In the ongoing stakeholder management debate, the focus is shifting to the role of boards in developing a positive corporate culture and managing issues such as sexual harassment in the workplace.
Boards have had a huge focus on employee wellbeing during the pandemic, but Mark Morey, secretary of Unions NSW, told the panel the increase in working from home has raised new issues including domestic violence, the mental health costs of working alone and cost shifting of electricity, cleaning and materials to the employee.
“There are a lot of challenges in ensuring we have a business culture that’s effective for a workforce not all in the same place at the same time,” he said. “It’s not only a WHS issue, but also a cultural and an innovation issue about what the workplace of the future looks like and how employees can be best equipped to be most effective.” Morey added that underpayment of staff is also an important issue. “Boards are starting to think about this. The social part of ESG needs to play a stronger role.” He noted including workers on boards would be a positive way to maximise diversity.
Boards need to protect their reputations by fully understanding their customers, said Alan Kirkland MAICD, CEO of consumer advocacy group Choice, who outlined how directors can ensure they are protecting their customers’ interests. Consumer expectations of companies are simple — don’t lie or mislead consumers about your products; don’t charge for products they haven’t received; don’t sell products manifestly unsuitable for their needs.
“[Directors] need to understand how your products actually work, how they make money, who they’re making money from and what the needs of those customers are. What are the sales channels and incentives involved?”
As debate increases over the role of boards in developing a positive culture and managing key issues such as sexual harassment in the workplace, Nicola Roxon GAICD, chair of HESTA super fund and VicHealth, told the panel HESTA didn’t buy into the “shareholders vs stakeholders” narrative because good stakeholder management delivers good shareholder returns. “If companies are well managed, they’re going to be successful, which means the nearly one million members HESTA invests on behalf of will get returns over time.”
In the wake of allegations in parliament and business of sexual assault and harassment, Roxon said that women being heard and respected, included in decision-making, and feeling safe in the workplace should all be key issues. “The depressing thing for women my age is it feels like it’s been the topic of the moment for all my working life — and I’m a little bit despairing it hasn’t advanced as much as I thought it was going to 30 years ago,” she said.
She outlined how HESTA engaged with Indigenous stakeholders in the wake of the Juukan Gorge incident, when mining giant Rio Tinto blew up culturally significant 46,000-year-old rock shelters in the Pilbara, Western Australia. She said the disconnect between Rio’s reputation as a leader known for its engagement with Indigenous communities and its actions, came as a shock. “What HESTA sees as value for members is that we have an industry that engages properly with Indigenous communities. A continued mismatch between community expectations and the actions of mining companies will cause a continued downward spiral in value for the miners, Roxon said.
Noting that HESTA manages $300m of Rio Tinto shares and about $2.5b in the broader mining sector, Roxon said the super fund wants a stable, successful, well-engaged mining sector that is respected in the community, which will deliver long-term returns.
Pru Bennett GAICD, a partner at stakeholder advisory Brunswick Group, said that “to deliver a long-term sustainable return to shareholders, a long-term, sustainable approach needs to be taken”. She noted too many companies externalise costs, which aren’t recognised in their profit and loss accounts — so they can generate large profits in the short term by pushing these costs onto society.
“Doing the right thing is more than a PR exercise. It’s one thing to have policies, it’s another to be able to demonstrate to your stakeholders these policies are being implemented in an effective way.”
The Black Lives Matter and #MeToo movements have shone a light on societal issues that cannot be ignored. Boards reacting to these developments need to start at home, the BLM, #MeToo and more: how should boards respond to social change? panel discussion heard. The “whooshing” nature of social media-driven movements around can be confronting for organisations, but ignoring them is not a safe option.
“It’s going to continue — absolutely,” said Wendy Stops GAICD, a director of retailer Coles and NFP Fitted for Work. “We’ve seen with BLM and the #MeToo movement, it becomes very pervasive very quickly, but for an organisation to ignore all these things is just crazy.”
Asked why directors should have to take on the additional load, Ian Hamm MAICD FIPAA, a Yorta Yorta man and chair of the First Nations Foundation, said, “I don’t see it as a load, rather [it’s] an opportunity to do more than you started out intending to do. If you’re on a board, you’re at the top of the organisation. You have to consider: what is our organisation contributing to the wider society in which we live?”
The BLM movement grew out of the US, but Hamm said it had reawakened the discussion of the position of Indigenous Australians. “It went back to that argument: where do Aboriginal people sit in Australia? Particularly after Rio Tinto [destruction of Juukan Gorge], despite the reconciliation action plans and all the good intentions. As boards, we’re doing this stuff, but what are we trying to do? Do we think about Aboriginal people the right way? Do we see them in the right way?
“People with a different perspective and life experience, bring that to a board and you will have a much better conversation. I was born in 1964, but wasn’t an Australian citizen until I was three. I’ve seen vast change in my life, and I can bring that to a board. If everyone’s the same, you don’t have oversight, you have a single line of sight.”
By Narelle Hooper MAICD
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