Oxera

A Message from Lord Pickles and Lord Blunkett, followed by Oxera's best practice article

The ability to listen and learn from one another has always been vital in parliament, in business and in most aspects of daily life. But at this particular moment in time, as national and global events continue to reiterate, it is uncommonly crucial that we forge new channels of communication and reinforce existing ones. The following article from Oxera is an attempt to do just that. We would welcome your thoughts on this or any other Parliamentary Review article.

Blunkett signature Rt Hon The Lord David Blunkett
Pickles signature Rt Hon The Lord Eric Pickles

www.oxera.com

THE PARLIAMENTARY REVIEW
Highlighting best practice
2| OXERA
Partner
Dr Luis Correia da Silva
Oxera Consulting LLP advises companies, policymakers,
regulators and lawyers on any economic issue connected
with competition, finance or regulation. With over 30
years’ experience, it has gathered wide-ranging knowledge as it
expands into new sectors, harnessing its reputation for credibility
and integrity among policymakers, regulators and courts. Today,
it has offices in Amsterdam, Berlin, Brussels, London, Oxford, Paris
and Rome, and is able offer international clients flexible support,
including providing advice in several languages. Partner DrLuis
Correia da Silva tells
TheParliamentary Review
more.
What society expects from business is evolving rapidly. New business models mean
that intermediaries are being removed and traditional value chains are being disrupted.
Advances in AI and automation are having profound effects on employment.
Communities are exerting enormous social pressure and questioning globalisation.
Furthermore, we urgently need to separate economic growth from the consumption
of finite resources and further adapt to the needs of our environment. Businesses need
to understand that beyond providing returns to their shareholders, they play a critical
systemic role in the development of society. At Oxera, we help our clients to navigate
these questions and cultivate sustainable, forward-looking business models.
Moving towards a stakeholder model of governance
Business leaders are being asked about the need to commit to meaningful long-term
strategies that satisfy a broader range of stakeholders. Many organisations now
understand that they must look beyond only returning value to shareholders; they
are recognising that the sole pursuit of returns to shareholders can have a negative
impact on the very fabric of the societies in which their businesses operate. These
questions are also relevant to investor communities, which must agree strategies and
come together with other investors and institutional shareholders in order to achieve
significant positive outcomes.
Several factors are driving this evolution in thinking. For example, regulators and
governments across Europe continue to challenge business models that traditionally
operate purely for short-term financial gain. Politicians, consumer groups, regulators and
competition authorities are increasingly active in getting firms to think more critically
about their conduct in terms of fairness, pricing and consumer outcomes. Meanwhile,
there are issues of inequality and informational imbalances to address; some consumers
simply do not have the necessary information available to them when they are making
choices. It is incumbent on businesses to seize the initiative on these issues, increasing
legitimacy and trust in their activities and contributing to wider sustainability. We are
slowly beginning to see this shift in attitudes emerge across companies in Europe.
A new way of thinking is the first step to addressing the scale and complexity of the
challenges that business leaders face. This new approach needs to strike the right
AT A GLANCE
OXERA
»Managing Partner: Dr Helen
Jenkins
»Partner: Dr Luis Correia da Silva
»Founded in 1982
»Based in Amsterdam, Berlin,
Brussels, London, Oxford, Paris
and Rome
»Services: Economic and
finance consultancy
»No. of employees: 184
Oxera
3OXERA |
BEST PRACTICE REPRESENTATIVE
balance between five forms of capital
– financial, physical, human, social and
natural – and represent the needs of all
stakeholders and shareholders in the
long term. We believe that economics,
with its ability to understand trade-offs,
plays a vital role in establishing this new
approach, providing understanding
and insights around which businesses
can coalesce. It is vital for organisations
to comprehensively understand and
quantify the trade-offs between forms
of capital, to model cause and effect,
and to create frameworks that help
businesses to stay within the boundaries
of competition, fairness and regulation.
Applying this new approach
We focus on applying this thinking to
ensure the suitability and success of our
organisation and the clients we work
with. For us, a level of investment in all
five forms of capital – financial, physical,
human, social and natural – achieves
the right balance. We embed these
values in our frameworks, allowing us
to remain competitive and innovative
and to attain our long-term goals.
As an economics consultancy, we are
acutely aware that one of our main
sources of capital takes the form of the
talented individuals who work with us.
These bright people could be doing many
other things in society, so we have to
ensure that they are growing as people
and enjoying the work they do with us.
Therefore, investing in human capital is
a fundamental part of Oxera’s current
and future business model – focusing
on developing the skills, knowledge
and attributes of our people. We give
our people clear meaning, purpose and
direction in the roles that they play and
the contributions that they make.
Our clients
We have been helping clients evolve
and adapt their business models to
meet these changing expectations.
For example, in financial services, we
are assisting firms in ensuring that
their business models do not exploit
behavioural biases. In the water sector,
firms are developing business plans
that capture the trade-offs between
natural and financial capital and making
the implicit social contract explicit.
Technology firms are thinking about
how they balance the benefit they
provide to consumers with the impact
on suppliers and competitors.
In a broader sense, taking this new
approach means that we are making
a commitment to people, society, the
environment and our clients that goes
beyond corporate social responsibility
and reputation. It’s a big undertaking
– and how can we and the wider
business community know if we have
been successful? At present, there is
no simple, unified way to set goals
and evaluate performance against the
different forms of capital.
Helping to redefine and redesign
businesses and markets with long-term
resilience, expert economic advice
encourages organisations to think more
strategically and base their short-term
decisions on well-considered financial
frameworks. Moreover, this advice can
help to crystallise solutions to long-term
challenges such as material and fuel
scarcity. Economics can power new
perspectives and support long-term
business sustainability by measuring the
cause and effect of a range of scenarios
and supporting companies in meeting
the needs of the broadest range of
stakeholders possible. Considering how
we make use of and generate returns
upon the five forms of capital is a
natural extension of this philosophy.
It is not a straightforward journey.
Indeed, for many businesses, this is
uncharted territory. Success will come
only if we continue to discuss and
debate every aspect, chipping away at
these seemingly difficult trade-offs until
their complexities unravel and solutions
begin to emerge. It is in this spirit that
I ask businesses, organisations and
policymakers: is now the time to think
beyond the bottom line?
We help our
clients to cultivate
sustainable, forward-
looking business
models
Businesses
need to
understand
that beyond
providing
returns to
their
shareholders,
they play a
critical
systemic role
in the
development
of society

