Friday, October 27, 2006

Now just plain making stuff up

In today's column, Polly Toynbee writes about the proposed companies bill, and specifically a clause to require companies to disclose information about their suppliers.  She writes:

The Financial Times all this week has run a loud and intimidating campaign against one clause, with a front-page splash and yesterday's thundering leader attacking industry minister Margaret Hodge. The subclause they oppose is the only item in this monumental bill that concedes anything to the lobby for stronger corporate social responsibility to protect the environment and communities.

This is part of a broader charge against the FT, that it has become the mouthpiece of the CBI:

The growing influence of the CBI over the once independent-minded and more nuanced Financial Times is sad to behold: now that its former editor Richard Lambert heads the CBI, he seems to not only adopt belligerent CBI narrow-mindedness but to cast the FT under the CBI's sway too.

Actually, the FT leader (link here, possibly requiring a subscription) is less than thundering in its criticism of the clause:

Yet the harm is less in the clause than in how it was introduced.

The FT leader agrees with Polly that on the face of it the clause requires something similar to the Operating and Financial Reviews that were originally proposed, but then vetoed by Gordon Brown.  In fact, the FT says:

At first sight, the new proposal for companies to disclose information about suppliers looks similar to the government plans for statutory operating and financial reviews (OFRs) that were in the bill until the Treasury decided to scrap them. This type of broader business commentary can help to focus attention on strategic questions beyond the next quarterly earnings figures. But the original OFR proposals were firmly underpinned by detailed accounting standards in a way that the current plans are not. This makes them harder for businesses to interpret. The DTI promises guidance: that must emphasise that the information need be given only where it is material and is at directors' discretion. Even then, there are likely to be high-profile and costly legal challenges as the non-governmental organisations that have pressed for the proposal try out how it is being applied in practice.

Read that carefully -- the complaint is not about the requirement to report, but rather that the requirement to do so in an ambiguous way generates uncertainty.

Indeed, Polly complains that:

The spectacle of the CBI and the Institute of Directors in full war cry is enough to frighten any government. How arrogantly they stamp, rampage and threaten mere elected politicians.

(I think in psychology this is called projection).  However, compare that with the FT leader which says that:

In their dealings with government, businesses should not always expect to get their own way. They do need consultation and certainty.

Thus, apparently, the mouthpiece of the CBI in full war cry, arrogantly stamping, rampaging and threatening.


Polly also writes:

An ICM poll shows that 90% of the public want companies to be legally obliged to report on their social responsibilities

Actually, according to the CORE press release (downloadable here):

90% of voters think that “the Government should set out enforceable rules to ensure companies are ‘socially responsible’, for example to ensure companies do not damage the environment.”

That's not "legally obliged to report".


When writing about CORE, Polly Toynbee writes:

Campaigners for greater openness are the Corporate Responsibility Coalition (Core) and the Trade Justice Movement, with over 130 organisations and 9 million members.

CORE represents 130 organisations, and the TJM claims to be:

a coalition of over 80 UK organisations with over 9 million individual members.
(source is a pdf, link here)

That's not having 9 million members.  The list of member organisations is here, and includes, for example, the Church of England and UNISON.  I think it's a bit rich to describe their members as being members of the TJM.


Polly also writes:

But imagine a government that dared stand up to them [i.e. CBIand IoD].  On behalf of shareholders, simple questions should be put: why do directors pay themselves obscene sums, a 28% rise in the boardrooms this year, all of it stolen from citizens' pension funds and Peps?

Skip lightly over the rhetoric about "stolen", and that of course shareholders do ask these sorts of questions without needing the state to do it for them according to the Observer, but consider the implication for a moment that the only shareholders in UK companies are pension funds and PEPs, and rightly discard it for the ill-informed and facile assumption that it is.

1 comment:

Anonymous said...

"...consider the implication for a moment that the only shareholders in UK companies are pension funds and PEPs, and rightly discard it for the ill-informed and facile assumption that it is."

And consider how poorly it fits with the usual ".....90% of wealth is owned by 10% of people...." myth.