CAIRNGORMS NATION­AL PARK AUTHORITY

Audit & Risk Com­mit­tee Paper 3 06/12/19

1. CAIRNGORMS NATION­AL PARK AUTHOR­ITY AUDIT AND RISK COMMITTEE

FOR DIS­CUS­SION

Title: CRI­TER­IA FOR ASSESS­ING PRIVATE FIN­ANCE PROPOSALS

Pre­pared by: DAV­ID CAMER­ON, DIR­ECT­OR OF COR­POR­ATE SERVICES

Pur­pose of Paper

1. This paper sup­ports dis­cus­sion by the Com­mit­tee on the cri­ter­ia which may be adop­ted by the Author­ity for enter­ing into any form of com­mer­cial part­ner­ship, private fin­an­cing arrange­ment or spon­sor­ship with a private com­pany. The cri­ter­ia may equally be used in con­sid­er­ing poten­tial fund­ing arrange­ments with a char­ity set up by a com­mer­cial entity for its Cor­por­ate Social Respons­ib­il­ity pur­poses, as the char­it­able entity will nev­er­the­less remain clearly linked with the private fin­ances and profit sources resourcing that charity.

Decision Required

1. The Com­mit­tee is invited to con­sider the ideas and sug­ges­tions set out in this paper and to advise on wheth­er the over­all dir­ec­tion set out seems appro­pri­ate for the devel­op­ment of a form­al pro­cess for pre­lim­in­ary eval­u­ation of poten­tial com­mer­cial part­ner­ships by the Authority.

Con­text

1. The Com­mit­tee has dis­cussed at a pre­vi­ous meet­ing the poten­tial for approaches to the Author­ity by com­mer­cial com­pan­ies to seek to spon­sor the Author­ity and / or spe­cif­ic pro­ject activ­it­ies delivered by the Author­ity. The Com­mit­tee agreed that there would be mer­it in estab­lish­ing a set of cri­ter­ia against which com­mer­cial spon­sor­ship or fund­ing pro­pos­als might be assessed in order to provide a degree of objectiv­ity and trans­par­ency in assess­ment of any such pro­pos­als, and also to provide clar­ity to com­mer­cial entit­ies on the stand­ards and cri­ter­ia that would be expec­ted of them as part­ners with the Authority.

2. Any eval­u­ation of part­ner­ship pro­pos­als would of course also have to include appro­pri­ate due dili­gence assess­ments of com­pany stand­ing and leg­al con­sid­er­a­tion of the spe­cif­ic terms of part­ner­ship. How­ever, such activ­it­ies are resource intens­ive. The devel­op­ment and adop­tion of a set of com­mer­cial part­ner­ship eval­u­ation cri­ter­ia provides an ini­tial fil­ter­ing mech­an­ism, through which pre­lim­in­ary and high level assess­ment of the fit of a pro­posed part­ner­ship with the Authority’s core prin­ciples and may be under­taken. Con­sid­er­a­tion of pro­pos­als against the cri­ter­ia also allows for impacts on stra­tegic risk man­age­ment to be assessed.

Cor­por­ate Plan: Vis­ion, Mis­sion and Values

1. Our Cor­por­ate Plan rep­res­ents an appro­pri­ate start point for con­sid­er­a­tion of cri­ter­ia for com­mer­cial spon­sor­ships. As stated in the Plan, our vis­ion, mis­sion and val­ues are import­ant state­ments of what the organ­isa­tion wants to achieve and how we go about achiev­ing it. It will be cru­cial that a com­mer­cial spon­sor or part­ner is fully aligned with these vis­ions and val­ues to avoid con­flict and poten­tial repu­ta­tion­al dam­age. In devel­op­ing a set of cri­ter­ia for enga­ging with the com­mer­cial sec­tor, the fol­low­ing aspects of our vis­ion, mis­sion and val­ues would appear to be the most import­ant elements.

Our Vis­ion

1. “An out­stand­ing Nation­al Park, enjoyed and val­ued by every­one, where nature and people thrive together.”

