Daily Bulletin


The Conversation

  • Written by Thomas Maak, Director, Centre for Workplace Leadership, University of Melbourne

After months of debate, the Australian Securities Exchange last week dumped a proposal to include reference to a “social licence to operate” in its updated Corporate Governance Guidelines.

It was wrong to do so.

The new guidelines, released on Wednesday, replace “social licence to operate” with terms such as “reputation” and “standing in the community”.

The chair of ASX Corporate Governance Council chair Elizabeth Johnstone says they are “more likely to be better understood”.

But in practice they don’t mean the same thing.

The ASX abandons push to require companies to have a social licence to operate. Was it only ever 'politically correct nonsense'? Markup of revisions to consultation version of Fourth Edition of ASX Corporate Governance Principles. ASX

According to the Australian Financial Review the Council came to the view that the phrase was “contentious” and that it would “create problems for companies in the gaming, alcohol, tobacco, fast food and mining sectors” – the very sectors where corporate responsibility is at constant risk, and governance is most needed.

David Murray, chair of troubled investment firm AMP, had labelled the phrase “politically correct nonsense” – which raises the question as to whether the phrase is indeed left-wing nonsense and why the Council felt the need to dumb it down.

The AMP chair’s comment suggests the financial sector has still a long way to go in understanding that businesses are not only responsible to their owners but also to a wide array of stakeholders who have legitimate claims; among them governments, communities, customers, and citizens. As a consequence, as the AMP ought to well know, businesses operate in an environment of contested values.

Read more: Why AMP and IOOF went rogue

“Politically correct” or not, the phrase is an accurate metaphor for the reality that companies that disregard the values of the societies in which they operate run the risk of boycotts and legal and legislative action that will put them out of business.

It raises the question why the Council felt the need to shy away from such an accurate depiction of what is necessarily a key governance objective: maintenance of the social licence to operate.

There are probably two reasons:

  • guidelines such as the ASX Corporate Governance Principles are outcomes of extensive debate and consultation and so tend to reflect the values of the lowest common denominator

  • commercial interests have long dominated ethical considerations in many industries, especially those in which the Council fears the phrase may “create problems” – the gaming, alcohol, tobacco, fast food and mining industries.

As it happens, the mining industry has long been aware of the need to maintain such a licence and made significant progress in embracing social responsibility in the fields of human rights and indigenous inclusion strategy.

It is hard to see how the concept of a social licence would create problems for it.

Read more: Not getting a social licence to operate can be a costly mistake, as coal seam gas firms have found

Other industries have long avoided such a debate and have instead engaged in reputation management through campaigns around responsible gambling, responsible drinking and healthy eating – all of which are paradoxical attempts to soften the edges of a problematic core of their operations rather than to align them with what society wants.

Continuing to do so, by pretending there is no such thing as a social licence, is not in their long term interests.

By surrendering, the Australian Securities Exchange has served neither them nor the cause of corporate governance well.

Authors: Thomas Maak, Director, Centre for Workplace Leadership, University of Melbourne

Read more http://theconversation.com/the-asx-abandons-push-to-require-companies-to-have-a-social-licence-to-operate-was-it-only-ever-politically-correct-nonsense-112840

Writers Wanted

Physical Therapist Talks About This New Massage Gun On The Block - The HYDRAGUN

arrow_forward

Too much information: the COVID work revolution has increased digital overload

arrow_forward

Ammonite: the remarkable real science of Mary Anning and her fossils

arrow_forward

The Conversation
INTERWEBS DIGITAL AGENCY

Politics

Prime Minister's Remarks to Joint Party Room

PRIME MINISTER: Well, it is great to be back in the party room, the joint party room. It’s great to have everybody back here. It’s great to officially welcome Garth who joins us. Welcome, Garth...

Scott Morrison - avatar Scott Morrison

Prime Minister Interview with Ben Fordham, 2GB

BEN FORDHAM: Scott Morrison, good morning to you.    PRIME MINISTER: Good morning, Ben. How are you?    FORDHAM: Good. How many days have you got to go?   PRIME MINISTER: I've got another we...

Scott Morrison - avatar Scott Morrison

Prime Minister Interview with Kieran Gilbert, Sky News

KIERAN GILBERT: Kieran Gilbert here with you and the Prime Minister joins me. Prime Minister, thanks so much for your time.  PRIME MINISTER: G'day Kieran.  GILBERT: An assumption a vaccine is ...

Daily Bulletin - avatar Daily Bulletin

Business News

Getting Ready to Code? These Popular and Easy Programming Languages Can Get You Started

According to HOLP (History Encyclopedia of Programing Languages), there are more than 8,000 programming languages, some dating as far back as the 18th century. Although there might be as many pr...

News Co - avatar News Co

Avoid These Mistakes When Changing up Your Executive Career

Switching up industries is a valid move at any stage in your career, even if you’re an executive. Doing so at this stage can be a lot more intimidating, however, and it can be quite difficult know...

News Co - avatar News Co

4 Costly Mistake To Avoid When Subdividing Your Property

As a property developer or landowner, the first step in developing your land is subdividing it. You subdivide the property into several lots that you either rent, sell or award to shareholders. ...

News Co - avatar News Co



News Co Media Group

Content & Technology Connecting Global Audiences

More Information - Less Opinion