Corporate Eye

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Chris Milton

Chris Milton

XBRL: The Transparency Acronym

It’s time to challenge your stereotypes! Here’s what first springs to my mind when I think of these professions:

A Formula One racing driver: fireproof overalls, helmet tucked under one arm, cocky stance and arrogant smile on his face.

A high court lawyer: hand tailored suit, leather briefcase, slightly otherworldly air and nose in the air.

A corporate analyst: reserved, uncomfortable in the real world, an abacus on the desk, smart clothes but never truly smart in demeanour.

Hang on a minute… an abacus?? A slightly sharper look at the corporate analyst and a somewhat Pythagorean figure emerges, complete with wraparound white sheet and funny pointy beard.

This is because corporate analysts are, at the end of the day, brilliant mathematicians whose mental agility would flummox the rest of us humble human beings. They’re the gods of all number crunchers.

Hence, I suppose, the abacus: to help with the day-to-day shuffling around of figures in analysis of a company or product’s performance. But surely we’ve progressed beyond such oddities by now?
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Materiality within Sustainable Reporting

Imagine something you can live without; an atlas, perhaps, or pretty wallpaper. These may improve your quality of life or be useful repositories of knowledge, but they’re not strictly necessary for your day to day existence.

Now think of the things you really do need: air, water and nutrients must be top of your list. Additionally, shelter is useful for maintain a good health and transport is normally necessary to continue to earn a living.

Materiality within sustainability reporting is the concept of how much something is part of a business’ ongoing processes. How material it is to that company’s existence.

So taking the example above, pretty wallpaper and an atlas are pretty immaterial to an individual’s existence. Conversely air, water and nutrients are most definitely material, as are transport and shelter to a given degree.
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Sticklebacks of Sustainability

WARNING: sticklebacks can cause choking, vomiting and severe stomach pains if swallowed. So would read the food safety report on these small fish for their larger predators.

They have a spiny dorsal fin which they can raise if another fish attempts to eat them, hence the name. Its purpose is to lodge the stickleback, somewhat painfully, in the mouth or throat of its predator.

Often as not, this causes the predator in question to spit the stickleback out, thus saving its life.

Smaller listed companies can be compared quite favourably to sticklebacks. Preyed upon by larger fish, they often have to develop self defence mechanisms which can be surprising in their elegant simplicity.

On a whim, I thought I’d have a look at those FTSE Fledgling companies, equity vehicles aside, who were due to publish their reports last week. Perhaps their websites would have signs of sustainable spines, ready to be raised as a predator approaches?
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A Brace of Indices

In Indiana Jones and The Last Crusade, the fearless archaeologist has to step through a grid of letters in order to reach his goal. If he puts a foot on the wrong letter he’s promised nothing more than a long fall to a hard landing.

Converting business’ existing tools and structures to a more sustainable model is equally fraught with danger. One false move and it’s possible that the existing financial basis to business could be lost with no real gain elsewhere.

This is why the establishment and development of sustainability indices by two of the most well respected brands, Dow Jones and FTSE, was a welcome development.

Both have now been operating for over seven years and look set to strengthen their role as stock indices of the future. But how so they gauge the sustainability of their constituent companies?
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One Man’s Stakeholder ….

Think of 1984 and somewhere in between the famine in Ethiopia and Michael Jackson’s hair catching fire, you’re likely to think of George Orwell’s famous dystopian novel.

Part of this is Newspeak, which is characterised by the absence of synonyms or antonyms, meaning that there is only one “authorised” word for any given thing or activity.

1984 is also the year in which R. Edward Freeman published his book “Strategic Management”. It was here that the concept of a stakeholder was coined to describing anyone who affects or is affected by a corporate body.

I would not for a moment class the term “stakeholder” as being part of any form of Newspeak, especially as it’s one of the more useful terms to have come out of the linguistic wave which swept through business in the 1980s.

However for a concept whose management principles will be 25 years old next year, it’s interesting to note that companies are still unsure how to use their websites to communicate sustainability to their stakeholders.
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A Chocolate Box Of Waste

Sometimes the choices put in front of you are a veritable chocolate box of decisions. Strawberry or Coffee; Praline or Brazil? Life is sometimes just far too short to come to a final decision.

The same applies when reviewing the sustainability sections of the major food and drink retailers’ websites. There are food miles; working conditions (both in the UK and abroad); organic, fair trade and ethical considerations… (deep breath)

…. vegan and vegetarian, halal and kosher requirements; waste and packaging; additives, colourings and preservatives … and, of course, the dreaded plastic carrier bag.

Out of these one stands out: packaging. It doesn’t matter how near or far your food’s source or what its moral, spiritual or religious provenance is, it still need to be in something when it leaves the shop.
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