The recent furore and public backlash at brands which take UK tax avoidance to the extreme was wholly predictable, and avoidable. But how many organisations involve their senior financial people in brand management – how many CFO’s see the brand as part of their responsibility?
I don’t want to get into the rights and wrongs of the tax avoidance activities of these multi-nationals. A CFO had a right and responsibility to maximise post-tax profits for his or her shareholders. They may even be held liable if they do not act to avoid excessive tax burdens.
Boards must share brand values as part of their corporate responsibility. Many of the brands involved in the recent ‘scandals’ take their customer focus very seriously. They have made huge investments in their brands and would probably include such values as fairness, probity, honesty and fiscal responsibility as part of their brand ethos.
Brand leadership v finance.
There seems to be some disconnect here between the brand stewards and the financial stewards.
I’m not suggesting that anybody has acted illegally, but as with all brand issues it is a matter of perception. When the public see successful businesses apparently thriving, they take that as a positive brand virtue. When they hear of shadow companies and ‘management’ and ‘royalty’ fees from overseas that lead to minimal taxes being paid, they smell something bad.
When the tax advisors came up with a great scheme to minimise corporation tax, and when the FCO presented this to the board, did nobody say; “Hey, this does not square with our brand values – it looks bad to our public.”
The problem is one of brand leadership. If the brand is at the centre of corporate decisions it is a great safeguard and reality check for corporate responsibility.
We are already seeing the outcomes: brand aware customers are making their feelings known by using their consumer power. Perhaps the FCO’s will think again. Rather than saying; “I’ve done nothing illegal”, concentrate on explaining falling customer revenues at the next board meeting.