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Big end of town should mind its own business


Big corporates and sporting codes should serve shareholders and stakeholders and let the public make up their own mind on social issues, argues Morry Bailes.

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As debate rages about the efficacy and wisdom of having a Voice solely for Aboriginal and Torres Strait Islander people direct to our federal parliament and executive, it is worth examining another phenomenon that has accompanied much of our recent public discussion in Australia, and that is the role assumed by publicly listed companies and membership organisations in the political domain.

The advent of CEO’s expressing opinions on behalf of companies and entities is hardly new, but it has built to a crescendo as the public dialogue about the Voice hots up. There was a day when the idea of a corporation, comprising the interests of a wide variety of shareholders and thus opinions, offering a singular view on an issue outside of its core business was regarded as totally out of bounds.

What right did a company whose purpose was to generate income and value from capital,possibly have remarking on social issues, if those issues did not concern the business of the company? But then, those were the days when journalists reported facts, and didn’t express personal opinion; when the public was more concerned about making a crust and what was happening economically than what the latest social hot potato was.

Now, it is de rigueur for large Australian corporations and representative sporting bodies to pipe up with opinion and seeming advice to hordes of the great unwashed, who apparently need a steer from your friendly C-suite to comprehend, say, the legal nuances of an amendment to The Marriage Act, as we saw during the same sex marriage debate, or in this case an amendment to the Australian Constitution to allow the proposed Voice.

Is it lawful for the CEO of the corporation I own shares in to spout off with an opinion that I diametrically disagree with? Is that allowed? Unless it is false and misleading in the context of the law, yes it is. Is it seemly? Well, that is another question. But here’s the kicker. Recent surveys of public opinion in the U.S. at least, support the idea that a majority of people actually expect CEOs to speak up about social issues.

Business schools actually teach you how to safely do it. Harvard Business School, for example, lays out a three limb test as to whether your company should speak out on a social issue. First, does the issue ‘align with your strategy?’ Second, ‘can you meaningfully influence the issue?’ Lastly, ‘will your constituencies agree’ if you speak out?

Nothing is seemingly off limits. From the Black Lives Matter movement, to climate change, same sex marriage, family and domestic violence and so on. What sets most of these issues apart however, is that there is majority support. It’s pretty safe to argue in favour of a plebiscite to legislate for same sex marriage when 60% of population voted yes. Family and domestic violence is a no brainer.

But what about the Voice? It is difficult to recall a time when more corporate bodies lined up on one issue than has occurred with the Voice. From the AFL and other sporting codes, to big miners Rio Tinto, Newcrest, and BHP, retailers Woolworths, Coles and Wesfarmers, and big banks NAB, Commonwealth and ANZ. The chairman of Wesfarmers Michael Chaney has gone one step further, by suggesting that ‘we have international shareholders who are looking with great interest at this referendum and frankly I think would throw their hands up if it were lost and wonder about Australia as a fair place’.

Mr Chaney would seem to be out on a bit on a limb on this however. Other business groups immediately questioned the likelihood of Mr Chaney’s grim forecast, with the Australian Chamber of Commerce and Industry saying it was ‘over reach’ and more interestingly, indicating through its CEO Andrew McKellar, that the issue of the Voice was not a business issue, and that the largest commerce and industry association in Australia would not be weighing in on either the yes or no side.

For many who would prefer to make their own mind up about this and other social issues, rather than be lectured to by the C-suite and sporting code bosses (as if their grasp of the Australian Constitution is somehow greater than ours), the position of the ACCI comes as something of a relief. As is no doubt the current somewhat voluble discourse at the Victorian Bar Association. Vic Bar was about to jump out in favour of the Voice, as had their NSW colleagues, when a charge was led by members of the Bar who weren’t necessarily against the Voice,but who considered that their association should stick to its traditional objects, which did not include commenting on what is perceived by many as a political issue. The latest is that the question is going to a vote of membership, which seems a pretty fair way of doing it.

