Farage fiasco shows perils of trying to be the moral police

I never thought I’d say it, but Nigel Farage might just have done corporate Britain a big favour by highlighting the injustice done to him by Coutts.

After the bank informed Mr Farage of its decision to close his account, a 40-page file was revealed last week, produced for the “Coutts Wealth Reputational Risk Committee”, providing substantial evidence that the decision was not a question of his finances, but his politics.

The dossier, which included references to his tweets, Wikipedia page, and news articles about him, references his “chauvinistic”, “xenophobic” and “racist” views, citing examples such as his friendship with Novak Djokovic and his comparing of Black Lives Matter protestors to the Taliban. The report deemed him to be a reputational risk for the bank. Coutts has since apologised.

The drama raises the question of whether a bank – or indeed any company – should refuse to do business with a customer on the basis of such reputational concerns?

There is no doubt that businesses now feel much greater pressure to engage on social issues and have been more vociferous in recent years in professing their values and stances on issues such as DE&I, climate change, and racial justice.

In the recent past I have been asked by companies in different sectors to advise on similar conundrums; that is, whether they should refuse to accept the custom of particular high-profile individuals with well-documented controversial views contrary to their own.

On each occasion, I advised considerable caution.

Yes, of course companies have the right to refuse to do business with someone, as long as they don’t break rules on discrimination, for example. And I understand why they would feel uncomfortable about doing business with high-profile individuals whose ethics and values appear to be the antithesis of their own.

But doing so would also open several cans of worms. Imagine the questions a company might be asked, should news of its rejection of a high-profile figure become public, as it surely would.

Are you judging the ethics and values of all your customers, or just those you have heard of? What is the process for this? How do customers qualify for this scrutiny? Do you have a scoring system? Who else have you refused to do business with? And, by the way, Mr CEO…how can you justify refusing business to a controversial politician when we have evidence of you working with a warlord / convicted paedophile / wife beater in the recent past?

A well-intentioned company could very easily be shown to be deeply hypocritical.

As I gave this advice, for a moment I doubted myself when I realised that I, and my employer, would certainly refuse to work for some companies on ethical grounds, and have done so. But I would argue the difference here is the nature of the product or service provided, and the feasibility of making such a judgement consistently. Our business is about promoting our clients, protecting and enhancing their reputation. Refusing to do so for clients whose reputation does not deserve to be protected or enhanced seems entirely reasonable to me and given that we work with a very manageable number of clients we can, and do, assess each one in a consistent manner according to agreed criteria before embarking on a relationship.

But refusing someone a holiday, a bank account, or a pair of trainers based on disapproval of their views…? Surely in reality there are no sizeable holiday companies, banks or trainer brands in the world whose customers are all squeaky clean and accurate reflections of the company’s stated values? And attempting to assess this in a manner that is equitable, consistent, and not riddled with holes, seems entirely unfeasible.

Certainly, any company planning to refuse to do business with someone on the grounds of inconsistency with their values needs to think it through in great depth and be very clear indeed about the processes they follow and the grounds on which they can make such decisions. A clearly thought-out policy explaining when, why, and how they can and can’t refuse to serve a customer is a governance prerequisite for any business considering going down this path.

Being a responsible business, a business with genuine values, is laudable. But this should really be about how the business behaves. Policing how each and every one of its customers behaves is – in most industries – a step too far.

I certainly don’t want the Farage fiasco to hasten any backlash against ESG. Or at least, not against genuine corporate efforts to be responsible and create a positive impact, of which there are many. But if it makes businesses stop and think before haphazardly becoming the moral police, it’s no bad thing