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Debate over independence is every company’s business

Debate over independence is every company’s business

This column has been calling on businesses across Scotland to enter the fray over Scottish independence for months now.

While Courier Business has advocated neither a Yes nor a No vote, we are clear that Scotland’s future is too important for firms big, small and middling not to challenge those politicians making the running on both sides of the debate.

Last week, I regretted that a Westminster-Holyrood referendum stramash in Aberdeen had obfuscated Sir Ian Wood’s important prescription for the future of the crucial oil and gas industry.

Recently, we saw more sound business practice which again, inevitably, spiralled into a more-heat-than-light clash over referendum votes.

Releasing their annual results, Standard Life and RBS both updated their respective corporate registers to reflect a best guess at market risks should the country vote in favour of independence in September.

Standard Life, it emerged, has set up new entities in England in case changes to the legislative, economic or regulatory framework require it to move part of its business away from its Edinburgh headquarters. No surprises the vast majority of its customers, including lucrative local authority pension funds, come from south of the border.

Similarly, RBS duly registered the risk that a vote in favour of independence could hurt its credit rating. On the same day, rating agency Standard & Poor’s said Scotland would face “significant, but not unsurpassable” challenges if it were to go it alone.

In each case, the risk was recorded as one among a string of unknowns. Others included the perceived threat of a referendum on withdrawal from the EU, as promised by Prime Minister David Cameron, and continued exposure to the still troubled eurozone.

With investor confidence crucial to huge finance firms like Standard Life and RBS, it would be imprudent to do anything but look at business options and risks offered by independence. But these steps are not just sound and sensible business practice, they are now formally required of major firms.

The distinctly unexciting-sounding Financial Reporting Council imparted a typically unexciting piece of advice earlier this year: it reminded big business that the Companies Act and Corporate Guidance Code require directors to highlight risks to their businesses for the benefit of investors.

“If boards consider that a vote in favour of Scottish independence is a strategic issue or a principal risk, then disclosure should be made,” it said as it issued new guidance.

But the past seven days brought other disclosures, too, with travel firms saying they could be among those who would win under independence.

While revealing his annual results on the breakfast telly sofas, British Airways boss Willie Walsh said independence would likely have a positive effect on his company.

He has his own reasons for taking the view. The Scottish Government’s opposition to the Westminster-imposed air passenger duty is shared by many in the tourism sector, who believe that the levy discourages visitors and limits the total tourist spend north of the border.

End the Union, the Government’s White Paper says, and APD would be phased out likely sending more holiday-makers north and swelling BA profits. As a business which by its very nature is used to operating across countless borders and which, unlike Standard Life and RBS, does not have a large-scale presence in Scotland Mr Walsh’s position is wholly unsurprising.

That his view was echoed by firebrand Ryanair chief Michael O’Leary was even less remarkable.

It is worth remembering that despite the news headlines, all the companies I have mentioned here sought to offer no direct opinion on September’s vote. In fact, executives went out of their way to stress the decision was one for the Scottish people.

But the fact firms are now recognising risks and openly talking about opportunities can only help Scots make up their minds over the coming six months.

More companies will make more disclosures as September approaches, and given there remain a host of uncertainties over currency and the like it is almost inevitable that more risk will be registered. There’s certainly plenty of important detail still to be pinned down.

But the debate can’t remain the preserve of the Standard Lifes and BAs of this world. Every company must take a close look at how it could be affected.