Opinion today: How to hold companies accountable

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Public companies used to know where they stood vis a vis their investors — share price was all. But, these days, groups of all sorts are facing activist calls to take action on all kinds of social and political issues, from gun control to climate change.

BlackRock’s Larry Fink’s call earlier this year for “purpose driven companies” was a turning point, writes Rana Foroohar. But Delta Airlines discovered the potential pitfalls of stepping into hot issues when it stopped offering discounts to National Rifle Association members and was then penalised by gun rights supporters in the Georgia legislature, who killed a jet fuel tax break that would have benefited the company.

Rana agrees that share price is an inadequate metric for measuring corporate performance because it encourages short term thinking and depresses spending on research and development. But she warns against using activism as a measure instead. Her proposed solutions for holding corporate managers to account are far more quantitative.

Change at the ECB: The battle to succeed Mario Draghi as president of the European Central Bank when his term runs out in November 2019 is already underway. Wolfgang Münchau argues that the eurozone needs someone with a fine-tuned antenna for politics and a readiness to change course when the facts shift. He writes that those choosing Mr Draghi's replacement should ask candidates what they would do with the €2.3bn in sovereign bonds on the ECB’s balance sheet.

The worm turns: Lancôme last week announced that Isabella Rossellini, aged 65, would serve as the face of major new advertising campaign, some 22 years after it summarily cut the movie star loose for being too old at the age of 43. The cosmetic group’s change of tune stems from a growing realisation that older people are the ones with money to spend, writes Ian Leslie, but he warns that marketers should beware of painting the entire demographic with same brush. 

Dropping dollar: Lawrence Summers argues that the combination of rising US interest rates and the decline of dollar against many major currencies reflects deepening investor skepticism about the direction of US policy. Pointing to the newly announced steel tariffs as well as to increases in the federal deficit despite a healthy economy, he warns that “currency markets are sending a signal that the US is not on a healthy path”.

Best of the rest

It is beyond this prime minister to beat Brexit swords into ploughshares — Andrew Rawnsley in the Observer

Hooray for Harvey-less Hollywood! — Maureen Dowd in the New York Times

Scandal-hit charities can learn from an unlikely source: the private security sector — Matthew Cawthorne in the Telegraph

A Moment for Movement on Guns — Peggy Noonan in the Wall Street Journal

The West Wing adventures of Ivanka and Jared are coming to end. And none too soon — David Usborne in the Independent

What you’ve been saying

A packet of crisps? We should be so lucky — letter from Jasmine Whitbread

Liam Fox, the UK secretary of state for international trade, has attacked Sir Martin Donnelly, the former permanent secretary of his department, for suggesting that leaving the customs union would be like swapping a three-course meal for a packet of crisps. If we fail to negotiate a good deal, Mr Fox will be lucky to get either. There are plenty of people making great tasting crisps in London and plenty of restaurants serving three-course dinners, and a vast number of them are staffed by EU citizens. While the prime minister has promised the rights of those EU citizens are secure, there’s no room for hardline Brexit backtracking on December’s agreement — especially while so many questions remain unresolved, despite the government now offering some clarity for those arriving during the transition period. Whatever happens with phase two of the negotiations — the trade agreement — it cannot be allowed to undo the agreement on the rights of EU citizens in the UK. Welcoming words are not enough. I’ve heard more of them than I’ve had …hot dinners.

Comment from European_Observer on Britain’s sorry excuse for snowflakes

There are lower cost [snow clearance] options that ought to be put in place. For example, in Austria, where at low altitudes snow is reasonably common, but a long frigid spell is rare, local councils engage farmers and other contractors on a retainer basis, providing them with snow plough attachments for their tractors (much less costly than dedicated snow-plough trucks). The farmers then clear the side-roads when told to do so, while the heavy equipment only needs to concentrate on the main roads. The contractors also clear the sidewalks with tractors from toy town.

A fair approach to global corporate taxation — letter from Chris Preston

It is rightly recognised that taxing revenues is neither very effective nor fair, and the utopian solution of taxing where value is added is impractical. May I suggest a simple, admittedly imperfect, but effective compromise solution? Global profits before tax should be proportionally split according to the revenue distribution of the company by country. Each country where the company had sales would then impose its individual corporate tax rate on its proportion of the profits. The overall tax rate paid by the company would then be a blended rate, weighted by its sales in each country, which is intuitively fair. Clearly this should apply only to companies above a certain size to avoid excessive costs for small businesses operating in multiple countries. There would also have to be agreement on common accounting treatment to arrive at the definitions of both revenues and profits, but these should be relatively simple compared with the complexity of the structures currently used to offshore and avoid paying a fair rate of taxation.

Today’s opinion

Mario Draghi’s successor has some hard questions to answer Candidates with the necessary qualities for the ECB top job are in short supply

 Currency markets send a warning on the US economy Concerns over the dollar weakness are magnified by the decision to impose across the board tariffs on steel and aluminium

 The backlash against shareholder value Many Americans believe corporations must address social and political issues

 Lancôme’s new ad campaign tempers our obsession with youth Isabella Rossellini’s rehiring at 65 shows marketing needs to broaden its audience

 Labour’s #MeToo problems are far from over The party is my family; the hardest abuse to hear about involves those you trusted

FT View

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 FT View: Vladimir Putin’s nuclear posturing is a dangerous escalation A shift in US policy threatens to lower the threshold for nuclear war

The Big Read

The Big Read: Saline investigation highlights the cost of American healthcare Authorities are investigating whether companies aggravated a shortage of the vital medical product to boost profits