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How to say it

30 September 2014 By Chris Hughes

A UK politician has caused a stir by telling business to stay out of politics – especially the question of Britain’s membership of the European Union. Notwithstanding the intervention of Conservative MP John Redwood on Sept. 29, most corporate chieftains instinctively avoid wading into the political sphere. But there’s sometimes a business case for speaking out.

A company’s stakeholders – be they customers, staff, shareholders or suppliers – have political preferences as individuals. No firm can speak for them collectively. In the recent vote on Scottish independence, company workforces, up to the board, were split. And chief executives who stick their head above the parapet in normal times either get ignored or abused.

This doesn’t mean commerce operates in a vacuum, floating above politics. The idea of commercial “neutrality” is a fiction. Given business forms a big part of society, using resources and contributing jobs, it deserves its say in how society is governed.

Chairmen and CEOs are well advised to speak out on specific policies, legislation or regulation, if these affect the prospects of their enterprises. That’s more transparent than lobbying, or financial donations where rules permit. The trickier question is whether to enter historic single-issue debates – such as the Scottish referendum. Redwood, a eurosceptic, reportedly reckons business risks a backlash if it now pipes up about Europe.

The UK-EU debate has many aspects. Like Scotland, it is about identity. But economics, trade and regulation are a big part too. Where the outcome has a material impact on a company, a board would be reckless not to provide such information to those potentially affected, in suitably respectful language. The message to convey is roughly: here is how this situation might impact us, you will of course decide for yourself.

The impetus for such statements should not be coercive politicians whipping up support for their cause, but an obligation to provide useful information to stakeholders or the direct request for such clarification. If a company later finds itself in what was a predictable difficulty, no one can accuse it of negligently and cowardly keeping quiet

 

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