'Brexit neutral' is not good enough for brands

Time is running out for companies to come down on one side of the Brexit debate, for the sake of their stakeholders as much as anything.

Being neutral on the issue of 'Brexit' is not a viable option, warns Patrick Donovan
Being neutral on the issue of 'Brexit' is not a viable option, warns Patrick Donovan

By now, it’s probably too late to hope that we can expect any proper public deliberation across British business on the merits – or otherwise – of Britain remaining in the European Union.

With the clock ticking on the referendum, the debate has been taken over by groups such as Lord Rose’s Britain Stronger in Europe for the Euro supporters and, for those looking to heave up the drawbridge, Vote Leave, backed by City spread-better, Peter Cruddas.

These, and other groups, have tried with patchy success to win over business leaders who have such a strong interest in determining the outcome of what could result in the most profound eco-political shake-up in the UK’s living memory.

And yet, none of these lobby groups can claim to speak for the corporate equivalent of middle England. If recent polls are to be believed, a number of listed companies have yet to go public on their views about the Brexit.

Nobody suggests that a company should be obliged to opine on the Brexit simply because a referendum is looming.

But there is a strong argument that stakeholders should be appraised of the potential consequences faced by any individual company in the event of a No vote. That’s certainly the case for companies now going through the IPO process, for example. 

Ironically, it took arch Eurosceptic Cruddas – the man who donated £1m to the Vote Leave movement – to spell out the risks that the Brexit could have on his trading company CMC Markets in its recent IPO prospectus.

Such are the legal constraints, he was obliged to spell out all the risk factors to the company’s shareholders – and that inc­luded his admission in the prospectus that quitting Europe could potentially impact the spread betting group’s profits.

Doubtless, Mr Cruddas signed off this prospectus with gritted teeth. Yet his shareholders have far more visibility about the risks of a Brexit than investors in many other companies.

And the corporate world is certainly concerned about the referendum’s outcome.  According to ICSA research, 70 per cent of FTSE350 companies reckon a Brexit would result in "some" or "significant" damage to their businesses. The FT followed with a recent poll of FTSE100 companies, which found that one in ten had no stance on the outcome of the referendum, with only four – easyJet, Persimmon, GKN and Standard Life – engaged in detailed planning for a Brexit.

Plaudits then to Vodafone and Shell, which are prepared to go on record with their support for EU membership. And there is clarity at least from Wolseley which reassures: "Membership of the EU has little direct impact on our business either way."

But is it credible for companies such as Tesco to say they remain "neutral" out of respect for the diverse views of its stakeholders? I don’t think so.

Shareholders and other interested groups are surely entitled to far more transparency. 

Can such explanations be left until after any potential Brexit? Now that really could turn into a PR disaster.

Patrick Donovan is MD of Citigate Dewe Rogerson

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