2. Work­ing with­in this vis­ion, cri­ter­ia for com­mer­cial spon­sor­ship sug­ges­ted are that the pro­posed terms of part­ner­ship must:

• Cri­ter­ia 1: Rep­res­ent a real increase in value of the Cairngorms to the people of Scotland.
• Cri­ter­ia 2: Offer a means through which the Author­ity and its com­mer­cial part­ner can cre­ate a sig­ni­fic­ant improve­ment in the capa­city for nature and people to thrive together.

Our Mis­sion

1. The key ele­ment of our mis­sion in this con­text would appear to be to bring ​“people togeth­er toward a com­mon pur­pose”. Devel­op­ing a stra­tegic part­ner­ship with a com­mer­cial entity offers the Author­ity, as a lead­er in envir­on­ment­al man­age­ment and sus­tain­able com­munity and rur­al eco­nom­ic devel­op­ment, to bring a new organ­isa­tion into the fold in work­ing toward the object­ives of the Author­ity which has not pre­vi­ously been act­ive in this area. The pro­posed terms of the part­ner­ship could seek to ensure that:

• Cri­ter­ia 3: The pro­posed part­ner can demon­strate a real, integ­ral step change in its organ­isa­tion­al mis­sion as an entity which, while con­tinu­ing with its com­mer­cial oper­a­tions, is com­mit­ted to do so sustainably.
• Cri­ter­ia 4: The pro­posed part­ner can demon­strate a stra­tegic object­ive of work­ing to estab­lish­ing real and sus­tain­able value from its oper­a­tions for Scotland’s rur­al envir­on­ment and the sus­tain­able devel­op­ment of its eco­nomy and communities.
• Cri­ter­ia 5: On the basis of these pre­vi­ous two cri­ter­ia, the pro­posed part­ner can demon­strate a real and mean­ing­ful align­ment between its organ­isa­tion­al mis­sion and that of the Cairngorms NPA.

Our Val­ues

1. An align­ment through com­mer­cial spon­sor­ship or oth­er sig­ni­fic­ant income stream with a com­mer­cial part­ner can have a sig­ni­fic­ant impact on the per­ceived val­ues of an organ­isa­tion. The Author­ity is ​“an open, inclus­ive, innov­at­ive and pro­fes­sion­al organ­isa­tion that behaves with integ­rity”. The Author­ity will also oper­ate ​“in an envir­on­ment­ally friendly way that provides lead­er­ship in this area”. In devel­op­ing a com­mer­cial rela­tion­ship with a part­ner, the fol­low­ing poten­tial cri­ter­ia may be adop­ted to ensure align­ment with the Authority’s values:

• Cri­ter­ia 6: The pro­posed part­ner can demon­strate a set of estab­lished organ­isa­tion­al val­ues that already align with the Authority’s val­ues, or can demon­strate a com­mit­ment at the highest level of exec­ut­ive and non-exec­ut­ive man­age­ment that the part­ner­ship estab­lished with the Author­ity is a key means of imple­ment­ing aligned val­ues with­in the part­ner organisation.
• Cri­ter­ia 7: The pro­posed part­ner demon­strably has, or is using the part­ner­ship as a key means of imple­ment­ing, core val­ues which place envir­on­ment­al sus­tain­ab­il­ity and act­ing on the cli­mate emer­gency at the heart of its stra­tegic plans and objectives.
• Cri­ter­ia 8: The pro­posed part­ner has, or seeks to imple­ment through the part­ner­ship, oper­a­tion­al meth­ods that seek to act on the cli­mate emergency.
• Cri­ter­ia 9: The pro­posed part­ner­ship will demon­strably con­trib­ute toward a tar­get of net zero emis­sions in Scot­land by 2045.

