for some time in response to public unease about things like additives and fatty ready meals.

Some might feel that people should be left to take responsibility forwhat they eat.

However, Kate Snowden, at the Food and Drink Federation, notes that the industry body produced a seven-point manifesto last year to help address the healthy-eating issue.

This has included developing new products, looking at how things are advertised to children, reducing portion sizes and improving labelling.

The federation helped officials produce a report on school meals whose conclusions were pre-empted by Kelly, further underlining its willingness to engage in the healthy-eating debate.

However, the diplomatic Snowden's comments also hint at concern that too much is being expected of firms.

"Industry has always said it could be part of the solution, but in partnership with the government, educators and parents, who all have a part to play, " she said.

She is obviously uneasy that, possibly in an attempt to force responsibility onto firms, Kelly talked about banning some snacks and fizzy drinks from vending machines in schools.

"We don't think banning is effective in terms of tackling obesity. Such products are sold as snacks, not as meals. By banning them, you are not teaching children how to enjoy them as part of a balanced diet, " she said.

A similar kind of extension of responsibility is evident in the world of financial services, formerly of interest almost exclusively to men in bowler hats but now firmly on the tabloid newspaper agenda.

This owes much to issues such as endowment mortgage mis-selling, which have prompted regulators to change the rules of the game and punish miscreants.

The selling of self-invested personal pension plans to people who have the option to take advice is likely to come under close scrutiny in an age when pension provision is a big issue.

Banks are now required to fulfil a quasi-policing function by scanning every account application for evidence that a moneylaunderermight be about.

But it is in the area of their lending policies that high street banks have been facing the closest scrutiny, in a development that some would probably want to see result in a big increase in their duties.

The Consumer Credit Counselling Service recently said just 32,000 credit card borrowers in Scotland owed [GBP]1bn-plus on credit cards. With average debts of [GBP]28,000, many seemed to face ruin - stoking unease about the potential consequences of the so-called borrowing binge of recent years.

With accusations of irresponsible profiteering flying around, banking chiefs strove to remind people that the huge earnings they made helped fill the Treasury's coffers, while none had an interest in lending to bad credit risks.

Such claims find sympathy at the CCCS, whose Frances Walker said: "Credit empowers people to do many things and, as long as it is used responsibly, it can be a force for good.

Obviously, there has to be responsible borrowing as well as lending."

However, she complained:

"There is a conflict between what all banks would say at managing director and public relations level - that it's not in their interests to lend to those who can't pay back - and people in the sales departments being set targets whose success depends on selling credit, who are not affected by the consequences (where people cannot repay)."

Such comments might be seized on by critics of banks as ammunition for renewed attempts to enforce "responsibility".

However, while the consequences of a slew of environmental regulation introduced in recent years is cited by lobbyists as one of the biggest bugbears of members, this is the area in which business will most likely be required to assume increased responsibility in future.

Claims by businesses that they are being faced with huge costs in time and money to comply with new environmental regulations in areas like waste disposal get little sympathy from green campaigners.

Duncan McLaren, chief executive of Friends of the Earth Scotland, says that, insofar as they exist, increased expectations of business come from society - that is, those people on whom businesses rely for custom and profit.

"Regulations are all too often broken and firms are fined desultory amounts when they breach them on the rare occasion when regulators have the resources to prosecute them, " he said.

Some elements of regulation make it more burdensome to comply with them than necessary, but those who embrace the environmental agenda will find that savings from cutting wastage, for example, far outweigh any costs.

With climate change a reality that could result in massive damage to the planet unless emissions of greenhouse gas are cut drastically, much tougher action could be required, says McLaren.

Given the massive interest generated by the G8 gathering of global leaders in Scotland recently politicians may be keen to table potentially votewinning environmental legislation, a prospect that may be greeted with alarm at CBI Scotland.

"We have always recognised a broad responsibility to be a good corporate citizen and not just to make profits, " says assistant director Alan Mitchell.

"But if business is expected to do more and more to deal with wider social health issues, it would be problematic."

STRUGGLING TO DO THEIR BIT

SMALL business organisations are particularly wary of suggestions that firms should assume wide-ranging social responsibilities.

Their lobbyists say any reluctance to do more reflects fears that the burdens entailed by greater corporate social responsibility will fall disproportionately on smaller fry, as it has with red tape.

"The problem with corporate social responsibility is that it's easy for big businesses to use it as a public relations exercise, " says Niall Stuart of the Federation of Small Business in Scotland, "where the likes of the big banks and utilities spend huge amounts on CSR work."

Small firms do not have the resources to match the programmes of the giants - missing out on the promotional benefits such programmes bring - while their own, necessarily more modest, offerings often go unrecorded.

Some of the most onerous responsibilities introduced in recent years include administering state benefits through the payroll, a function historically fulfilled by government.

"Where new expectations come from the consumer, businesses have to respond but the prime responsibility of a business is to the business itself, to ensure that it is profitable and can afford to continue employing people, " says Stuart.

He is alarmed by reports emanating from Europe that some politicians would like to see the fulfilment of corporate social responsibilities made a condition of being awarded public sector work.

"Surely the whole philosophy of CSR is that it's voluntary, " he said.

Source: Herald, The; Glasgow (UK)

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