1 Trust Ports and their stakeholders
1.1 What is a trust port?
1.1.1 Trust ports are independent statutory bodies, governed by their own local legislation and, run by independent boards who manage the assets of the trust for the benefit of stakeholders.
1.1.2 There are some parallels to private trusts, where a fund, or property, is owned and managed by one party for the benefit of another. In that context the stakeholders of the trust, in whose interests the trustees work, are usually clearly and definitively identified.
1.1.3 All ports are obliged to act in accordance with their local legislation and other relevant law, whether they are trusts, private or local authority owned. In the case of trust ports they are generally creatures of statute and operate only within the powers and duties conferred on them by statute.
1.1.4 Trust ports operate in a commercial environment with no direct public funding and compete in the market with private and local authority ports as well as other trust ports. There are no shareholders or owners and profits are reinvested in the port. They make significant contributions to both local, and in many cases, the national economy.
1.2 Who are the Stakeholders?
1.2.1 The stakeholders of a trust port are varied and numerous and some are often intricately bound up in the port's operation, perhaps as users or employees of the port. It is also recognised that the range of stakeholders will vary depending on the scale, nature and location of the individual port. In the trust port context the stakeholders do not have a direct financial investment in the port in the way that shareholders do in a private company. It is essential to view any benefits in the round and not purely as monetary gains.
1.2.2 Modernising Trust Ports - A Guide to Good Governance ("described a trust port as 'a valuable asset presently safeguarded by the existing board, whose duty it is to hand it on in the same or better condition to succeeding generations. This remains the ultimate responsibility of the board, and future generations remain the ultimate stakeholder'. Through the running and maintenance of this asset, though, others stand to benefit. Although not an exhaustive list, as stakeholders will vary from port to port, the following may all be considered stakeholders of a trust port:
- Port Users
- The local community
- Local and regional economies and authorities
- Port employees including Trade Unions
- Related interest groups
- The national economy and Central Government
- Local and regional businesses
1.2.3 As stakeholders in the port, the interests of these groups should at all times be the guide by which trust port boards direct the port. There are bound to be conflicts of interest from time to time between - and in some cases within - the various stakeholder groups. It is the duty of the boards, at all times, to strike a balance that respects the interests of all stakeholders, not just one group, in the light of the objectives of the port, including commercial considerations, and what constitutes the 'common good' for all stakeholders (current and future) and the port itself.
1.2.4 In order for trust ports to fulfil that obligation, they must have a firm idea of what constitutes the objectives of the port. It is the responsibility of the boards, having identified their stakeholders and considered their needs, to arrive at a clear description of these objectives. Ports are also aware that stakeholders can change over time especially as the business of the port moves into new areas and new stakeholders may need to be identified and established ones reviewed.
1.2.5 In some cases stakeholders will have more than one form of relationship with the port. Users of the port for example, can often be primarily customers with whom ports will have purely commercial relationships. They may also have other forms of relationship, and trust port boards should hold this in mind as they manage the port.
1.2.6 A responsibility lies too upon the stakeholders who should monitor the port's performance and hold the board to account in a responsible manner, for the ways in which they manage the assets in their care. Trust ports should always deal with stakeholders in an accountable manner although the board has ultimate responsibility for any decisions taken.
1.3 Benefit to Stakeholders
1.3.1 The larger trust ports can expect to generate a significant return which can be reinvested in the operation. In a private company that return would be distributed among shareholders in the form of a dividend. Trust ports, having no shareholders, must use any profits generated to support the long term viability of the port and thus for the benefit of the whole community of stakeholders.
1.3.2 A conventional trust often distributes income generated by the trust's assets among its beneficiaries. Scottish Ministers do not however consider that a trust is required to quantify all benefits purely in financial terms. The improvement and modernisation of it's assets, services and infrastructure for the benefit of its users cannot always be valued in this way.
1.3.3 There is instead a range of ways in which a trust port's surplus may be, and is, justifiably employed. These uses constitute a stakeholder benefit, and may include any of the following:
- investing in infrastructure with a longer-term view than might be expected of a private company port, which may need to generate a return over a shorter period;
- investing in infrastructure, or another good such as environmental protection, to a higher standard or greater extent than might maximise profits, but where this brings direct quantifiable benefits to stakeholders;
- undertaking activities that have a lower commercial return than might be acceptable to a private company port, but which have other benefits for stakeholders - eg for the local community;
- providing employee packages, including training, above the market rate, where this helps to build the local skills base;
- making charitable grants or donations of time; and
- making other financial investments, for example in local enterprises or community projects, with social as well as economic returns.
