Attacking capitalism as practised seems to be suddenly fashionable across the mainstream political parties. As the spring ‘bonus season’ is imminent, David Cameron has highlighted that he wants to take action on excessive salaries in the corporate world.
The Prime Minister promises to boost shareholder power to give them more of a say in curbing enormous payouts for top executives and the Liberal Democrats want independent remuneration committees. One Conservative MP has made the case against what he calls ‘Crony Capitalism’. The Labour leader, Ed Miliband has called for a “fairer and better capitalism”, following up his conference speech when he divided capitalism between good “producers” and bad “predators”.
Politicians are aware that high salaries, especially in the banking community, allied to inequality and public austerity are a matter of concern to many voters. A report from the Institute for Public Policy Research found that chief executive pay rose to an average of £5.1million last year, a hike of 33% against a 24% increase in the value of their companies.
The Government has accepted Sir John Vickers’ proposals to ‘ring-fence’ banks retail and investment activities; however, the changes will not be implemented until the start of 2019.
Action and coverage in 2011 was high. UK Uncut protested about alleged tax avoidance and Occupy captured a public anger that conventional politics ignored. The Guardian’s Tax Gap series highlighted companies avoiding £25bn tax through tax havens and loopholes.
More recently, the High Pay Commission reported: “As Britain enters times of unparalleled austerity, one tiny section of society has been insulated from the downturn. That is the top 0.1% of earners, with company directors in particular continuing to enjoy a huge annual uplift in rewards.”
The recent Organisation for Economic Co-operation and Development (OECD) report, “Divided We Stand” finds that the average income of the richest 10% is now about nine times that of the poorest 10% across the OECD, and the individual UK report indicates even bigger differentials.
The public will probably await evidence of deeds following the rhetoric to see whether politicians are willing to tackle the “unacceptable face of capitalism” – a phrase coined by former Prime Minister, Ted Heath back in the early 1970s.
So, what can we do about it? – here are some ideas to take up right now…
Invest for change and consume ethically
Firstly, we can all take action in our own lives by our investment and consumer choices. The Co-operative Bank’s Ethical Consumerism Report recently reported that the overall spend on ethical food and drink was £6.6bn up 5.07%. Within this, Fairtrade sales increased 36% and alongside rainforest alliance, organics and ethical boycotts command over £1bn of the market.
The value of money in ethical savings and investments increased by 9% in 2010 to £21.2bn. This includes £9bn in ethical bank deposits as well as £11.3bn in ethical investments.
There is lots of help to invest your money ethically. The EIRIS Foundation and Ethical Investment Research Services is a great resource and a leading global provider of independent research into the environmental, social, governance (ESG) and ethical performance of companies.
The UK Sustainable Investment and Finance organisation (UKSIF) aims to ensure that the UK finance sector is the world leader in advancing sustainable development through financial services. The Ethical Investment Association (EIA) is an association of financial advisers from around the UK, dedicated to the promotion of green and ethical investment. One local firm of advisors are Rathbone Greenbank Investments.
The Local Authority Pension Fund Forum LAPFF exists to promote the investment interests of local authority pension funds, and to maximise their influence as shareholders whilst promoting social responsibility and corporate governance at the companies in which they invest.
National Ethical Investment Week (NEIW). October 14-20, 2012, is a special week to promote this growing area of the economy. Your banking choices can also be influential – bankers with a declared conscience include the Triodos Bank, The Co-operative Bank and the socially orientated Unity Trust Bank.
We should not forget the growing role of credit unions as sustainable financial co-operatives. The Ethical Consumer Research Association’s Guide or the Southwest Fairtrade Guide will help guide your purchases.
Find the facts and get campaigning
Secondly, public campaigning and pressure on companies is a very effective way to change their practices – adverse publicity can affect their brand image, their sales or dent customer loyalty.
If you want to monitor and challenge company practice, organisations like the Good Banking Campaign, Amnesty, Corporate Watch or Corporate Europe Observatory (CEO) research and campaign on finance and corporate issues. The Corporate Responsibility (CORE) Coalition strives to improve UK companies’ impacts on people and the environment.
The (Ecumenical Council for Corporate Responsibility) works for justice in and through economic structures and for responsible stewardship of the earth and its resources. Global Witness has run pioneering campaigns against natural resource-related conflict and corruption and associated environmental and human rights abuses. If you want to know a lot about a corporate you can sign up to Corporate Critic who give a comprehensive check on ethical or environmental performance.
Spring also welcomes in company annual meetings (AGMs) when boards report back to their owners, the shareholders. Shareholder activism, you only need one share, is a way in which shareholders can influence a corporation’s behaviour.
Activism covers a broad spectrum of activities. Activism includes “voting with one’s feet”, private discussion or public communication with corporate boards and management, press campaigns, blogging and other e-ways of public “naming and shaming”, openly talking to other shareholders, putting forward shareholder resolutions, calling shareholder meetings and – ultimately – seeking to replace individual directors or the entire board.
Shareholder activism can be very effective , but has some constraints in a globalised world. Shareholders may only be short-term profit seeking owners, while 41% are foreign owned. Insurance companies hold 13%, pension funds (see LAPFF) 13% and individuals only 10%.
So, exercising your financial power and campaigning already are, and can continue, making a difference. Fair pensions do a good guide to help you get involved. NCVO have great campaigning resources, including one dealing with the private sector (currently being updated). Their Forum also has lots of useful advice.
Check out some of the links above – have a great time; positive change for a fairer and sustainable society is at your fingertips. Next week in part two, I will look at some other ideas. Meanwhile, it would be great if you can share your ideas for action on this blog!
Roger James is a campaigner for Oxfam South West in Bristol – these views are his own