World Bank Group: Should Oil Exporters Shift Capital Stock to Renewables?

As the Financial Times pointed out recently, oil companies such as ExxonMobil and Shell would, under measures considered for the global climate pact to be sealed in Paris next year, cease to exist in their current forms in 35 years. A proposal to phase out global carbon dioxide emissions by as early as 2050 was not resolved during the UN climate talks held in Lima last December.

However, the adoption of even a watered-down version of this proposal, in Paris or in later rounds of climate negotiations, would mean that the amount of oil and gas produced by these companies, and the quantity of coal mined by enterprises such as Rio Tinto, would need to be greatly reduced by mid-century. Such long-term concerns might over the next years trump current worries about an oil price slump that could be on the wane as soon as marginal projects and producers are shaken out from the bottom of the market.

Government Oil Revenue to Fall

Whereas ExxonMobil and Shell are private companies, national oil companies such as Saudi Aramco, Statoil, and others control about three-quarters of all crude oil production and more than 90% of reserves. For a radical reduction in global carbon emissions to be achievable, state-owned oil companies would need to dramatically reduce the production of hydrocarbons.

If that should happen, government revenues from hydrocarbons would be a fraction of what they are today. But oil-rich countries have become so dependent on oil exports that a viable economic future is hard to imagine were these exports to be significantly reduced. National oil companies’ production decisions are likely to be less affected than private companies by price mechanisms such as a carbon tax, particularly for those companies that benefit from large low-cost reserves. However, in the long run, carbon pricing and technological developments in the renewables sector are likely to affect even these companies.

Renewable Energy Exports Could Replace Oil

Many of today’s oil and gas exporters are doubly blessed: they are endowed with rich oil, gas and mineral deposits and also exhibit exceptionally good conditions for the generation of renewable energy (high intensities of sunlight or wind, an abundance of land that might be used for solar plants and wind farms, and relative proximity to major energy markets). These conditions provide them with the option of maintaining their traditional sources of energy exports, while developing alternative energy sources.

“Whereas ExxonMobil and Shell are private companies, national oil companies such as Saudi Aramco, Statoil, and others control about three-quarters of all crude oil production and more than 90% of reserves. For a radical reduction in global carbon emissions to be achievable, state-owned oil companies would need to dramatically reduce the production of hydrocarbons.”

Consider Saudi Arabia and other oil-exporting desert nations. The vast deserts of the Arab peninsula could provide enough solar energy to satisfy a significant share of European demand, while leaving capacity to spare for neighbouring regions. Other oil and gas exporters are blessed with windswept coastlines where energy can be captured from wind, waves, and ocean currents, and sold in regional markets. Such exports would likely require large investments in transmission infrastructure and the development of innovative financing models, as well as the deployment of recent and further innovations in energy storage.

Capital and Energy Potential Are Complementary

The idea of exporting solar power to major markets from neighbouring desert regions is not new. Morocco is fast developing its solar energy potential, at first for domestic consumption – to reduce a reliance on fossil-fuel imports that has strained its balance of payments – with ambitions to export power to Europe later. Oil-exporting nations, meanwhile, have been able to use proceeds from oil sales to build up very large capital reserves in the form of foreign assets held in sovereign wealth funds (SWFs).

Globally, SWFs hold assets worth approximately $6.5 trillion, of which about half is held in oil funds – SWFs that are capitalised by proceeds from oil and gas exports. The world’s largest oil fund, Norway’s Government Pension Fund Global (GPFG), holds foreign assets worth $893 billion. The funds of the United Arab Emirates and of Saudi Arabia are not far behind, with assets worth $773 billion and $757 billion, respectively.

Based on capital costs per watt in the range of $2.50 per peak watt for concentrated solar power, the capital cost of plants providing peak power equal to the average consumption of the European Union could be around $1 trillion. (This does not include costs of transmission infrastructure, or transmission losses). Overall costs are also coming down rapidly, and Dubai’s state utility last November accepted a bid for a photovoltaic solar power plant with a cost per kilowatt-hour of less than six cents. This sets a world-wide record low for the cost of solar electricity, significantly below recent records in Brazil and India of around 8–9 cents per kilowatt-hour.

Unlike private investors, whose incentives are stacked in favour of the short term, SWFs are able to consider the home country’s strategic long-term interests. For most equity funds, with managers frequently judged on quarterly performance, the “long-term” rarely goes beyond 3-5 years, the time required to buy a company and then “fix and flip” it, and pressures from shareholders often keep investment horizons below two years. But sovereign funds, given the right mandate, are in a position to provide large amounts of patient capital. They thus provide oil exporters with a potential strategic advantage in adjusting their economies to a low-carbon world, while potentially reducing risk and earning a fully competitive return.

Macroeconomic Feasibility

Traditionally, oil funds have been used to save for future generations, to stabilize the home economy in the face of highly volatile oil and gas prices, and to reduce the risk of large oil revenues generating asset bubbles and exchange rate appreciation. For these reasons, oil funds tend to invest in foreign assets, mainly traded securities. Such funds may, however, find it increasingly attractive to invest in renewable energy, including in their own home economies.

First, preserving capital and earning a competitive return on renewable energy investments will become increasingly achievable as solar and wind technologies continue to improve, and as more penalties are imposed on carbon emissions through carbon taxation and regulation.

Second, many of the components of wind and solar power infrastructure are typical import goods. This makes a “Dutch disease” or upward pressure on the exchange rate, less likely. “Dutch disease” and asset bubbles are generated by excessive spending on goods and services that are not internationally traded, such as construction work and locally produced construction materials. Imports, on the other hand, do not generate domestic price pressures because supply is in most cases highly elastic, and prices are determined by global demand.

The macroeconomic risk of investing in renewable energy at home could thus be manageable, and countries would need to find a balance between the use of imports and the option of developing national manufacturing industries to produce components for the renewables sector.

Investing through Partnerships

Last year, Norway’s GPFG significantly reduced its exposure to coal and tar sands, a decision that resulted from the fund’s long-term risk assessment. Other oil funds are likely to follow suit, but few large institutional investors have yet moved beyond tracking risk to actively divesting from carbon-intensive sectors – although the pressure to do so is increasing.

Further down the road, decisions to increase investments in renewable energy may involve both commercial and strategic objectives. Whereas foreign sovereign funds’ investment is mainly a commercial undertaking, governments are increasingly seeing their domestic sovereign funds as a vehicle for optimizing returns and strategic national investments through equity and project finance. Domestic investment mandates are motivated by several distinct concerns.

A country may find that there are positive externalities to domestic investment, including growth and productivity-enhancing effects which are not fully reflected in their financial returns. For investments in the renewable energy sector, such externalities could include the development of domestic technological capacity to produce intermediate products for wind and solar plants, and generation of employment.

Investing in power transmission infrastructure may foster profitable export markets. Such bulky investments may require a large institutional investor, or direct government investment, to be feasible. The pursuit of first-mover advantage is also relevant. As regional renewable energy markets develop amid rising carbon prices and more efficient wind and solar technology, current oil exporters with well-capitalised SWFs may be able to establish dominant market positions early on.

Governments are then faced with two separate, but related, questions – of allocation and of agency. First, should they allocate more investment to building a stock of fixed capital for renewable energy generation? Second, should these investments be undertaken through the government budget or by the SWF, possibly through a separate subsidiary?

Both are feasible options, and governments could leverage their own capital through public-private partnerships. A SWF, on the other hand, can act as an expert independent investor, with greater flexibility than the government, within its established mandate. The fund may use a variety of risk-sharing mechanisms to make projects bankable, thereby crowding in private and sovereign investors.

What Are the Risks?

An oil-to-renewables strategy of fixed capital investment is not without risk. The primary risk is to the wealth objectives of the SWF – to its ability to preserve and grow its capital, if non-commercial objectives are allowed to prevail over commercial ones. Co-investing with like-minded public or private investors is likely to reduce this risk, by strengthening investment discipline. Additionally, renewable energy investments must be subject to well-defined return objectives and strict corporate governance principles, allowing the fund to operate as an independent specialised investor within its mandate. This would require the fund to develop the requisite sector expwertise to operate a renewables portfolio.

A Strategic Priority?

Some large oil exporters have begun investing significantly in the production of renewable energy, though not yet for export. Saudi Arabia has embarked on an ambitious program of renewable energy production for domestic consumption, and aims to generate 54 gigawatts of renewable power by 2032, most of it solar.

Several national oil companies are already operating in the renewable energy sector, and their technical and managerial skills are likely to be critical for a successful shift away from hydrocarbons. In Saudi Arabia, Saudi Aramco has been tasked with leading the implementation of the kingdom’s renewable energy policy. According to a recent report by consulting firm Wood Mackenzie, technological development in solar energy could be so fast and disruptive over the next decade that traditional energy companies that are unable to adapt would face a tough market.

No oil-exporting country has yet fully started to replace hydrocarbons in its export composition. Over the next decade, however, oil-rich nations may find that investing in their capacity to remain energy exporters in a low-carbon world should be their highest strategic priority.

<address style="text-align: justify;">The views expressed in this article are not necessarily those of the World Bank.</address>

The authors are grateful to Otaviano Canuto, Bryan Land, and Marijn Verhoeven for their highly valuable feedback on earlier drafts.

About The Authors

Håvard Halland is a natural resource economist at the World Bank, where he leads research and policy agendas in the fields of resource-backed infrastructure finance, sovereign wealth fund policy, extractive industries revenue management, and public financial management for the extractive industries sector. Prior to joining the World Bank, he was a delegate and program manager for the International Committee of the Red Cross (ICRC) in the Democratic Republic of the Congo and Colombia. He earned a PhD in economics from the University of Cambridge.

