It’s unusual for a Governor of the Bank of England to announce his next job before Downing Street has named his successor. In Mark Carney’s case, the new role turns out to be an unpaid, part-time one as the UN’s special envoy for climate action and finance, so no protocol has been breached — though the announcement will serve as a reminder to Chancellor Sajid Javid or whoever succeeds him to let the long--suffering Canadian escape his Threadneedle Street prison as swiftly as dignity allows after election day. What’s significant is the confirmation this news offers that ‘climate risk’ has moved into the mainstream of financial and corporate life. That shift was hailed last week at a seminar in the City’s Guildhall to launch Principles for Purposeful Business, a study published by the British Academy as part of its continuing work on ‘the future of the corporation’.
The eight principles enumerated under the provocative slogan ‘purpose before profit’ sought to address wider issues such as inequalities and ‘accountability to a range of stakeholders’, but speakers kept drawing the discussion back to climate change. That this is a man-made crisis which only concerted human action can avert was taken as read: what constitutes virtuous corporate behaviour in response to that creed was open to argument — but not clearly answered. A water utility that has written sustainability into its memorandum and articles was held up as an example. But water is a benign and universally essential commodity, I pointed out from the floor: what if I’m chief executive of an oil company or an airline? I can’t just close down, not least because for the time being the world still needs what I provide. A half-answer from the platform spoke of the inevitability of ‘stranded assets’ (oil fields, coal mines, perhaps even jet aircraft, that will have to be abandoned long before they are economically exhausted) in toxic sectors; but I would have liked to hear from Shell about its renewable technology investments or easyJet about its carbon-offset forests and solar farms.
The trouble is they weren’t in the room — or if they were they kept quiet, knowing how little sympathy they would find among the assembled academics, think-tankers and sustainable investment gurus. Carney’s first task in his UN role will be to establish global guidelines on matters such as whether central bank quantitative-easing programmes (like the ECB’s) should exclude buying ‘brown’ corporate bonds issued by polluters and favour ‘green’ ones. No doubt he’ll also push for greater transparency in the way companies report their climate impacts. But in doing so, he needs to bring real-world corporate chiefs to the table and praise rather than scourge those who are trying to transition at a practical pace towards a distant net-zero goal. If he does that effectively, I’ll think better of him in his new job than I did in his old one.
Tax matters too
Corporate tax and its avoidance were little mentioned at the British Academy session, though there was some impassioned advocacy for carbon taxes. It was an odd imbalance; this column has long argued, as a principle of fair business, that multi-nationals should feel obliged to pay a reasonable level of tax wherever they generate profit, particularly when they do so by competing against taxpaying local firms and relying on local public services.
On that theme, the Fair Tax Mark campaign has just published a report on the tax conduct of the ‘Silicon Six’ (Facebook, Apple, Amazon, Netflix, Google and Microsoft) since 2010. It finds their aggregate cash taxes paid, at $180 billion, to be just over half what they might have paid at ‘headline’ tax rates. While Apple and Microsoft looked respectable enough as contributors of $140 billion between them, Amazon was paying an effective tax rate of 12.7 per cent and Facebook just 10.2 per cent — compared with a headline US corporate tax rate of 35 per cent until Trump cut it to 21 per cent in 2017. Both companies dispute the report’s findings, relying on complex structures — and devices such as Amazon’s booking of UK sales in Luxembourg — to obfuscate the arithmetic. But Fair Tax Mark concludes that Amazon ‘stands out as the business with the poorest tax conduct… growing its market domination across the globe on the back of revenues that are largely untaxed’.
Middle-class climate evangelists who have persuaded themselves that shopping on Amazon reduces their own carbon footprint might plead in mitigation; but for a better world, maybe Mark Carney should take up the ‘fair tax’ cause alongside the green one.
Pity the commuters
Could there be a stupider use of the right to strike — or, frankly, a better argument for the advance of robotics — than the RMT union’s proposed 27 days of disruption (of which this Tuesday was the second) on South Western Railway routes in opposition to the company’s plan to give control of the closing of train doors to drivers rather than guards? RMT leader Mick Cash says this long-running dispute is all about ‘safety and accessibility guarantees at the platform/train interface’, but it’s obvious that what it’s actually about is 1970s-style job protection, resistance to change and militant muscle--flexing for its own sake.
If you’re a commuter on these already overcrowded and unreliable services, you have my deepest sympathy, especially if you’re trying to read this pressed in a standing sandwich between several other angry passengers. If you’re a member of RMT’s national executive, I suppose I should at least thank you for a timely demonstration to southern voters as to what to expect if a Corbyn-McDonnell regime really lets hard-left trade unionists off the leash. I see there’s another of these strikes due on Friday 13 December, just as the election winner arrives in Downing Street to take power: with a bit of luck, both Labour’s leaders will be free to spend a relatively harmless day on a very chilly Waterloo picket line.