Panama papers: Why the era of operating behind a veil is coming to an end
For the last three weeks, the Panama Papers have dominated headlines worldwide, leading to embarrassment, back-tracking and resignations among some of the world’s political elite. In the furore that’s followed, politicians have entered uncharted territory of scrutiny, with the publishing of tax returns now potentially a prerequisite for anyone seeking a job in high office.
Fuelled by the sheer volume of documents and high-profile figures named in them, the fallout isn’t likely to dissipate any time soon. The practices of businesses and politicians are under the microscope like never before, and the public are demanding ever more transparency.
While the indignant response to the leaks may seem like a one-off reaction to an exceptional situation, the public’s thirst for transparency is a theme which has been building momentum for some time. This was exemplified last year when news that Volkswagen (VW) had been cheating pollution emissions tests came to light. This was not the first time that a globally-respected company had been exposed for cheating the system for their own benefit. Yet six months down the line, the VW scandal is still a regular fixture in newspapers.
Read more: Who leaked the Panama papers?
And the odds are that recent news of Mitsubishi falsifying their fuel economy figures will not be the last we hear of the scandal. What’s clear is that there has been a shift in the public’s expectation of transparency, signalling an end to the era of businesses operating behind a veil.
Our own research emphasises this growing demand for transparency. When 2,000 adults were asked about their attitudes towards financial institutions, an overwhelming 76 per cent claimed they wanted more transparency about what their funds are being used for. Half of those we surveyed said they believe it should be standard practice that banks make their customers aware of where their money is being invested or lent. The tide has turned and businesses, financial institutions and the government have no choice but to keep up.
Further evidence of this movement is visible in the widespread shareholder revolt sweeping across the FTSE 100 in response to excessive executive pay packets. Such packages are nothing new, yet an unprecedentedly furious response has led to a review by a group of leading shareholders and companies. The group, chaired by Legal & General chief executive Nigel Watson, has concluded that "greater transparency and more accountability" among other reforms "are vital to restore confidence in a system widely seen as broken".
Read more: Panama papers: Reaction to the revelations
This revolution has undoubtedly been influenced by the rise of digital technology, particularly the growth of social media, which has both democratised the investigation and consumption of news and created a platform to mobilise against injustice. The upshot is that both public and private stakeholders demand more transparency and ethical performance from corporations, both local and global. In response to this, a growing number of companies now place huge amounts of focus on openness and customer feedback.
Despite the development of this new world, where information has become key, our research shows that a staggering 63 per cent of people have no idea if the activities of the funds, pensions or companies they invest in are ethical.
But this is beginning to change and as people grow more aware, the most successful businesses will be those which act now, by developing a model of complete transparency while still making money for their customers. If people have the choice between investing in a successful, transparent company or a successful opaque company, the former will always win. If for no other reason, it’s now a safer option.