Alan Gelb is a senior fellow at the Center for Global Development. He was previously with the World Bank in a number of positions, including director of development policy and chief economist for the Africa region. His research areas include the management of resource-rich economies, African economic development, results-based financing, and the use of digital identification technology for development. He has written a number of books and papers in scholarly journals. He earned a B.Sc. in applied mathematics from the University of Natal and a B.Phil. and D.Phil. from Oxford University.

Silvana Tordo is a Lead Energy Economist Sustainable Energy Department, Oil, Gas and Mining Unit of the World Bank. Her area of focus includes upstream oil and gas sector policies and strategies, legal, regulatory and institutional frameworks, taxation and petroleum contracts, sovereign wealth funds, and local content. Prior to joining the World Bank in 2003 Silvana held various senior management positions in new ventures, negotiations, legal affairs, finance, and mergers and acquisitions. Her experience includes a wide range of business development activities in the oil and gas sector.

As the Financial Times pointed out recently, oil companies such as ExxonMobil and Shell would, under measures considered for the global climate pact to be sealed in Paris next year, cease to exist in their current forms in 35 years. A proposal to phase out global carbon dioxide emissions by as early as 2050 was not resolved during the UN climate talks held in Lima last December.

However, the adoption of even a watered-down version of this proposal, in Paris or in later rounds of climate negotiations, would mean that the amount of oil and gas produced by these companies, and the quantity of coal mined by enterprises such as Rio Tinto, would need to be greatly reduced by mid-century. Such long-term concerns might over the next years trump current worries about an oil price slump that could be on the wane as soon as marginal projects and producers are shaken out from the bottom of the market.

Government Oil Revenue to Fall

Whereas ExxonMobil and Shell are private companies, national oil companies such as Saudi Aramco, Statoil, and others control about three-quarters of all crude oil production and more than 90% of reserves. For a radical reduction in global carbon emissions to be achievable, state-owned oil companies would need to dramatically reduce the production of hydrocarbons.

If that should happen, government revenues from hydrocarbons would be a fraction of what they are today. But oil-rich countries have become so dependent on oil exports that a viable economic future is hard to imagine were these exports to be significantly reduced. National oil companies’ production decisions are likely to be less affected than private companies by price mechanisms such as a carbon tax, particularly for those companies that benefit from large low-cost reserves. However, in the long run, carbon pricing and technological developments in the renewables sector are likely to affect even these companies.

Renewable Energy Exports Could Replace Oil

Many of today’s oil and gas exporters are doubly blessed: they are endowed with rich oil, gas and mineral deposits and also exhibit exceptionally good conditions for the generation of renewable energy (high intensities of sunlight or wind, an abundance of land that might be used for solar plants and wind farms, and relative proximity to major energy markets). These conditions provide them with the option of maintaining their traditional sources of energy exports, while developing alternative energy sources.

“Whereas ExxonMobil and Shell are private companies, national oil companies such as Saudi Aramco, Statoil, and others control about three-quarters of all crude oil production and more than 90% of reserves. For a radical reduction in global carbon emissions to be achievable, state-owned oil companies would need to dramatically reduce the production of hydrocarbons.”

Consider Saudi Arabia and other oil-exporting desert nations. The vast deserts of the Arab peninsula could provide enough solar energy to satisfy a significant share of European demand, while leaving capacity to spare for neighbouring regions. Other oil and gas exporters are blessed with windswept coastlines where energy can be captured from wind, waves, and ocean currents, and sold in regional markets. Such exports would likely require large investments in transmission infrastructure and the development of innovative financing models, as well as the deployment of recent and further innovations in energy storage.

Capital and Energy Potential Are Complementary

The idea of exporting solar power to major markets from neighbouring desert regions is not new. Morocco is fast developing its solar energy potential, at first for domestic consumption – to reduce a reliance on fossil-fuel imports that has strained its balance of payments – with ambitions to export power to Europe later. Oil-exporting nations, meanwhile, have been able to use proceeds from oil sales to build up very large capital reserves in the form of foreign assets held in sovereign wealth funds (SWFs).

Globally, SWFs hold assets worth approximately $6.5 trillion, of which about half is held in oil funds – SWFs that are capitalised by proceeds from oil and gas exports. The world’s largest oil fund, Norway’s Government Pension Fund Global (GPFG), holds foreign assets worth $893 billion. The funds of the United Arab Emirates and of Saudi Arabia are not far behind, with assets worth $773 billion and $757 billion, respectively.

Based on capital costs per watt in the range of $2.50 per peak watt for concentrated solar power, the capital cost of plants providing peak power equal to the average consumption of the European Union could be around $1 trillion. (This does not include costs of transmission infrastructure, or transmission losses). Overall costs are also coming down rapidly, and Dubai’s state utility last November accepted a bid for a photovoltaic solar power plant with a cost per kilowatt-hour of less than six cents. This sets a world-wide record low for the cost of solar electricity, significantly below recent records in Brazil and India of around 8–9 cents per kilowatt-hour.

Unlike private investors, whose incentives are stacked in favour of the short term, SWFs are able to consider the home country’s strategic long-term interests. For most equity funds, with managers frequently judged on quarterly performance, the “long-term” rarely goes beyond 3-5 years, the time required to buy a company and then “fix and flip” it, and pressures from shareholders often keep investment horizons below two years. But sovereign funds, given the right mandate, are in a position to provide large amounts of patient capital. They thus provide oil exporters with a potential strategic advantage in adjusting their economies to a low-carbon world, while potentially reducing risk and earning a fully competitive return.

Macroeconomic Feasibility

Traditionally, oil funds have been used to save for future generations, to stabilize the home economy in the face of highly volatile oil and gas prices, and to reduce the risk of large oil revenues generating asset bubbles and exchange rate appreciation. For these reasons, oil funds tend to invest in foreign assets, mainly traded securities. Such funds may, however, find it increasingly attractive to invest in renewable energy, including in their own home economies.

First, preserving capital and earning a competitive return on renewable energy investments will become increasingly achievable as solar and wind technologies continue to improve, and as more penalties are imposed on carbon emissions through carbon taxation and regulation.

Second, many of the components of wind and solar power infrastructure are typical import goods. This makes a “Dutch disease” or upward pressure on the exchange rate, less likely. “Dutch disease” and asset bubbles are generated by excessive spending on goods and services that are not internationally traded, such as construction work and locally produced construction materials. Imports, on the other hand, do not generate domestic price pressures because supply is in most cases highly elastic, and prices are determined by global demand.

The macroeconomic risk of investing in renewable energy at home could thus be manageable, and countries would need to find a balance between the use of imports and the option of developing national manufacturing industries to produce components for the renewables sector.

Investing through Partnerships

Last year, Norway’s GPFG significantly reduced its exposure to coal and tar sands, a decision that resulted from the fund’s long-term risk assessment. Other oil funds are likely to follow suit, but few large institutional investors have yet moved beyond tracking risk to actively divesting from carbon-intensive sectors – although the pressure to do so is increasing.

Further down the road, decisions to increase investments in renewable energy may involve both commercial and strategic objectives. Whereas foreign sovereign funds’ investment is mainly a commercial undertaking, governments are increasingly seeing their domestic sovereign funds as a vehicle for optimizing returns and strategic national investments through equity and project finance. Domestic investment mandates are motivated by several distinct concerns.

A country may find that there are positive externalities to domestic investment, including growth and productivity-enhancing effects which are not fully reflected in their financial returns. For investments in the renewable energy sector, such externalities could include the development of domestic technological capacity to produce intermediate products for wind and solar plants, and generation of employment.

Investing in power transmission infrastructure may foster profitable export markets. Such bulky investments may require a large institutional investor, or direct government investment, to be feasible. The pursuit of first-mover advantage is also relevant. As regional renewable energy markets develop amid rising carbon prices and more efficient wind and solar technology, current oil exporters with well-capitalised SWFs may be able to establish dominant market positions early on.

Governments are then faced with two separate, but related, questions – of allocation and of agency. First, should they allocate more investment to building a stock of fixed capital for renewable energy generation? Second, should these investments be undertaken through the government budget or by the SWF, possibly through a separate subsidiary?

Both are feasible options, and governments could leverage their own capital through public-private partnerships. A SWF, on the other hand, can act as an expert independent investor, with greater flexibility than the government, within its established mandate. The fund may use a variety of risk-sharing mechanisms to make projects bankable, thereby crowding in private and sovereign investors.

What Are the Risks?

An oil-to-renewables strategy of fixed capital investment is not without risk. The primary risk is to the wealth objectives of the SWF – to its ability to preserve and grow its capital, if non-commercial objectives are allowed to prevail over commercial ones. Co-investing with like-minded public or private investors is likely to reduce this risk, by strengthening investment discipline. Additionally, renewable energy investments must be subject to well-defined return objectives and strict corporate governance principles, allowing the fund to operate as an independent specialised investor within its mandate. This would require the fund to develop the requisite sector expwertise to operate a renewables portfolio.

A Strategic Priority?

Some large oil exporters have begun investing significantly in the production of renewable energy, though not yet for export. Saudi Arabia has embarked on an ambitious program of renewable energy production for domestic consumption, and aims to generate 54 gigawatts of renewable power by 2032, most of it solar.

Several national oil companies are already operating in the renewable energy sector, and their technical and managerial skills are likely to be critical for a successful shift away from hydrocarbons. In Saudi Arabia, Saudi Aramco has been tasked with leading the implementation of the kingdom’s renewable energy policy. According to a recent report by consulting firm Wood Mackenzie, technological development in solar energy could be so fast and disruptive over the next decade that traditional energy companies that are unable to adapt would face a tough market.

