Features Australia

Selling virtue

9 February 2019

9:00 AM

9 February 2019

9:00 AM

Mining giants BHP and Rio Tinto have become the first major companies to publicly support the Uluru Statement from the Heart, and endorse enshrining an indigenous ‘voice to parliament’ in the constitution. So if you thought corporate virtue-signalling by companies such as Qantas couldn’t get any worse than we witnessed during the same-sex marriage plebiscite, then you’d better think again.

How big business backed the ‘Yes’ campaign exposed just the tip of the corporate political meddling that increasing numbers of business leaders believe is justified in the name of so-called ‘Corporate Social Responsibility’ (CSR). The proponents of CSR inside Australian business are all too successfully subverting companies from their traditional roles and functions by indulging in naked political activism on issues that have little to do with the true business of business.

According to chief executive Andrew McKenzie, BHP could no longer simply ‘stand on the sidelines’ and instead the company will take an active part in addressing the ‘unfinished business with the indigenous peoples of Australia’ by donating $1 million of shareholders’ money to support the Recognition campaign.

In a similar vein, a group of leading company directors — including Simon McKeon, Diane Smith-Gander, Jane Hemstrich and Cameron Clyne — also recently announced the formation of a new network to encourage business to take the lead on what the Australian Financial Review tellingly called ‘this year’s same-sex marriage debate’ and support the push for a republic.

The corporate politicking over Recognition and the republic shows the extent to which business has embraced the CSR mantra that says making profits is no longer enough, and companies must instead earn their ‘social licence’ to operate by speaking out about social issues. The apparent readiness of leading corporate figures to encourage companies to not merely blur, but brazenly cross, the line between politics and business, reflects the radical ideas being promoted by the burgeoning ‘social responsibility’ industry.

The army of managers and consultants employed in HR, people and culture and corporate affairs divisions, and in the major professional services firms, are actively — and clearly effectively — pushing for companies to participate in driving ‘systemic change’ around social, environmental, and economic issues.

The standard justification for CSR is that companies need to consider the interests of wider groups of stakeholders, not just shareholders, in order to protect their name and good standing in the community. But in a free and democratic society, it is absurd to argue that company reputations are enhanced by stepping into controversial political debates. Pushing progressive causes that do not appeal to those with conservative views means that activities conceived of as socially responsible simply end up politicising company brand and reputations. Moreover, shareholders — the true owners of the company — also hold diverse political views, and that means some are sure to be unimpressed with company directors and senior managers using shareholders’ money to play politics.

Given the polarisation between elites and ordinary citizens that is evident in all Western democracies in the age of Trump and Brexit, you would have to have a political tin ear not to realise that corporate politicking will alienate many in the community and mean companies acquire pejorative reputations for ‘being political’. Yet the polarisation may help explain why support for CSR has grown in business circles: corporate elites who work, live and socialise within a bubble of groupthink fellow elites often don’t appreciate that outsiders have different attitudes and opinions.

Because the community grants public companies a host of special legal rights and privileges, they should respect the pluralism — the different views and values — of the whole community. This is impossible if, in the name of CSR, companies are associated with divisive political positions.

But alas, corporate elites can personally benefit — at shareholders’ expense — from CSR initiatives that associate their individual corporate profiles with ‘worthy’ issues.

The politicisation of business is also being encouraged at the highest levels. The draft governance standards proposed last year by the Australian Stock Exchange state that companies must earn their licence to operate by acting ‘socially responsibly’ with regards to inherently politically contentious issues including human rights, climate change, taxation and wages. The well-established CSR doctrines and structures across business make it very difficult for corporate leaders who might wish to prevent political meddling — on top of which is the reality that those who push back against ‘progressive’ agendas can face career-limiting professional repercussions.

Stemming the escalation of corporate involvement in politics might therefore require establishing an alternative institutional framework to counter the ‘industry’ approach and help to restrain and limit a company’s CSR activities. This might entail introducing into the language and practice of business a new ‘Community Pluralism Principle’ — the terms of which would explicitly remind corporate decision-makers of the importance of ensuring CSR activities do not distract from the company’s core business purposes and negatively affect and politicise its brand.

This principle could be inserted into ASX’s corporate governance standards, or could be directly included in company constitutions — actions which are most likely to occur at the initiative of shareholders fed up with the diversion of company resources into political activism.

This would send an unequivocal signal to corporate elites that public companies should not cross the Rubicon between business and politics.

Got something to add? Join the discussion and comment below.

You might disagree with half of it, but you’ll enjoy reading all of it. Try your first 10 weeks for just $10

Show comments