Astronomers today warned that an asteroid “capable of destroying London will narrowly skim past Earth” later this week.
While scientists are “sure” there is no chance of impact, the capital – and perhaps the rest of the West – is on a collision course with a juggernaut of a very different nature: a new form of responsible, “popular capitalism”, as the Prime Minister has called it.
This weekend saw two interesting developments in an ongoing debate that is gaining momentum from successive corporate tax scandals over the past year:
1. Parliament backs its chat
Companies that avoid paying their fair share of tax are to be barred from lucrative Government contracts in new rules expected to be announced this week.
According to the Sunday Times, companies will for the first time be forced to disclose their tax compliance history, any unpaid tax bills and their use of aggressive tax avoidance mechanisms. Civil servants will be able to block businesses in breach of the new general “anti abuse” rule from tendering for future State contracts.
Precisely how stringent and enforceable this new system remains to be seen.
However, that tax avoidance has become a potential procurement issue is significant in shifting the agenda from risk purely to reputation to risk to new revenue.
2. Barclays and a “new era of banking”
Talking of a more moral approach to making money, Barclays boss Sir Anthony Jenkins is expected to announce on Tuesday the closure of its Structured Capitals Business (SCM) – the bank’s highly profitable subsidiary which advised companies on tax avoidance.
Jenkins is expected to say:
“There must be a new approach for a new era of banking. Banks that fail to change will become failing banks. My message is that Barclays is changing. Going forward, such activity is incompatible with our purpose”
According to the Sunday Times, a team of traders that bets on complex derivatives linked to food prices could also be disbanded.
Writing in the Sunday Telegraph, Jenkins goes into further detail about the bigger so-called “Transform” root and branch strategy review of which these changes are part.
In phrases that echo Unilever’s Paul Polman, Jenkins talks about there being “no choice between behaving well and performing well as a business”, that “recognising the impact we have on wider society is not optional [but] central”, and that Barclays now sees its “purpose” as helping people to “achieve their ambitions in the right way”.
It will be interesting to see how this all plays out on Tuesday. Not everyone in the financial community yet shares Anthony Jenkins’s vision of the future of his industry, as the Financial Times pointed out today.
“A recent one-hour conference call on ethics was met with sneering by US bankers, according to insiders, who said they hankered after Mr Diamond and were dismissive of Mr Jenkins’ attempts to overhaul the bank’s culture.”