No oil-exporting country has yet fully started to replace hydrocarbons in its export composition. Over the next decade, however, oil-rich nations may find that investing in their capacity to remain energy exporters in a low-carbon world should be their highest strategic priority.

The views expressed in this article are not necessarily those of the World Bank.
The authors are grateful to Otaviano Canuto, Bryan Land, and Marijn Verhoeven for their highly valuable feedback on earlier drafts.

About The Authors

Håvard Halland is a natural resource economist at the World Bank, where he leads research and policy agendas in the fields of resource-backed infrastructure finance, sovereign wealth fund policy, extractive industries revenue management, and public financial management for the extractive industries sector. Prior to joining the World Bank, he was a delegate and program manager for the International Committee of the Red Cross (ICRC) in the Democratic Republic of the Congo and Colombia. He earned a PhD in economics from the University of Cambridge.

Alan Gelb is a senior fellow at the Center for Global Development. He was previously with the World Bank in a number of positions, including director of development policy and chief economist for the Africa region. His research areas include the management of resource-rich economies, African economic development, results-based financing, and the use of digital identification technology for development. He has written a number of books and papers in scholarly journals. He earned a B.Sc. in applied mathematics from the University of Natal and a B.Phil. and D.Phil. from Oxford University.

Silvana Tordo is a Lead Energy Economist Sustainable Energy Department, Oil, Gas and Mining Unit of the World Bank. Her area of focus includes upstream oil and gas sector policies and strategies, legal, regulatory and institutional frameworks, taxation and petroleum contracts, sovereign wealth funds, and local content. Prior to joining the World Bank in 2003 Silvana held various senior management positions in new ventures, negotiations, legal affairs, finance, and mergers and acquisitions. Her experience includes a wide range of business development activities in the oil and gas sector.


Godiva Chocolatier: What’s in a Name?

While love-struck Juliet in Shakespeare’s Romeo and Juliet proclaimed that a name is just a name, nothing so straight forward applies in business. Especially in the fast moving consumer goods sector the company name, brand, image, and logo all play a critical role in driving sales and hence the all-important bottom line.

Marketing experts advise that in naming a company, product, or a feature, the brand name must be created for strategic impact. It must grab attention, generate interest, and tell customers something novel. A whole new industry has grown up around such naming services which include branding and name research geo-linguistics (checking appropriate languages to ensure that the connotations of the name are appropriate). With nearly twenty million active trademarks and 230 million URLs in the world, the process of choosing a distinctive new brand or company name can imply a lot of work.

“What’s in a name?

That which we call a rose

By any other name

would smell as sweet.”

Once selected, the brand name must be nursed. One PR disaster can tarnish it for a generation. Something as trivial as an inappropriate Facebook post, a flippant tweet, or a rogue YouTube video can spread around the world at lightning speed, undoing years of diligent and painstaking work.

Godiva Chocolatier is a distinctive name – selected to be synonymous with quality and redolent of history. Premium chocolate manufacturer Godiva Chocolatier fixed on the name in 1925 because its Belgian founder Joseph Draps liked the medieval legend of Coventry’s Lady Godiva. The name also provided the distinctive logo: a long haired naked lady riding on horseback.

The story of Lady Godiva dates back nearly a thousand years. Her husband was Leofric the Earl of Mercer and Lord of Coventry. He was a powerful and ruthless ruler who imposed hefty taxes upon his subjects. Legend has it that the kind-hearted Lady Godiva persistently pleaded with her husband to relieve the heavy burden of taxes he had imposed on the residents of the town of Coventry but to no avail.

This marital spat has entered the annals of posterity because Leofric eventually said he would grant his wife’s request, but only if she would ride naked on horseback through the town. The legend has it that the good lady was horrified by the idea. However, by ordering the people to remain indoors with their windows and doors barred, and loosening her long hair to serve as a cloak, she was able to mount her horse and ride through the silent streets without compromising her modesty.

Leofric accepted his defeat with good grace, acceded to his wife’s wishes, and abolished the town’s oppressive taxes. Be it legend or history, records show that in medieval times no tolls were paid in Coventry except on horses. The town of Coventry is immensely proud of Lady Godiva and an annual pageant has been established to re-enact her ride following the original route.

Back to chocolate and to the present day: Godiva Chocolatier is now established as a world-wide luxury brand with over 600 retail boutiques and shops in the United States, Canada, Europe, and Asia. In its ninety-year history the company has spread its wings and flown far from its Belgian roots. The first Godiva shop outside Belgium opened in 1958 on Paris’s fashionable Rue St Honoré. Over the next decade the company targeted American markets, focusing on luxury malls. In 1967, the company was acquired by US food processing giant Campbell Soup Company. The brand prospered and ten years later annual sales had reached $500 million.

Then came a parting of the ways: Campbell Soup decided that the “premium chocolate business does not fit with Campbell’s strategic focus on simple meals” and Godiva was sold to the Istanbul-based Yıldız Holding, owner of the largest consumer goods manufacturer in the Turkish food industry, for $850 million at the end of 2007.
In the Coventry area Godiva is an extremely popular name for local enterprises. Businesses dealing with insurance, mortgages, fire-fighting equipment, bearings, carpets, and mountain bikes, amongst others, all use the name. Godiva Chocolatier, marketing a premium Belgian chocolate product, has no links with Godiva and her home town of Coventry. However, the Turkish owners have recently created uproar in the Midlands town by claiming intellectual property rights on both the name and the image.

In 2007, Godiva Chocolatier filed a patent on Lady Godiva’s identity at the Intellectual Property Office register in London. It trademarked the name along with several versions of the image of a comely woman on horseback. The cost of this claim would have been around £1,000 and took place with no obligation to consult interested parties the before going ahead.

The trademarking came to light last year when company lawyers gave the owner of the Lady Godiva public house in Geneva ninety days to cease and desist from using the name. The Godiva-themed English Pub opened in 2007 in a student area of the city. The menu includes delicacies such as the Lady Godiva Burger and the Lord Leofric Burger, although naked ladies on horseback appear to be in scant supply.

The legal threat provoked fighting talk from the pub owner, Englishman Glen Simmons: “My pub has nothing to do with chocolates so I don’t see how anyone could be confused. I wanted to name the pub after a woman who was part of England’s heritage and I could think of no one better or more famous than Lady Godiva.”

The heist of Lady Godiva’s name and image has provoked outrage. Colin Walker, vice-chairman of the Coventry Society, is reported by The Daily Mail as saying: “This is an absolute travesty. No one should be allowed to hijack the identity of historical figures for their own commercial interests. I never thought it would come to this. If the Belgians try to enforce this in Coventry, there will be angry protests. We are very proud of Lady Godiva, and she is known and loved around the world.”

Predictably, social media fanned the flames of the argument with a Facebook and Twitter account in the name of Boycott Godiva. Happily, sanity prevailed and the chocolate company set out to assure establishments in and around Coventry that it has no wish to challenge any that use the name Lady Godiva. “The legend of Lady Godiva has already taken its rightful place in history and we are as respectful as anyone of Coventry’s close association with it,” the firm said in a statement.

The company went on to explain that the action against the Geneva pub was undertaken because it appeared “confusingly similar” to its own stores and cafes. “This is a narrow dispute where we feel we are entirely within our rights,” the statement added.

So, in summary, a multinational conglomerate worth billions of dollars threatened the owner of one small pub over the use of a name from the history of a country where neither David nor Goliath is based. Much publicity resulted, especially in the Coventry area which believes that it has the best claim to the Lady Godiva name. Who are the winners and losers of this unequal contest? Godiva Chocolatier may claim the legal high ground but its actions have succeeded only in drawing bad publicity upon itself.

Choosing the right brand name is important, but throughout the life of the brand, its reputation must be maintained. For Godiva this requires the generosity of spirit of Lady Godiva rather than the iron fist of her husband Earl Leofric. The heavy-handed legal letter could be considered an own goal for the chocolatier.

By Penny Hitchin


Troy Wiseman: Bamboo - A Sustainable Source of Fibre

Over the last ten years, REDD (Reducing Emissions from Deforestation and Forest Degradation) and REDD+ developments have proved that the price attributed to, and the willingness to pay for, forest based ecosystem services – whether through compliance or voluntary schemes – is unlikely to ever compete with the market price for wood and fibre sourced from the deforestation and degradation of the world’s remaining natural forests.

Although project level benefits may be significant, so long as demand continues and a thriving market provides attractive returns on the harvesting of natural forests, leakage is inevitable, and truly quantifiable REDD+ in many nations will be hard to achieve. The math is simple: plantation forests still supply only a fraction of our fuel and fibre needs, and without an alternative, at the global scale the degradation will continue, although the actual location may shift. Therefore addressing the drivers of deforestation, a premise on which REDD was built, through the provision of sustainable and long term alternatives is critical.

“Bamboo provides a fibre that reduces pressure on natural forests.”

US-based EcoPlanet Bamboo is industrialising bamboo produced under stringent protocols and procedures and developed around a framework of positive social and environmental impact. It is a private sector mechanism that has the potential to contribute towards addressing a major driver of deforestation, regenerate fragmented forest ecosystems, and restore ecosystem functions. Through such a mechanism, and through the provision of certified bamboo fibre to the industries that currently drive deforestation, commercially produced bamboo can be one piece of the puzzle in moving the REDD+ agenda forward, all while sequestering and storing significant volumes of atmospheric CO2.

The ultimate goal is to address the simple supply and demand for wood and fibre within a tangible timeframe and under a framework that this “alternative” fibre is produced only in a way that meets market demand, without the associated environmental cost. As such, it constitutes, a private sector solution that is economically viable and satisfies the world’s need for fibre.