This list is neither prescriptive not ranked in priority order and may not be applicable to every port but is indicative of areas to be considered.
1.3.4 Trust port boards manage their operations and reinvest any surpluses in an efficient manner within a commercial environment. However their primary aim is not the production of profit for shareholders but the best use of the assets they manage in order to secure that asset for future use. It is for the boards to consider how best to achieve this and they may consider involving stakeholders to assist in determining the best course.
1.3.5 The aims of individual boards will vary and while maintenance and improvement of the port infrastructure will generally be a high priority boards must consider the future, changing market conditions and adapt their operations to meet future needs. It is appreciated that this is a particular issue for smaller ports who may need to consider more radical diversification, possibly into new areas such as leisure if, their main business is reducing as is the case in some traditionally fishing harbours.
1.3.6 Boards of many ports already quantify their stakeholder benefits within their annual reports and accounts and various strategy documents, but for the smaller ports it may be more difficult to quantify the wider benefits. It is important that stakeholders understand and appreciate the benefits accruing from the port and how they are achieved.
1.4 The Role of Stakeholders and Consultation
1.4.1 A trust port is held to account for its performance and actions by its stakeholders, including the wider community it serves. For the responsibility is double-edged, and a trust port's stakeholders must be prepared to interest themselves in the port's operation, and to challenge the board where they believe performance has fallen short. Transparency is crucial to fostering trust within the community of stakeholders.
1.4.2 Individual trust ports will be able to identify their stakeholders and to include them in formal consultation on significant decisions where appropriate.
1.4.3 It is not intended that trust port boards are faced with multiple irreconcilable demands from stakeholders, or that each and every decision must be consulted on in depth. Boards must be free ultimately to make commercial decisions on all issues facing the port, having weighed the various representations and advice received. The board is best placed to judge the overall impact of any recommendation. Stakeholders, while articulating their concerns and holding ports to account, must therefore also be considering the interests of the port as a whole.
1.4.4 Scottish Ministers, as a stakeholder, particularly in the nationally significant trust ports, will maintain an overview of performance and may challenge where necessary, as all stakeholders should be prepared to do. Ministers do not propose, however, to involve themselves in day to day decisions boards make, nor to question boards' judgment, having considered the views of stakeholders, about what is best for the port. It should be noted that the issue of whether any statutory undertaker is operating out with its powers is a matter for the courts and Ministers can only act as informal 'honest broker' in seeking to resolve any disputes.
1.4.5 Some trust ports may find it beneficial to establish formal stakeholder groups, which meet regularly and have representation from the various stakeholders. These could be created to consider specific issues or manage specific projects within their area of competence, and could report to and advise the board. Such groups will not be appropriate in all cases particularly in the smaller trusts where the costs, both financial and in resources, may well outweigh any benefits from this approach. Each trust must have regard to the specific provisions in its constitution.
1.4.6 Alongside consultation, the provision of information is an important pillar of accountability. Having made decisions, it is crucial that the board communicate them, and their results, to its stakeholders. Section 3 of this guidance discusses in more detail the requirements for publishing formal reports, accounts and strategy documents, but there are other ways in which trust ports can interact with their constituency.
1.4.7 One of the most important stakeholder groups for any trust port is the local community. Often the port is at the heart of that community. Trust ports should ensure that there is an effective, continuing dialogue with the local authorities in its immediate hinterland. This will do much to promote the improved partnership that is sought between the trust port sector and local government. It is noted that this is an area where there are already strong and improving links, with collaborative working in relation to offshore renewables opportunities being a particular example.
1.4.8 Larger trust port boards may consider the need for local liaison and focus groups to ensure that the local community is informed and on side. This could include a functioning and updated website, and might be supplemented by regular publication of newsletters, reports of board meetings, and holding public meetings to discuss port operations and plans. We acknowledge that many ports already undertake this activity and derive benefit from it.
1.4.9 As a minimum, all trust ports should hold a widely and effectively advertised open annual meeting (AM) and, where practicable and appropriate, other meetings as required to discuss significant matters of interest to their stakeholders. The Chairperson should arrange for all board members to attend the AM, and also ensure that notice of the AM, together with the relevant documentation, is sent out to stakeholders at least 20 working days before the meeting.
1.4.10 Trust ports and their executives should actively seek to engage with the local community through liaison with local groups, schools etc at a level appropriate to their size. They should actively participate in local and regional debate on plans (local and regional Government, development agencies etc). Above all, the port and its executive should be seen to be accessible to the community at large.