Sharing Profits: The ethics of remuneration, tax and
John N. Reynolds
Palgrave Macmillan £29.99
Church Times Bookshop £27
THIS is an exceptionally timely and focused book. In the wake of
the financial crisis, I have struggled with several attempts to
apply ethics to business in a philosophical or theological way.
Sharing Profits is different from those titles, because of
its practicality. As banks and their bonus policies and corporate
tax arrangements continue to make headlines, it is also uncannily
Remuneration, tax, and payments to shareholders are complex
things, often deliberately shrouded in mystery. John Reynolds lifts
the shroud in a very thoughtful way.
He has exceptional experience of what he is writing about.
Before embarking on a 20-year career as an investment banker, he
studied theology at Cambridge University. This eventually made him
an ideal candidate for chairing the Church of England's Ethical
Investment Advisory Group for four years from 2006. More than that,
he is now on the Methodist Church's Central Finance Board, and the
investment committee of the Scottish Episcopal Church.
John Reynolds's book is a brisk, practical, systematic, and
sensible guidebook to anyone thinking about the morality of
capitalism, or seeking to exercise responsible investment
judgement. It does not grandstand or attitudinise.
Though it is lively, it is not a particularly easy read. But
this is a very complex subject. Each chapter crackles with ideas
and references from history, literature, and theology, as well as
numerous practical examples bringing clarity to complex decisions
made by boards and investors. But they are not necessarily told
what to do.
Take the nervousness about ethical investment by church
institutions, for example. It is easy and clear-cut to deplore
church investments in dubious activities such as gambling. But the
same churches which abhor the idea of deriving dividends from
casino corporations may well turn to the Heritage Lottery Fund when
it comes to restoring the roof with funds subscribed by weekly
lottery gamblers. A blind eye is easily cast when it is convenient.
Ethics isn't easy.
I have some reservations about Reynolds's ideas about the
responsibilities owed by and to company shareholders as owners of
the business, which shape much of the book.
The traditional and easily comprehended ideas about ownership
and its responsibilities have surely become much more tenuous with
the rise of computerised share-trading, in which institutions may
"own" shares for fractions of a second as they attempt to profit
from market imperfections.
This doesn't change the human principles of ethical investment.
But it does make you wonder about who actually owns anything in
this microsecond world, and how ethics can apply to a computer
acting only according to its algorithms.
Many people have been outraged by continuing exposures of the
way in which companies seem to behave with little regard for any
moral code except for "Don't Get Caught". Reynolds reminds us that
ethical behaviour has also a lot to do with what society accepts
and the law and the regulators determine. Tax avoidance is
perfectly legal, even if morally sniffy. It is up to the law to
Reynolds's realistic approach is right at the end of the book.
"Business plays a major role in establishing strong ethical
principles," he writes. "But it cannot do so in isolation from the
rest of society."
This is not a book for those who seek polemical denunciation of
the errors of capitalism. Reynolds is too embedded in the
investment world for that. Sermons will not be written from it,
despite its stimulating asides.
But for those seeking to exercise ethical decisions as
investors, directors, or advisers, it should become a much
consulted textbook. In particular, reading it will load even more
responsibilities on to the people who are seen as the key to
improving company behaviour, the non-executive directors.
Unless it scares them off, wiser boardroom decisions may result
Peter Day is the presenter of In Business on BBC
Radio 4 and Global Business on the BBC World