Fibres are used in everything from consumer items such as toilet paper, tissue, and kitchen paper to clothing and textiles and from engineered timber for construction, housing, and furniture to charcoal and other fuel products.

Bamboo has traditionally been an enigma for policy makers, foresters, and environmentalists. Ecologically speaking, the 1,200 plus species of bamboo are part of the grass family but the biomass the plant produces is a wood-like fibre with properties that mirror those of many traditional wood species from hardwoods to softwoods.

Once mature, bamboo grows extraordinarily fast with new stems or culms emerging annually and removed biomass being replaced annually. Statements and online media that sell bamboo as maturing within three years, not requiring pesticide or fertiliser, or other claims of bamboo as a miracle plant are completely unfounded. Like any other crop being produced commercially, bamboo requires a stringent management regime and many inputs.

In the context of REDD+, bamboo’s greatest advantage in addition to being an alternative fibre for timber-dependent industries, is its ability to be grown on degraded and marginal land. As a crop, it does not undermine food security and produces vast volumes of fibre without the need for replanting. Bamboo provides a fibre that reduces pressure on natural forests, whether that represents fibre to replace the kraft pulp currently used in toilet paper and sourced from old growth boreal forests in Canada and Russia or fibre that replaces dissolving pulp for textiles and clothing which is currently sourced from the clearing of primary tropical forests in Indonesia and elsewhere. It can also be used as a valuable tool for the successful restoration of ecosystems, particularly if native species are grown. Within a six to eight year period – depending on the level of soil degradation and the ability to understand and execute a set of unique protocols – bamboo creates a continuous and permanent canopy cover. Its strong root system breaks up compacted soil and provides water filtration benefits, restoring water tables and managing water cycles and increases organic soil carbon and nutrient levels. As EcoPlanet’s VCS-validated and verified projects in Nicaragua have shown, bamboo can sequester and store up to 800 tons of CO2 per hectare.

However, stringent controls are required to ensure that bamboo remains a tree-free, deforestation-free solution. To achieve this, EcoPlant believes in certification and independent auditing as a means to determine a global benchmark for bamboo’s commercial production as well as robust REDD+ safeguards with clearly defined policies, laws, and regulations. Quantifiable carbon (whether as a REDD+ initiative or as a straightforward Afforestation/Reforestation project), social and biodiversity impacts are criteria for the company’s projects, as is Forest Stewardship Council (FSC) certification for the sustainable management of the bamboo resource itself. If done correctly, and this framework adhered to as projects increase in both scale and scope, bamboo could prove to be an economically viable mechanism to achieve the core components of REDD+.


Caroline Criado-Perez: Ordeal and Success by Social Media

The rise of social media has transformed the way in which the world communicates. However, this can be a double-edged sword as freelance journalist, broadcaster, and campaigner Caroline Criado-Perez discovered.

Ms Criado-Perez has been prolific user of social media and highly successful in deploying it for societal change. Her campaigns include The Women’s Room, which works to ensure more women experts to feature in the media; and Keep a Woman on English Banknotes, a grassroots campaign to pressure the Bank of England to comply with the Equality Act in its selection of famous faces to grace banknotes.

The 2013 banknote campaign followed the announcement by the Bank of England that 19th century prison reform campaigner Elizabeth Fry was being dropped from £5 notes to be replaced by Winston Churchill. This would mean that women are no longer featured on any British banknote apart from the queen who is ubiquitous on the other side. Ms Criado-Perez points out that “she is there simply for the achievement of having been born without any brothers.”

“Ms Criado-Perez is one of a new breed of campaigning activists and thoroughly understands how to deploy social media to engage with supporters and publicise campaigns.”

The choice of faces for the new notes implied that women haven’t been historically significant enough to warrant such a tribute. Incensed by this refusal to celebrate female achievement, or recognise the importance of providing visible role models, Ms Criado-Perez launched an online petition and raised funds for a potential legal challenge. The campaign caught on and eventually the bank decided to use Jane Austen’s face on the new £10 note.

Sadly, the success of the campaign drew the wrath of misogynistic twitter users. They subjected Ms Criado-Perez to a deluge of vile and hateful tweets much in the same way other high profile female tweeters expressing strong opinions have experienced. From behind the mask of anonymity that social media offers, vitriolic and foul abuse poured in, threatening sexual violence, torture, and even death. Restraining orders, prosecutions, and short jail sentences were eventually meted out to the very worst offenders. Ms Criado-Perez’s twitter profile now pointedly says, “Please send all hate mail to your mum.”

The Women’s Room – an online resource set up jointly by Ms Catherine Costello and Ms Criado-Perez that offers registered users a comprehensive database of women experts available to talk to the media – came about in 2012 when she heard BBC Radio 4’s Today Programme use all-male panels on successive days to discuss women’s bodies and health issues.

A report on teenage girls and contraception featured an all-male panel including the headmaster of Wellington College public school. The next day, a piece about women’s experiences of tests for breast cancer again failed to include any women. Stuck by the absurdity of this, Ms Criado-Perez considered the problem: surely there were plenty of women with the relevant knowledge, skills, and experience to comment.

She found that while women are included in media coverage, three-quarters of the media’s pundits are men. Producers argue that there just aren’t that many female experts around. Ms Criado-Perez was determined to tackle this mismatch and launched a social media campaign to compile a database of women experts who would be available for media input, appearances, and assorted punditry.

The Women’s Room database currently holds around 3,000 names and is helping to counter under-representation of women in the media. Programme makers, journalists, and others can readily identify women experts on particular topics, with the result that women experts registered with the database now feature across the media every day of the week.

Ms Criado-Perez is one of a new breed of campaigning activists and thoroughly understands how to deploy social media to engage with supporters and publicise campaigns. She was included in the Independent on Sunday’s Happy List 2013 of one hundred outstanding people whose volunteering, caring, fundraising, mentoring, charity founding, or general selflessness makes Britain a more contented, supportive, better-adjusted, and happier country. In 2013, Ms Criado-Perez won the Liberty Human Rights Campaigner of the Year Award.

Her first book Do It Like a Woman, published earlier this year, contains a riveting a collection of stories celebrating women at their strongest, from campaigning against female genital mutilation and sex trafficking to being the first woman to cross the Arctic Circle alone.


CFI.co Meets the CEO of Edgars Stores: Linda Masterson

Linda started working for Edgars as Group Financial Director and, after executing various roles in the business, became CEO on the 1st of April 2010.

After a difficult decade during which the group’s working capital was decimated by hyperinflation, Edgars Stores began the process in 2010 of re-positioning its brands and reaching out to potential customers with compelling ranges, value and credit products in a bid to re-capture its position as market leader in the clothing retail sector. Customer retention and appreciation were key focus areas from that re-start.

The first Zimbabwean Edgars store was opened in 1946 in Bulawayo. In 1974, the company was listed on the Zimbabwean Stock Exchange and was extremely well received, with shares continuing to be tightly held even in present day. By 1992, 87 stores were established in Zimbabwe, with a trading space of 54,800sqm. During the period following April 2007, amid the challenges associated with hyperinflation, Edgars consolidated the business and relinquished its poorer-performing stores. By the end of 2010, the number of retail outlets had fallen to 33. Despite closing 43 percent of its stores, Edgars did manage to retain 62 percent of its trading space. There are currently 53 Stores (40,282 sqm) under the Edgars and Jet umbrellas, while our manufacturing unit has been re-energised to its current, profitable position.

Between 2010 and 2014, Edgars recaptured its position as market leader, through a measured but bullish risk appetite and the re-establishment of credit to customers. “We aim to supply our customers with value for money by providing quality fashion merchandise for the family at competitive prices and superior customer service in convenient shopping environments. We believe that we are Zimbabwe’s market leaders in the credit retailing of clothing and it is our resolve to remain so” Masterson says.

Employment Strategies

According to Linda, the Edgars Group is an employer of choice in the Zimbabwean job market. She attributes this status to a number of factors, the dominant reasons being that Edgars Stores is a high-profile company which has earned a reputable status, offering employees competitive remuneration packages and excellent training programs. Most importantly, it recognises employees for their contribution. “We strive to promote an environment where a lot is expected of employees but they are recognised for their efforts and treated with respect” emphasised Linda.

Customer Service Continuum

“We regard customer service as encompassing the whole supply chain; delivering the right product to the right stores at the right time, at the right price and in the right sizes and colours” says Masterson. The Group has well-established internal structures and procedures that support the business including planning, buying, distribution and IT.

Linda Masterson: No Dithering, Ever

Greatest Achievement: Raising a remarkable son of excellent character who is a wildlife veterinarian involved in community development. Happy husband of a talented artist and proud father of two boys.

Favourite Things: Edgars; its people and its customers, family, scuba diving, nature.

Pet Hates: Dishonesty and dithering.

Special Talents: Motivating people, strategising, execution.

Edgars is focused on developing strong partnerships with its suppliers to ensure the highest level of quality and customer service. As Linda explains, “Developing and maintaining key strategic ‘win-win’ partnerships with our suppliers is a key factor in successfully maintaining the customer service continuum, by providing the focused assortments expected of each chain.

We try to foster long-term relationships in order to develop synergies between ourselves and our suppliers.” Quality control is rigorous and to international standard.

Customer Focus

“We believe in what I call our ‘customer service continuum’ where the customer is the focus at every stage in the pipeline. We invite customers to talk to us and we listen. Every few months, around 20,000 customers are contacted and invited to give us their views. Viewpoints received are considered by executive management and we learn and adjust accordingly. We regard a customer complaint as an opportunity – that a complaint, handled well, often results in a more loyal customer than if the complaint had never arisen in the first place. Every customer complaint reaches the desk of the Executive team, including mine, and we ensure that quality responses are given to our customers.”

