Why Jimmy Carr’s tax shaming bodes well for corporate responsibility


When a comedian – not a global summit – is the catalyst for a front-page debate about corporate responsibility, you know the times we live in are strange but exciting.

Forget Rio (assuming you haven’t already). Outrage at Jimmy Carr’s dodgy tax arrangements, which resurfaced last week, has done more to stimulate mainstream discussion about what individuals and companies should contribute to society than anything recently agreed by Ban Ki Moon’s bunch.

What began a month ago as a classic media exposé about the tax-dodging super-rich has exploded into something of much greater significance. Last week the focus shifted from tycoons to tradesmen with a government crackdown on general tax avoidance and condemnation of the underground cash-in-hand economy of cleaners, plumbers and gardeners.

The fact that this story has got so big speaks more clearly of a shift in values than anything said at Rio. And, for proof of this, we have to look no further than the issues from which our politicians seek to make political capital: while too busy to attend a historic summit to determinethe future we want, the prime minister that same week cleared space in his hectic schedule to decry the moral wrongdoing of Carr’s personal finances.

Tax – and not paying enough of it – is, of course, not a new point of contention. But the strength of feeling it now inspires is on an unseen scale. So, too, is what it has come to stand for: from tutting acceptance at the smart accounting of the rich, to shock and anger at short-changing the rest of society.

It is a collective anger that is not willing to admit trade-offs. Not even for those bankrolling the world’s greatest sporting occasion. After 150,000 supportive signatures, the Olympics’ biggest sponsors – McDonald’s, Coca Cola, General Electric and Visa – were last week shamed intowaiving tax breaks to which they were contractually entitled.

How times have changed since Mandelson, maven of centre-left Labour, announced how “comfortable” we all were with people getting filthy rich. The reality that those riches have cost the rest of society dearly has reset the paradigm.

We are entering a new era of capitalism. First, performance is no longer the sole precondition of survival. The way we do business is just as important as the success of the business we do. As seen most recently with the Libor scandal, the solvency of your business means little in society’s eyes if that liquidity has been created in ways deemed recklessly self-interested.

Second, the public are moving towards a greater understanding of society as a rich web of interactions rather than a collection of celebrated individuals. This has given us a vision of an economy that, while not socialist, feels increasingly all-in-it-together. This is the true force behind the continuing dairy row and the mounting pressure on supermarkets (and now coffee chains) to pay farmers a fair price or risk the collapse of an essential British industry.

Given the scale and complexity of the social problems we face, we can assume that society will come to expect businesses to play an ever more substantial role in solving them. Research suggests we might already be on this trajectory, and daily headlines show that without doubt we are.

The challenge for business is to identify evolving social issues that can reward corporate leadership with competitive advantage. This is about driving new business revenue, not simply reducing risk and defending reputation.

In practice, there are four stages. The starting point, as McKinsey & Cohave outlined, is research and development: scoping the company’s social landscape for issues with competitive potential by monitoring media trends, tracking legislative agendas, mapping social media conversations, and speaking to external and internal stakeholders. For efficiency, this can be done by co-ordinating activities in which the company is already engaged.

The next step is to select the active leadership issue by mapping and measuring its materiality for the business. This involves squaring stakeholder expectations on a given issue against those that might significantly have an impact on profitability, now and in the near future (Coca Cola presents this well). An issue with leadership potential will combine high levels of stakeholder concern and a strong perceived duty to act with the company’s capacity to bring about real improvement and its credibility to do so.

Once a social issue has been shortlisted, a rigorous and robust recce of the reality, its causes, consequences and interconnections with other issues is essential, as is an audit of other key players in the space including peers and competitors.

Finally, armed with these insights, a business will be in a strong position to develop strategically led, win-win solutions. For a manufacturing-based business facing an extreme talent shortage, this might involve playing a more active role in local education and training, offsetting higher recruitment costs and the possible need to relocate while building a loyal, future workforce with the relevant skills. For brand-led food businesses, this might involve developing new products that mitigate health problems, such as obesity, and get ahead of legislation and public criticism. Or, like O2, it might involve strengthening relationships with young consumers by addressing the social issues that most concern them, such as rising youth unemployment.

What all this means is that, after decades of proliferating products to solve problems we never knew we had, companies can now help society solve a proliferation of very real problems by developing smart, socially contoured products. This is the prize and the paradox of a new era of capitalism built ultimately, not on creating what we want, but on responding to what we need.

Fail to heed these changing times and, as a business, you risk a fate worse than (former) funnyman, Jimmy Carr: not merely as the butt of the joke, but on the wrong side of a very heated public argument.

Originally published on Guardian.co.uk


Leave a Reply

Your email address will not be published. Required fields are marked *


You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>