www.oxera.com

This article was sponsored by Oxera. The Parliamentary Review is wholly funded by the representatives who write for it. The publication in which this article originally appeared contained the following foreword from Rt Hon Michael Gove.

Rt Hon Michael Gove's Foreword For The Parliamentary Review

By Rt Hon Michael Gove

This year's Parliamentary Review comes at a momentous time for parliament, as we collectively determine the destiny of the United Kingdom. 

On October 31, the UK will leave the European Union. The successful implementation of this process is this government's number-one priority.

Three years after a historic referendum vote, we will deliver on the decisive mandate from the British people. Trust in our democracy depends on it. Until that final hour, we will work determinedly and diligently to negotiate a deal, one that abolishes the backstop and upholds the warm and close relationship we share with our friends, allies and neighbours in the EU. But in the event that the EU refuses to meet us at the table, we must be prepared to leave without a deal.

As the Chancellor of the Duchy of Lancaster, it is my job to lead on this government's approach, should that scenario happen. Preparing for Brexit is my department's driving mission. But while I am leading this turbocharged effort, the whole of government is committed to this endeavour.

Ministers across Whitehall are working together to ensure that every possibility is considered, every plan is scrutinised and every provision is made. A daily drumbeat of meetings means that we are holding departments accountable, so that preparations are completed on time.

The chancellor has confirmed that all necessary funding will be made available. And we have mobilised thecivil service, assigning 15,000 of our most talented civil servants to manage our exit from the EU.

We will make sure that on November 1, there is as little disruption to national life as possible. Our trade relationships will continue to thrive, thanks to agreements with countries around the world worth £70 billion. Our country will remain secure, thanks to nearly 1,000 new officers posted at our borders. And the 3.2 million EU nationals now living and working among us can remain confident, with absolute certainty, of their right to remain in the UK.

Above all, our goal is to be transparent. Soon, we will launch a public information campaign so that citizens, communities and businesses are ready and reassured about what will happen in the event of “no deal”.

In my first few weeks in this role, I have travelled to ports and tarmacs, borders and bridges, all across the UK –from the seaside of Dover to the rolling green hills of County Armagh. I have heard from business owners and border officials, farmers and hauliers. They are ready to put an end to uncertainty. And they are ready to embrace the opportunities ahead.

Our departure from the EU will be a once in a lifetime chance to chart a new course for the United Kingdom. Preparing for that new course will be a herculean effort. But this country has made astounding efforts before. We can do it again.
Rt Hon Michael Gove
Chancellor of the Duchy of Lancaster