“We believe that we are Zimbabwe’s market leaders as credit retailers and it is our resolve to remain so thanks to a loyal customer base. We value integrity, professionalism, productivity and, above all, people. Times are tough again in Zimbabwe and the economy is likely to continue to deteriorate through 2016 but we are a highly committed, highly focused team who look forward to the future with optimism” says Masterson.


CFI.co Meets the CEO and Executive Director of Earthport: Hank Uberoi

Hank Uberoi is a man of vision. He also embarked on a singular mission: to reinvent the wheel of cross-border payment processing. In fact, the much-improved wheel is already a reality, spins smoothly, and allows for international remittances to be bulk processed and sent to beneficiaries by way of a single streamlined procedure that is both faster and cheaper than the antiquated messaging system currently used to shovel cash around the globe. It is also much less prone to failures, spans the globe, and über secure.

Mr Uberoi has no doubt that his company is set to tap into one of the largest business opportunities currently available. “While we have no problem entrusting courier services with hauling valuable parcels all over creation, cash is being moved around in a much less predictable fashion. We can easily track the progress of parcels, following remittances as they wind their way via multiple banks to recipients is all but impossible.”

The American-born businessman and former Goldman Sachs technology executive has changed all that. Earthport, the company he acquired in 2008 and manages since 2010, has rolled out a global payment gateway that is hailed as nothing short of revolutionary. “We needed to create a FedEx for money and did just that,” says Mr Uberoi who emphasises that his firm is not in the business of competing with banks but rather offering them a service that is superior and considerably cheaper than the Swift messaging service they have been using for the past forty or so years.

“Earthport is a hub-and-spoke network that ensures money arrives at its destination in a wholly predictable manner after travelling a direct route. We cut out the middleman and by doing so can offer significant cost savings.” Mr Uberoi is not one to mince words and bluntly states that today’s cross-border payment infrastructure is both “outdated” and “fundamentally broken.” However, Earthport offers an easy and, more importantly, future-proof solution that fully supports the existing regulatory frameworks and technology: “Our platform is scalable and easily incorporates new technological developments as they mature and become available for prime-time.”

Mr Uberoi thinks on a global scale and expects his company to lead the international payments industry as it comes to terms with state-of-the-art technology: “Business-to-business transactions are worth $20 trillion annually. If we can crack even a portion of the potential market we could be very, very large.” That cracking is proceeding nicely with Earthport attracting business from well-established multinational corporations, multilateral entities, and large banks looking to simplify their forex operations.

Mr Uberoi is not a little surprised that the current cross-border payment system, erected in the 1970s around thousands of correspondent banks communicating through the centralised Swift messaging service, has been left in place for so long: “The world has changed much over the last forty years, yet its payment infrastructure has not kept pace. I still find it amazing that nobody else saw this opportunity and came up with something better.”

Mr Uberoi emphasises that Earthport has designed its system from the ground up in order for it not to inherit the vicissitudes of the current model. “We needed a completely new approach to international payments: one that leverages the latest technology and strikes the perfect balance between speed and security. Earthport managed to do just that and has now shown the way forward.”


CFI.co Meets the CEO of WIR Finanzierer: Mark H van den Arend

Sometimes, all one needs is a break – lucky or otherwise. Mark H van den Arend got his one when Deutsche Bank hired him despite being a teenager with a slightly crooked CV that contained no discernible experience in either finance or administration.

As it happened, this young man just liked the whole idea of negotiating deals and working the numbers.

Deutsche Bank did not regret its audacious choice and supported Mr Van den Arend to obtain an MBA from Ashridge Management College and The City University of London. With a remarkable knack for identifying – and rectifying – market inefficiencies, Mr Van den Arend soon worked his way up the hierarchical ladder: “After two decades, I ended my career at the bank as a managing director overseeing its operations on Wall Street. Soli Deo Gloria.”

However, the at times glaring and puzzling shortcomings of markets continued to fascinate this South African-born banker who is now the driving force of WIR Finanzierer, a German financial services provider sharply focused on helping small and medium-sized enterprises (SMEs) gain access to capital. “Even though Germany is an overbanked market, plenty of well-run SMEs simply dislike dealing with banks and hence are increasingly receptive to other means of financing.”

With WIR Finanzierer, Mr Van den Arend has set out to tackle the problem. His company helps SMEs obtain “indirect” access to capital markets with amounts ranging anywhere from €500,000 to €10m per client. With the refinancing of bundled SME bonds, WIR Finanzierer is conceptually applying a structure similar to a securitisation. The process is remarkably fast and requires each SME bond issuer to obtain an indicative rating from rating agency Euler Hermes.

Once properly screened, financing may be arranged via WIR Finanzierer. “The process is transparent from end to end so that SMEs and investors alike know precisely what they are buying into. Moreover, WIR Finanzierer always participates with its own funds and refrains from anything which would jeopardise the simplicity, transparency, and comparability of its transactions.”

While SME financing, or the dearth thereof, is near the very top of both the political and economic agenda, so far little has been done to tackle the problem. Although there is more than enough money slushing around the economy, it fails to reach most SMEs.

Given the immense significance of the SME-Sector to overall economic health, it is of paramount importance that SMEs have efficient access to sufficient financing – for modernisation and expansion.

“That is precisely what WIR Finanzierer does. We act in a swift and decisive manner. The streamlined procedure allows for snap decisions. Not only SMEs are thus helped, investors also benefit enormously as they receive access to an asset class previously unavailable to them: the vast universe of the German Mittelstand. The portfolio returns – on average about six percent annually – are attractive as well, considering the investment grade profile of this investment.”

Tapping into the multibillion euro German SME market is only the beginning. WIR Finanzierer also eyes expanding into neighbouring countries, deploying the same strategy of splitting larger investments into bite-sized bits for SMEs who are, due to their size, otherwise unable to tap capital markets on their own.

“People who understand what we are doing realise that we are at the forefront of the European Capital Markets Union. The fact that we bring together SMEs and capital markets investors in a unique way is probably the main reason why you find our SME bond factsheet (KMU-Anleihe) on the website of the European Commission.”


UNCTAD Investment and Enterprise Division: An Investment Perspective on International Taxation

Tax avoidance practices by multinational enterprises (MNEs) often depend on corporate structures that are built by routing investments through offshore investment hubs or conduits that help shift profits from higher to lower tax jurisdictions. In essence, corporate structures built through FDI (foreign direct investment) can be considered “the engine” and profit shifting “the fuel” of MNE tax avoidance schemes.

In order to analyse the scope, dimensions, and effects of tax-efficient corporate structures (fuel-efficient engines) we can look at FDI flowing through conduit jurisdictions (transit FDI). Transit FDI does not equate with non-productive FDI. Foreign direct investment designed as part of tax planning strategies of MNEs can have a real economic impact on the countries involved. For example, an investment from a North American firm in Asia to start a new production plant may be channelled through Europe for tax reasons (potentially penalising tax revenues in both home and host countries) but still carries the productive-asset-creating effects of a greenfield investment.

Offshore investment hubs, can be differentiated in two groups:

Tax Havens – Small jurisdictions whose economy is entirely, or almost entirely, dedicated to the provision of offshore financial services.

Jurisdictions offering SPEs (special purpose entities) or other entities facilitating transit investment. Larger jurisdictions with substantial real economic activity that act as major global investment hubs for MNEs due to favourable tax and investment conditions.

Our Offshore Investment Matrix (see figure 1) provides a comprehensive mapping of corporate international investments through offshore investment hubs. For each unit of MNE international investment stock, bilateral data provide a pairing of direct investor and recipient jurisdictions, which are grouped under SPEs, Tax Havens, or non-OFCs (offshore financial centres). When the investor/recipient is a jurisdiction offering SPEs only part of the outward/inward investment is allocated to transit investment activity (the SPE component) while the remaining part is allocated to the non-OFC group. Thus the matrix really focuses on the transit FDI phenomenon.

[caption id="attachment_10428" align="aligncenter" width="300"] Figure 1: The Offshore Investment Matrix. Source: UNCTAD.[/caption]

The matrix shows the pervasive role of offshore investment hubs in the international investment structures of MNEs. In 2012, out of an estimated $21 trillion of international corporate investment stock in non-OFC recipients (blue area in figure 2), more than 30% or some $6.5 trillion was channelled through offshore hubs (dark blue area). The contribution of SPEs to investments from conduit locations is far more relevant than the contribution of Tax Havens. The largest offshore investment players are SPE jurisdictions.

A mirror analysis of the inward investment into offshore hubs (dark grey area) reveals that 28% of the total amount of cross-border corporate investment stock is invested into intermediary entities based in hubs. In some cases these entities may undertake some economic activity on behalf of related companies in higher tax jurisdictions, such as management services, asset administration, or financial services (base companies). However, often they are equivalent to letterbox companies, legal constructions conceived for tax optimisation purposes (conduit companies) and potentially to benefit from other advantages associated with intermediate legal entities.

[caption id="attachment_10429" align="aligncenter" width="300"] Figure 2: The Offshore Investment Matrix – transit FDI perspective. Source: UNCTAD.[/caption]

The prominent pass-through role of these entities in financing MNE operations causes a degree of double-counting in global corporate investment figures, represented by the dark grey area (investments into offshore hubs) which broadly mirrors the dark blue area (investments from hubs). Note that in UNCTAD FDI statistics this double-counting effect is largely removed by subtracting the SPE component from reported FDI data.

The share of stock between hubs (light grey area) is also relevant, at 5% of global investment stock. This confirms that offshore investment hubs tend to be highly inter-connected within complex multi-layered tax avoidance schemes. The Double-Irish-Dutch-Sandwich employed by many IT multinationals is a relevant example.

