This was the presentation made by Meesha Nehru, a director of CAN, at its launch event on 12 July:
I am a co-director of CAN who has been brought into the project not for my technical viewpoint – I am not an accountant – but because I come from the perspective of a user of accounts from wider stakeholder groups, specifically civil society, consumers and workers.
As a researcher, for the Tax Justice Network, as a founding member of the Fair Tax Mark and having worked for Unite the Union, I have spent a long time poring over both large and small company accounts in the hope of finding the information that would empower the different interest groups I was representing to make informed choices, understand risks, and hold companies to account. However, I’ve often been left frustrated, as, often it seems, the data that I’m really looking for was just not there, was only partial or too vague to be of use.
I remember when I first started looking at accounts as a non-financially-trained person. I couldn’t work out why there were 15 pages on Executive remuneration but barely even a couple of lines on employees and only small notes on tax. What little information there was, was at the global level – making it virtually impossible to get a clear idea of what a company was doing on tax and employment within specific countries, even though these issues have an impact on thousands if not millions of people.
Then there was the kind of language used in accounts. I lost count of the number of times I read ‘other’ as a category for expenditure, in tax reconciliations or as a whole segment of ‘business activity’. Another example was materiality. In the absence of a standard definition, I was left wondering how particular company defined the concept of ‘materiality’ when it was choosing whether or not to disclose all of its subsidiaries. These vague terms, may or may not have been obscuring information that could be of vital interest to stakeholders.
In fact, instead of giving a full and complete overview of a company’s activities, accounts seemed to me to be an abstract representation of the business – reflecting perhaps the abstraction of the financial markets in which many but by no means all are embedded – but making it seem as if the business was operating at a different level far away from the reality of the humans that interact with it on a daily basis – sometimes, as we will see, this even includes Directors.
Now, more than ever, it seems that there is a need for better quality information. As we collectively face climate change, businesses can do their bit by better communicating how they are fulfilling their commitments to tackle it. Granted, some companies have already made improvements in their disclosure and there seems to be a genuine willingness to do more – not least the work of the Fair Tax Mark and others is showing this. But new standards across the board would bring new data sets that would give us a better indication of how economies are actually functioning at the national level.
At a time when there is also great suspicion around what powerful interests say and what their real intentions are, equipping stakeholders to make proper comparisons and be fully informed can only help to rebuild all-important trust.
A different way of looking at accounting rules, such as those to be discussed by CAN could help to drive up standards, stopping any ‘race to the bottom’ in terms of tax contributions and perhaps even helping to set, new and sustainable, industry wage floors. Most importantly, such data, put in the public domain could provide a basis for reconnecting business back to the social context where it operates and offer a chance of planning and decision-making that is based on wider considerations that could benefit both business and communities.