Risk Man­age­ment

1. The Com­mit­tee has iden­ti­fied in its ini­tial dis­cus­sions that com­mer­cial part­ner­ships inher­ently rep­res­ent stra­tegic risk around the Authority’s repu­ta­tion­al man­age­ment. At the same time, such part­ner­ships and the access to fund­ing help address and mit­ig­ate a long-stand­ing stra­tegic risk around fund­ing depend­ency of the invest­ments made in the Cairngorms NP on gov­ern­ment grants and poten­tial decline in EU grants. As such, while there is con­tin­ued mer­it in pur­su­ing the grant depend­ency mit­ig­a­tion action of seek­ing diver­si­fic­a­tion in income streams, as may be achieved through com­mer­cial spon­sor­ships, there will be a new stra­tegic risk man­age­ment issue cre­ated around the man­age­ment of the Authority’s repu­ta­tion­al impacts from these part­ner­ships. It is there­fore appro­pri­ate to con­sider a fur­ther part­ner­ship apprais­al cri­ter­ia on this point, whereby the Author­ity might eval­u­ate wheth­er there is:

• Cri­ter­ia 10: In the opin­ion of the Author­ity, such a strong pre-exist­ing neg­at­ive pub­lic per­cep­tion of a pro­posed part­ner that an agree­ment could not be presen­ted as a pos­it­ive for­ward step irre­spect­ive of the mer­its of the part­ner­ship terms and objectives.
• Cri­ter­ia 11: In the opin­ion of the Author­ity, a clash or con­flict of interest with exist­ing policy object­ives or part­ner­ship arrange­ments exist which would pre­clude the part­ner­ship arrange­ments from mov­ing for­ward. This con­sid­er­a­tion includes the Authority’s rela­tion­ship with Scot­tish Gov­ern­ment and also rela­tion­ships with and through Nation­al Park Part­ner­ships (NPP).
• Cri­ter­ia 12: An expli­cit com­mit­ment by the pro­posed part­ner to com­mu­nic­ate and engage with the Author­ity on a reg­u­lar basis at a seni­or level, with a view to man­aging indi­vidu­al and shared com­mu­nic­a­tions around the pro­ject and the part­ners’ oper­a­tions more widely in order to ensure that the part­ner­ship adds repu­ta­tion­al value to all par­ti­cipants on a con­sist­ent and ongo­ing basis.

1. An aspect of repu­ta­tion­al man­age­ment will relate to the free­dom, and per­ceived free­dom, of the Author­ity to invest its resources accord­ing to the Authority’s own pri­or­it­ies. In assess­ing pro­pos­als, the Author­ity will wish to ensure that:

• Cri­ter­ia 13: Any pro­posed restric­tions in uses of fund­ing offered through the part­ner­ship are min­im­al and acceptable.

Next Steps

1. These sug­ges­ted cri­ter­ia are presen­ted for ini­tial dis­cus­sion by the Com­mit­tee. It is not pos­sible in devel­op­ing a set of cri­ter­ia to eval­u­ate part­ner­ship pro­pos­als to remove sub­jectiv­ity in assess­ment. How­ever, the estab­lish­ment of a set of cri­ter­ia does allow a con­sist­ent and trans­par­ent pre­lim­in­ary assess­ment of any part­ner­ship pro­pos­als to be under­taken. The Com­mit­tee is invited to con­sider wheth­er the pro­pos­als now put for­ward are tak­ing a reas­on­able dir­ec­tion to sup­port the eval­u­ation of any com­mer­cial part­ner­ship pro­pos­als which may come for­ward. Any addi­tion, amend­ment or refine­ment to the pro­posed set of cri­ter­ia by mem­bers would be welcomed.

2. Fol­low­ing con­sid­er­a­tion by the Audit and Risk Com­mit­tee, the pro­posed part­ner­ship eval­u­ation cri­ter­ia will be con­sidered fur­ther by Man­age­ment Team in light of mem­bers’ com­ments and sug­ges­tions. There­after, the pro­pos­als will be taken through appro­pri­ate gov­ernance struc­tures for adoption.

Dav­id Cameron 21 Novem­ber 2019 davidcameron@​cairngorms.​co.​uk