[caption id="attachment_10430" align="aligncenter" width="300"] Figure 3: Trend in the share of investment from offshore hubs. Source: UNCTAD.[/caption]

Between the start and end of the 2000s, the average share of investment flows to/from non-OFC countries routed through offshore hubs (Offshore investment share) increased from 19% to 27% (Figure 3). More recently, increasing international efforts to tackle tax avoidance practices have managed to reduce the share of offshore investments in developed countries, but exposure of developing economies is still on the rise.

Looking at transit FDI to analyse MNE base erosion and profit shifting (BEPS) practices yields new insights on the size of the phenomenon and on geographical patterns. It also provides new avenues to estimating tax revenue losses for governments around the world. Ongoing work in the international community on BEPS will benefit from this new analytical approach.

About the Author

Bruno Casella is an economist at the Trends and Data Section in UNCTAD’s Investment and Enterprise Division, based in Geneva. He is one of the lead authors of the annual World Investment Report.

Prior to joining UNCTAD in 2013, he was junior manager at McKinsey & Company where he served a wide range of corporate clients worldwide. He holds a PhD in Statistics and a degree in Economics at Bocconi University. He has co-authored research papers on probability, statistics, economics and finance, some published in refereed international journals.


Sophie in ‘t Veld: Calling the European Council to Order

Dutch MEP Sophie in ‘t Veld believes that the freedom of every person to hold their own thoughts and opinions is a cornerstone of any democratic society. Her vision for Europe is based on the values of the Age of Enlightenment: she speaks up for democracy, transparency, and equality in the European Union. In these troubled times, a principled politician is to be admired and valued, especially one who works to hold the European Union and its institutions to account.

Ms In ‘t Veld is a keen advocate of open government. Last year, she emerged victorious after a five year battle to gain access to the full text of the agreement that allows US authorities to access data on intra-EU bank transfers. The case centred on Ms in ‘t Veld being denied access to an opinion of the Legal Service of the Council of Ministers regarding the juridical basis of the SWIFT agreement.

Ms In ‘t Veld brought action against the refusal before the General Court, and won. In response, the council appealed against the ruling, arguing that the judges had erred in demanding the council substantiate its argument that the disclosure of the requested information would cause specific and actual harm. The final arbiter, the European Court of Justice, eventually ruled against the Council of Ministers.

“We need strong EU institutions, able to act and meet the immense challenges of today.”

Ms In ‘t Veld said: “The court clearly states that transparency is a prerequisite for a truly democratic Europe. The EU must evolve from a Europe of diplomats, discretion, and confidentiality to a Europe of citizens, administrative transparency, and trust.”

Her lawyer Onno Brouwer added: “In this case the council again explored the boundaries in an attempt to restrict the fundamental right of European citizens to administrative transparency. It is a great victory for Sophie in ‘t Veld and for the European citizens that the courts have now called the Council of Ministers to order. In particular, the Court of Justice’s view that European institutions must demonstrate that the disclosure of a document effectively harms the public interest is of great practical importance to journalists, interest groups, and all those who wish to obtain access to EU documents.”

Ms In ‘t Veld is a historian by training, speaks six languages, and describes her route into politics as “accidental” after failing to get a job in the private sector. She is passionate and committed, throwing herself into the causes she cares about.

In 2011, the UK National Secular Society awarded her with its Secularist of the Year Prize. She is currently in her third term as a member of the European Parliament.

When Pope Benedict XVI in his 2012 Christmas message called gay and transgendered people a “bigger threat to mankind than even the destruction of the rainforests,” Ms In ‘t Veld immediately called for the European Commission (EC) to condemn these remarks, saying: “I expect the EC to actively contribute to a climate of tolerance in which all EU citizens can live free of fear and discrimination.”

Institutional corruption is another of Ms In ‘t Veld’s bugbears. During a plenary debate on FIFA in June, she told her fellow MEPs: “Earlier on, UKIP tried to create the atmosphere of a football stadium here, including hooligans. Today’s debate is actually fairly modest. We are merely admonishing FIFA here, saying: Now, now boys – because it is mostly boys – keep your hands out of the cookie jar.”

In an online essay, Ms In ‘t Veld last year set out the case for EU institutions to move towards transparency. She remembered a scene from the popular 1980s TV series Yes Prime Minister in which Sir Humphrey Appleby, permanent secretary to the PM, admonished his boss, the rather hapless Jim Hacker: “Open government, Prime Minister, freedom of information? We should always tell the press freely and frankly anything that they could easily find out some other way.”

Ms In ‘t Veld thinks this quote illustrates perfectly the attitude of the EU institutions to transparency. As a diligent and committed MEP she is in a position to know: “Today, citizens are more assertive and vocal, taking ownership of the process, and giving shape and direction to the EU. The old culture of secrecy is increasingly giving rise to distrust. Transparency and accountability are preconditions for a true democracy.”

“Europe is going through the most turbulent period in its existence and the world is changing rapidly. We need strong EU institutions, able to act and meet the immense challenges of today. To that end, the EU must have the trust of the citizens. Transparency is the key to trust. Sorry Sir Humphrey, you are a man of the past. Transparency is the future.”


Evan Harvey, Nasdaq: Emerging Markets Leverage ESG Strategy

Over the last decade, emerging market exchanges (EMEs) have outperformed the rest of the world in a few key ways related to sustainability performance and disclosure. The primary markets in two emerging economies – South Africa’s Johannesburg Stock Exchange (JSX) and BM&FBOVESPA in Brazil – feature the longest-standing and most rigorous sustainability disclosure requirements from their listed companies.

“Smaller companies listed on EMEs (indeed, smaller companies listed anywhere) face a disproportionately difficult burden in complying with these rules.”

The impulse to make institutions more transparent and responsible emerged from South Africa’s difficult historical legacy and the good governance mandates of the King Code. JSX companies are not only required to disclose ESG practices, but they must do so in an integrated report, which merges financial and non-financial metrics into a unified narrative for investors and regulators. Brazilian companies that list on BM&FBOVESPA are “obliged to provide information on an annual basis that ranges from board practices to risk management policy, and the main risk factors that impact the organisation,” according to its rules.

The Business Case for Doing More (or Less)

Why have EMEs been so progressive on this topic and nimble in their execution? For one thing, EMEs tend to have less legacy regulation to work through and fewer corporate relationships to manage. This is not always the case – the two major exchanges in India, Bombay and NSE, have managed to implement good sustainability disclosure requirements despite listing thousands of companies – but seems to be generally true. Perhaps the lack of other capital-raising options ensures a steady supply of local IPOs, no matter how restrictive their rules are. Larger exchanges in competitive (and developed) markets must always hedge against overregulation, lest private companies follow the path of least resistance when navigating their public offering.

“It’s no secret that EMEs leverage ESG to entice investors, especially those from abroad, and promote more liquidity in their market. In the early stages of development, these are essential virtues.”

There are solid business drivers behind this. It’s no secret that EMEs leverage ESG to entice investors, especially those from abroad, and promote more liquidity in their market. In the early stages of development, these are essential virtues. But not everyone benefits equally from a strong disclosure regimen, at least in the short term. Smaller companies listed on EMEs (indeed, smaller companies listed anywhere) face a disproportionately difficult burden in complying with these rules. They often lack the resources or expertise to integrate ESG strategy and report on performance.

Many believe that exchanges may be overstepping their bounds in asking for this kind of data. In the two examples cited, the exchanges have close operational ties to the government or a local market regulator which means that their goals are aligned. But many other exchanges are not as closely tied to such regulatory controls, and perhaps threaten encroachment on territory best left to impartial experts.

Emerging Market Exchanges: Four Examples

The Korea Exchange does not require comprehensive sustainability reporting in its listing rules, but there are other drivers behind better corporate disclosure in that market. The South Korean government has issued environmental risk and evaluation guidelines for companies, based on the Global Reporting Initiative (GRI) standard but localised to focus on Korean business issues. More broadly, the Financial Services Commission issued a requirement in 2012 for the top 500 firms to disclose energy consumption, emissions, and sourcing data. Korean insurance companies, in particular, are required to report on their social and philanthropic activities. The Korean Exchange also has an index that includes about 70 listed companies with the highest overall ESG ratings.

There are two primary stock exchanges in mainland China – Shanghai and Shenzhen – and they both have taken progressive approaches to corporate ESG disclosure. Shanghai implemented a rule in 2008 that requires all listed companies to annually disclose environmental strategy and performance metrics. The Shanghai Stock Exchange also provides sustainability guidance, education, and outreach to its listed companies – as well as a small handful of related index products.

Shanghai does not specifically address the disclosure of much social or governance data, but Shenzhen does. Its reporting guidance, which originated in 2006, asks listed companies to address “social development, building social harmony, accelerating sustainable economic and social development, and promoting commitment to social responsibilities.” Furthermore, the guidance addresses specific social issues, such as supporting employee interests, improving occupational health and safety, equal pay, anti-discrimination and anti-corruption efforts.

Bursa Malaysia takes a comply-or-explain approach to corporate sustainability reporting. Companies are asked to disclose CSR activities and practices (covering the environment, marketplace, workplace, and community) or a detailed explanation as to why they are unable to do so. The exchange also created, in 2010, a rigorous education programme that educates public company management and directors on key sustainability issues and how they impact the bottom line. An online resource, called the Sustainability Knowledge Portal, provides reporting framework guidance, corporate case studies, and localised tax-incentive strategies.

