Utility Week

18 | 19TH - 25TH JANUARY 2018 | UTILITY WEEK Finance & Investment Market view L ast November, a leak consisting of mil- lions of files relating to tax avoidance and offshore investments – now known as the Paradise Papers – sent waves of out- rage across the world. Some of the most high-profile international figures, from Bono to Lewis Hamilton, had their reputations tar- nished by the Paradise Papers revelations. However, multinational companies have come in for the most sustained criticism, with the energy sector not escaping the hot water. Energy companies in the spotlight Polecat data shows that as an industry, the energy sector is the most mentioned in both online and social media in relation to the Paradise Papers, attracting as many as 546,298 social media posts in just one day. The energy company most in the spotlight is Navigator Holdings, which is probably due to its association with US president Donald Trump. The files reveal personal or corporate offshore ties to key Trump associates, such as Wilbur Ross, who maintained his inter- est in Naviagator Holdings when he joined Trump's cabinet, along with the company's links to Russian clients such as Kirill Sham- alov, Putin's son-in-law. Of course, these rev- elations come at a time of heated controversy and investigations into Russian involvement in US political affairs. Other energy companies such as Gazprom and Madagascar Oil also feature prominently in the companies mentioned online. Inter- estingly, though, none of these companies feature so strongly in the social media con- versation, showing that mainstream online media coverage does not necessarily trans- late into broad public interest and comment. Technology firms and high-profile consumer brands, such as Apple, seem to have caught the public imagination and ire far more than the energy sector as far as the Paradise Papers have been concerned to date. So, if you are not Navigator Holdings, should you care about its activities and expo- sure? The answer is a resounding yes. It all comes back to the six degrees of separation theory, which holds that nearly all individu- als are connected to every other person in the world in six steps or less. Fortunately, in everyday life you cannot be held responsible for the actions of your associates. However, in business things are different, with organi- sations increasingly held accountable for the other companies they choose to have deal- ings with. Major utility companies are oen on the frontline. They are customer-facing organi- sations whose brands are household names and upon whom societies depend to keep warm, heat their baths and cook their food. We are all familiar with the scrutiny and issues they face around matters such as pricing, supply security, safety and infrastructure. Therefore, if someone in their supply chain is found to be associated with unethi- cal business dealings, it is entirely possible for that utility company's reputation to be harmed by association and for questions and concerns to be raised about broader manage- ment competency and accountability. With the now ubiquitous presence of social media and companies governing ever more complex digital footprints, news travels fast, especially when it comes to the type of negative coverage revealed by the Paradise Papers. The Criminal Finances Act 2017 also influ- ences this landscape. Created by the UK gov- ernment in a bid to crack down on corporate non-compliance, the act means that com- panies can now be found liable for failing to prevent tax evasion by either a member of staff or an external agent working on the company's behalf, even when the business was not involved or was unaware of the tax evasion. Know your network It is more important than ever for companies to understand how their reputations may be exposed by the suppliers and others upon whom their operations may depend. Artifi- cial intelligence and natural language pro- cessing enables companies to monitor their entire ecosystem of assets in near real-time for association with potentially damaging reputational issues evident in the universe of conversation taking place online and on social media channels. The results enable early warning and well-informed timely business decisions and interventions. Energy and utility firms have long been leaders when it comes to antici- pating and managing systemic risk and net- works critical to their infrastruc- ture and ability to deliver supply and confidence. Embracing tech- nology that delivers reputation risk manage- ment and confidence is the natural next step. Bronwyn Kunhardt, co-chief executive and co-founder of reputation technology specialist Polecat Trouble in Paradise As much of the world still reels from the revelations of the Paradise Papers, Bronwyn Kunhardt considers the implications for the world's energy industry. Key points The leak of the Paradise Papers in Novem- ber 2017 made public lots of sensitive information about tax avoidance. Research identified that the energy sector was the most mentioned industry sector in the press in relation to the Paradise Papers. Reputational damage can be considerable by association, whether or not you have been specifically named. The Criminal Finances Act 2017 extends the liability of companies when it comes to tax evasion, regardless of whether they are aware of criminal activity. Companies' reputations are also affected by the actions of their suppliers. Utilities should constantly monitor the press and social media for negative coverage. "Artificial intelligence enables companies to monitor their entire ecosystem of assets in near real-time."

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