That approach is not offered however to shareholders of companies before their CEO jumps onto the national political stage, nor by members of sporting organisations whose CEO’s, not content with sporting fixtures and running a game, start pontificating on the most significant proposed change to the Australian Constitution since Federation. There was no wider voting process offered to legitimise the position on the Voice taken by, for instance, the AFL.

What is fascinating about the present state of public dialogue about the Voice from some quarters of corporate Australia is the question of whether it would pass the Harvard Business School’s test about when a company should speak about a social issue. There is not a shred of doubt that Australians would vote for Constitutional recognition of Aboriginal and Torres Strait Islander people today. The vast majority know it’s the only fair thing to do, much like the 1967 referendum providing  Aboriginal and Torres Strait Islanders people the right to vote. It was won resoundingly. Not so however the concept of the Voice.

The more impassioned and uncompromising the Prime Minister becomes, and the more corporations pile on to tell us all their  boards’ and CEOs’ opinions about what we all need to do to hold our nation together, and not raise the ire of everyone else in the world (allegedly), the more the polls tell us Australians are inclined to vote no.

So as to the first ‘Harvard’ test, alignment of strategy, I’m unsure why this constitutional amendment would align with any company strategy unless of course it was relying on contracts with the Australian government to make its money. Test two, meaningfully influencing the issue, seems to be a fail, because the more they talk the less support is engendered, and as to the third, do the constituencies agree, that is also a fail if current polls are to be believed. The yes vote as at today does not have majority support.

For those people who occupy representative positions, if the issue is not one of the business of a company, you might think it wise for board members and CEOs to ask what the people actually think. Of course, there is a great deal of water to pass under the bridge until referendum day, but given that, traditionally, yes vote support reduces the closer you get to the vote, there would have to be a lot of nervous yes campaigners out there today.

The 2017 same sex marriage vote should provide no assurance to those in support of the Voice, because it was a plebiscite which neither requires a majority of States and a majority of voters for success, as does a referendum, nor requires Australians to vote at all. It is a non-compulsory, simple majority vote, and is never about Constitutional reform.

Additionally, just eight out of 44 referendums have gotten up since Federation, only one of which was sponsored by the ALP. The last successful referendum in Australia was in 1977 and was not particularly controversial. Whilst this column is about law not gambling, if you are so inclined to visit the book makers, the smart money would be on this referendum adding to the long list of failed referendums of the past 122 years, in spite of all the corporate braying from the big end of town.

Given that these people speak on behalf of shareholders, there is an interesting question of law reform about whether when they adopt a minority supported position without a vote of shareholders, they should be allowed to commit a corporation to a particular social path. I favour freedom of expression over the alternative, however it may become a question for shareholders at AGM’s to enquire on precisely what authority their board, chair and CEO, has taken a particular social stance. Could this be a moment in corporate accountability to shareholders who are interested in returns rather than social platforms?

Meantime, if such people are to learn for next time, it would be to recognise that Australians especially loathe being told what to do, particularly when the statements in support of a position might, in the politest way possible, be described as ‘over reach’. If you’re going to say something, make it real, because the second Australian national trait is that we have pretty good bullsh*t meters.

The upside is that the Voice can be legislated tomorrow, as has been done in South Australia, even if the vote fails. We do not need a Constitutional amendment to have an Aboriginal and Torres Strait Islander Voice to Parliament, albeit that if legislated it would not be in the Australian Constitution, but in an Act of Parliament. It is, on the other hand, a sure fire away to see it work with an ability to later include it in the Constitution if a majority like it. But in the high stakes game that is the current Voice referendum, no compromise of any type is presently on the table.

Come October I do wish you happy (compulsory) voting, and I’m quite sure you’ll make your own mind up, irrespective of how many corporate bosses will, in the interim, tell you what’s best for you and our great country. I think the most of us can agree, that the final ingredient in our national character is a general wariness of self righteous, opinionated and  overbearing corporate leaders, given that in the main they seem to end up being more wrong than right.

Morry Bailes is Senior Lawyer and Business Advisor to Tindall Gask Bentley Lawyers, past president of the Law Council of Australia and a past president of the Law Society of South Australia.

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