A Complex Portrait

Many investors, even those with a deep appreciation for the entire ESG spectrum, believe that governance controls may be the best long-term predictors of corporate value and performance. So if EMEs are able to create a culture of outperformance in that area, the money would likely flow their way. And as the above summary illustrates, many markets have come to appreciate the value and necessity of better environmental reporting and performance from corporations; they are both sickness and cure in the quest to combat climate change.

Where does this leave social controls, such as human rights, diversity and inclusion, fair labour practices, and so on? Lack of corporate social controls will not only affect EMEs, but (via global supply chains) the much larger markets in developed economies where the largest companies list.

About the Author

Evan Harvey is the Director of Corporate Responsibility for Nasdaq. He also serves on the Board of Directors for the UNGC US Network and chairs the Sustainability Working Group at the World Federation of Exchanges.


Jonathan May-Bowles: UK Uncut and Its Impact

Veteran protester, sometime anarchist, stand-up comedian, and expert pie handler Jonnie Marbles, officially known as Jonathan May-Bowles, talks to CFI.co contributing-editor Darren Parkin about the character, origins, and future of UK Uncut, a movement that suffered its fifteen minutes of fame, momentarily reshuffled the national agenda, and has faded into relative obscurity.

Mr May-Bowles gained fame and a measure of notoriety when in 2011 he served media mogul Rupert Murdoch a foam pie during a high-profile appearance in parliament to explain his newspapers’ hacking of telephones to the members of the standing Culture, Media, and Sport Select Committee. At the time, the octogenarian was saved from direct impact by his trophy wife Wendy Deng (46) – a successful businesswoman and protagonist of a rags-to-riches story – who shielded her husband from the heap of shaving foam and proceeded to slap the assailant in the face. Mr Murdoch has since divorced his saviour.

Promptly arrested and handcuffed, Mr May-Bowles was initially sentenced to six weeks in prison, a verdict later reduced to four weeks of which he served two. Not merely a disruptive comedian, Mr May-Bowles manages to raise a number of inconvenient questions about British society and the direction in which the nation is heading. Mr May-Bowles is a cofounder of UK Uncut.

UK Uncut drew public attention brilliantly, and peacefully, to some remarkably eye-catching issues in the world of economics, but since all the calm, sit-down protests across the country, things seem to have quietened down - what happened?

It’s been a fair few years since I’ve been to a UK Uncut meeting. From the levels of activity and press interest they get these days, I fear the same is true for many others. Perhaps I’m wrong, and UK Uncut thrums now with as many members as it ever did and they have grand plans and clever schemes pupating in a West London squat somewhere, ready to take wing and unleash glorious mess upon the rich and powerful. I certainly wouldn’t put it past them: they are, without doubt, the cleverest band of miscreants I’ve ever had the good fortune to try and change the world with.

That said, the dulling of the drums is undeniable, but a melancholy quiet nonetheless. For one who dreamed our beat might somehow keep growing, pulling in ever more to our throng, our many musics mingling and swelling till its rat-tat-tat was just one wave of sound that would shake the Palace of Westminster to its foundations, shudder the coke from bankers noses, and make the TSG [Territorial Support Group – a specialist branch of the London Metropolitan Police dedicated in “public order containment”] tremble with such fear that their rattling shields and helmets added to our chorus, this now bangless whimper is a saddening thing to see.

Still I’m not blameless. After all I left – as did many others, often with good reason – though I do not think that is what is bringing about the silence. In the early days of the group’s activities there was an unusual mixture of edginess and safety to their actions. People tired of walking in a straight line holding placards could go and actually do something with little to no fear of arrest. There was a certain cheekiness to our chosen tactic – walking into ostensibly public spaces up and down the high street and reforming them to our own purposes. Phone shops became sit-ins, banks became crèches and libraries, Boots briefly became a pretend hospital and then, just briefly, an actual hospital when the police bizarrely started pepper spraying us and the staff (who, as so often was the case, totally agreed with our cause) helpfully offered both medical and emotional support. Incidents such as these were few and far between, however (though there were certainly occasional arrests – I spent my first hours in one of Her Majesty’s minimalistic decorated locked rooms after a Topshop employee pretended that I had assaulted him, long before Rupert Murdoch clumsily got a pie I was holding all over his face.

Something UK Uncut offered the disgruntled public was a chance to be civilly disobedient at scant risk to liberty and limb, and many jumped at the chance to go on a ramble across the thin blue line. For me, and I suspect many others, one of the most satisfying parts of the experience was the near total impotence of the Metropolitan Police. Faced with dozens, sometimes hundreds of largely middle class, often very well educated, trouble makers doing nothing more troublesome than sitting down where they shouldn’t, Britain’s largest police force seemed completely stumped.

Then came March 26. No one is sure why the police changed tactics. Perhaps Bernard Hogan Howe [London’s police commissioner] had some vast revelation after staring intently at his handcuffs for several hours, or the suggestion was proffered by some constable’s eight-year-old on “bring your kid to work day” – however the idea was hatched and on March 26, 2011, the cops decided to give a new and innovative tactic a try: “just arrest everyone.”

In this case “everyone” constituted 126 people who happened to be in Fortnam and Mason’s at about 7 PM. Large buses were brought into play as protesters were ferried around the city to any police station that still had room on a Saturday night. Some were treated disgustingly, including a 15-year-old girl who was told she would have to stay in the Spartan featureless cell police use for 24-hour lockups for the next six months. The injustice system was helped along its merry way by the British press whose firm belief in the veracity of police press releases seems to range from the supine to the aroused.

The accused (most of whom spent their time in F&M singing, blowing bubbles, and generally bringing the carnival atmosphere of so many other UK Uncut protests to the halls of the Queen’s favourite grocer) were labelled violent anarchist thugs. Despite having undertaken one of the largest mass arrests in UK history, the state decided that actually prosecuting all its detainees would be expensive and a right faff so, in the interests of justice, the CPS [Crown Prosecution Service] named a handful of defendants, split them into three groups, and tried them for aggravated trespass.

The CPS claimed its defendants were the “ringleaders.” However, activists close to the actual preparations for M26 [March 26] could make neither head nor tail of the logic behind the list, eventually concluding the state had compiled it using a blindfold and a pin. Luckily, the sentences meted out were not custodial, but the state had made its point: be peaceful if you want. Know the law if you want. Come in great numbers, without malice aforethought, to exercise your hallowed right to protest. None of that matters: we can and will arrest you by the ton and make up the rules for dealing with you later.

What had seemed like a fun game (albeit a heavily mismatched one where one side had all the money, power, and influence whilst the other had some pluck, guile, and hastily hand-painted banners) now seemed much more serious. It’s one thing to break the law knowing the potential consequences. It’s quite another to break it when you have no idea what the government will or won’t do – when you can’t even trust it to keep to its own rules, or the thinnest pretence of fairness. There’s a kind of anarchy in that modus operandi, and not the kind beloved by my fellow dreamy, freedom yearning utopians – a brutal, savage, random anarchy, the very type the government would like you to believe black-hooded protesters around the world are smashing windows for.

That wasn’t the end of UK Uncut, but looking back it was the beginning of the end. Whatever was said round meeting tables and in pubs, the state had scared us as much with its capriciousness as anything else it had to offer. Actions happened – and still do from time to time – but the scale has gradually eroded, the appetite for risk decayed. In activist parlance, the group has become mortifyingly fluffy. Perhaps a more searing indictment, though, is that I’d be hard pressed to tell you what the group now stands for. Tax justice? An end to austerity? Shutting down Boots for the afternoon? All laudable aims for sure, but there is no doubt that the initial energy, focus, and excitement have gone.

Did the protesters achieve what they set out to do, and has anything changed in the world because of it?

If UK Uncut set out to put tax avoidance by the mega-rich on the map as an issue, I think there’s no doubt they’ve succeeded. “Tackling tax avoidance” was one of the major ways parties pretended they would pay for their policies at the last election, and it has provided a major rebuttal to the austerity narrative.

However, if UK Uncut’s aim was to radically change the tax system, end austerity, or bring down the Tory government then I think it’s reasonable to say they’ve failed.

UK Uncut certainly put tax avoidance on the agenda but, sadly, politicians are far better at reading out agendas than implementing them.

You're very much an active voice in the fight for a more equal society, but what do we need to do as a nation to start working towards fairness for all?

As a self-confessed anarchist I would say we need to totally dismantle the arbitrary systems of power which currently rule our lives: the banking system, the police, the justice system, parliament, state and private education, state and private media conglomerates… *some hours later*... and Tescos all need to be ripped down and reinstated as entities which belong to the people whose lives they affect rather than distant, unaccountable elites. However, I’ve found that completely destroying and then reorganising the entire infrastructure of modern capitalism is to be too big a job for me to make much headway on personally, and others may find the same.

A more practical answer might be that we need to start ignoring and resisting these institutions, both individually and en masse. This might mean anything from reading a different or wider variety of newspapers to handing out bust cards to strangers getting hassled by police to refusing to participate in work which you consider harmful, meaningless, or destructive. I suppose what I’m advocating is a kind of “Atlas Shrugged” approach, except in my version the world slides merrily off Atlas’s shoulders, falls on his toe, and rolls its way towards freedom.

There will always be the argument that people should strive harder to succeed, but every society has within it people who simply cannot do that. Who's fighting their corner?

Surprisingly few, but there are organisations – from charities like Mind to direct action groups like DPAC [Disabled People Against Cuts] – that take up the mantle of those who cannot survive the merciless cosh of capitalism without at least a little headgear to soften the blow. It’s terrifying that people who can’t work are being forced to justify their existence and right to live; worse still that those appeals to decency aren’t assessed by medical professionals or even the government itself but by private companies like ATOS and now (I think) Capita, whose motive is profit and who many believe are on commission to get people off benefits. Behind all this is the distasteful insinuation that disabled people are faking it – that they just don’t want to work.

Which brings me to another, related and I think equally important question: who is fighting the corner of people who really don’t want to work?

No one, and why would they? The people successful enough to have the resources to pick a fight prefer a narrative in which their success is won by hard work and talent rather than doled out by the capricious whims of a cold, uncaring universe. This story is not only very comforting to rich people, giving them both the right to pat themselves smugly on the back and dampening their fears that the wheel of luck might turn and make them poor, but it helpfully negates their responsibilities to those less fortunate. If you’re not rich, you obviously didn’t work hard enough, so why should I be forced to help when you come tapping the begging bowl?

Perhaps the best thing about this horrible lie is that it’s completely unfalsifiable. For a start, it benefits from the utter meaningless of the term “hard work” in this context (presumably people who spend decades in food services or cleaning without aren’t working hard, whilst people living off the rent they collect from letting out flat they inherited and let out are) which in turn means the logic is totally circular: Poor? – You must not be working very hard. Rich? –Well done on all the hard work!

There is, at present, no one making the case against hard work (besides anarchists, who generally don’t get the biggest platform in the mainstream media): it’s frequently harmful to the individual doing and creates a keeping-up-with-the-Joneses competitive environment that turns social circles into circle-jerks over who owns the latest what and warm friendships into chilled envies over who got the biggest raise. Perhaps most obviously, it starves the individual of leisure time and liberty even on those occasions it enriches their bank balance. The shirkers-and-strivers narrative espoused by the Tories is as dangerous as it is false: nobody asked to be born into a hyper-capitalist state, so from whence does anyone get the right to force people to work merely in order to survive?

Does the tax system need reforming?

Obviously. I don’t think there is anyone in politics now who would say no to this question (aside from a few on the far ends of the left/right spectrum who would replace “reforming” with “abolishing”). The trickier and more pertinent question is how?

My personal preference would be: much higher income taxes for the über-rich – whose persistent threat to go on strike by leaving the country, should such a thing happen, never seems to receive the same opprobrium from the media as other forms of collective action – and a restructuring of the corporate tax code so that profit is acknowledged as being made at point of sale rather than at a PO Box in Switzerland and taxed accordingly. Additionally, there should be a total rethink of VAT with more genuinely essential goods such as gas and electricity for individuals, sanitary towels, prophylactics, non-prescription medicines, phones and phone calls, and most clothes totally exempt from VAT whilst super-luxury products would be subjected to higher rates. For many products (for example: cars, jewellery, clothing) the luxury status of a good is easily determined by its price and how far above the median value for such goods that price is. Put a bit more simply: a £3,000 Gucci dress should incur higher VAT than a £9 one from Primark. An £8,000 Skoda should incur less VAT than a £50,000 Porsche. Often genuinely luxury goods are beneficiaries of wealthy individuals’ taste for conspicuous consumption and so are what economists Veblen Goods – demand for them actually increases as their price goes up. So it’s a win-win for everyone.

What are your thoughts on the Transatlantic Trade & Investment Partnership (TTIP)?

TTIP could be the worst thing to happen to the public sector and consumer rights in my lifetime. Of course, it’s hard to know for sure as the meetings about it have all been so secretive. It’s somewhat incredible that Kippers and other nationalists demand a referendum every time the EU wants to redefine a biscuit but seem blissfully supine about the wholesale giveaway of sovereignty that TTIP represents.

Perhaps the problem is that most people have never heard of TTIP, let alone have any notion of why it’s bad, and summing up its awfulness in a few brief sentences is a job that would leave far pithier wordsmiths than me with a severe migraine. Nevertheless, I’ll give it a shot: TTIP will, to all intents and purposes, be the end of meaningful democracy in Europe – whether such a thing exists right now is a bone of contention, but it definitely won’t if this treaty is passed.

The introduction of Investor State Dispute Settlements will allow companies to sue governments for loss of profits – so should people, for example, vote for a higher minimum wage they will likely see any gains made from that decision sucked back into shareholders pockets by a barrage of lawsuits. Meanwhile anything which makes your average tycoon pull a frowny face – the NHS, say, or workers’ rights – will be dismantled in a rapid race to the bottom.

Oddly, though the stated aim of TTIP is merely to bring US and EU regulations into closer harmony, reaching that sweet pitch never seems to involve increasing regulations – whilst generally speaking the EU will be falling in line with the US, shredding hard-won rights and regulations like an investment banker with the SFO at the door – the US banking sector is likely to see a liberalisation of its rules to get them in line with London’s wild-west approach to financial governance. It is, in short, a massive power-grab by corporations which will crush the independence of states and the democratic right of voters to govern their own countries.

Bugger. I told you I couldn’t do it in a few brief sentences.

Do you have any regrets about the Rupert Murdoch incident?

Regrets? I have a few. But then again, too – oh, all right then. After the incident, many people’s outcry centred round the fact that what was in fact a paper plate with some shaving foam “could have been anything.” Considering the state’s overreaction to what was a pretty-silly non-violent protest I sometimes wish it had been anything. I mean, if you’re going down for assault, you might as well actually, you know, assault someone.

On a more serious note, I regret the timing of my prison sentence. Not the sentence itself, which at two weeks was a pretty perfect stay at what I’m told was her majesty’s considerable pleasure. Seriously, if you ever get the chance and can find the time, I recommend two weeks in prison to anyone – you’ll meet fascinating people, catch up on daytime TV and leave with a renewed and rejuvenated sense of utter contempt for the British state. The timing, however, forced me to miss a family holiday with my son (a holiday which, under normal circumstances, would have seen the judgement deferred, but I think my stunt had left one or two people in the establishment a little bit peeved so these were far from normal circumstances).

Finally, I often regret pleading guilty. At the time the idea was to put a line under things and save my family, girlfriend, and others from considerable stress. A jail sentence was not on the cards when I made the decision (my lawyers were told about the assault charge, which was what got me imprisoned, some twenty minutes before I made my plea) so I thought it would get things over and done with quickly. In retrospect, if I was going to do time anyway, I might as well have given the public a bit more of a show, played the whole thing out a bit, and called Murdoch as a witness.

Aside from that, I’d do it all again in a heartbeat.

Anything else?

Trying to answer your first question, I ended up penning this utterly monstrous preamble. It was useful for getting my thoughts in order but I didn’t want to make you wade through all those paragraphs before I even started answering your question. Nevertheless, I thought it may be of some value so I’ve tucked it in here:

First, a dollop of background on why UK Uncut ever succeeded in the first place. All opinions are mine own, etc.

UK Uncut worked exceedingly well, albeit all too briefly, for three reasons: co-operation, innovation, and an understanding of new technology its opponents simply lacked. First of all, and unusually for a rag-tag bunch of disparate lefties that included smash-the-state anarchists like me, social democrats, libertarians (yes, libertarians occupying squats, shops, and cells in order to make the case for higher taxes), cold careerists and almost everyone in between – we actually got on with each other.

Early on we were affable and laid back, sensible without being over cautious, and close enough friends to catapult each other’s ideas out of the air with a well cranked barrage of shit and still respect each other’s viewpoints after. The widely derided consensus model – attempted with limited success at Occupy amongst other radical movements going back some years – actually worked for us, for a time at least, forcing us to polish our plans to perfection before we unleashed them on some poor unsuspecting Saturday high street.

Why was this band of misfits able to work together so easily though when, ultimately, most of us had wildly divergent aims? I think it’s partly because so many of us had history together but also because we had such focused, precise goal – yet one each of us could see as a stepping stone towards some greater prize.

Some of us felt we were fracking some of free market capitalism’s great fissures and paradoxes – using the necessary openness of retail spaces as a foothold – and we could shine a shaming spotlight on the jaw-dropping corrupt relationship between big business and big government, passionately and unabashedly in bed together yet somehow screwing the rest of us. That’s why I marched, and sat, and got arrested: a system like Britain, venal and elitist; a system like capitalism, cold and capricious; a system like the West, hypocritical and vainglorious, must ultimately suffocate on the stench of its own corruption and inconsistency. I, and a few like-minded souls, came to UK Uncut to fan that pong towards the public (whatever that word means nowadays) and, perhaps, sicken them enough to help us end the decaying folly of wild, unaccountable neoliberalism before it became too late.

Others came to do simpler and, arguably, more practical things: help raise awareness of tax avoidance, establish that ordinary people still had extraordinary power, to disquiet, distress, and perhaps capsize the Conservative Party before it could hoist full sail and in, a handful of cases, just to help ignite third or fourth sector careers or so they could one day boast at some dinner: “I was there.”

We succeeded at most of these goals a little, some a lot, and a few not at all. But why?

Firstly, in in choosing tax avoidance as its focus, UK Uncut shined unwelcome light upon the tangled, creeping corruption that personifies the modern relationship between big business and the state. Tax loopholes for the rich and powerful are nothing new, of course, but we have, whilst barely noticing, reached a stage where our democracy is so rotten that corporations can write their own tax loopholes and simply slip them into legislation.

That this was not a major scandal before UK Uncut intervened is an indictment of the press – but, on some level, UK Uncut was as much a PR organisation as a direct action movement, providing the press with the characters, art, and narrative necessary for it to write readable stories about boring issues. The true genius though was the problem’s essential intractability – “lower taxes for corporations” had become such an unassailable piece of dogma in mainstream economics that the Conservatives would have bitten off their own hands rather than signing bills to demolish it, even if they had been inclined to do so.

[caption id="attachment_10458" align="aligncenter" width="187"] Darren Parkin[/caption]

By Darren Parkin, CFI.co contributing-editor