Our regulators are set up to fail by design
Our society is built on trust. Most of the time, we trust institutions and the government to do what they say they will. But when they break that trust – by not keeping their promises or acting unfairly – that’s when things start to fall apart. The system stops working for the people it’s supposed to serve.
As a result, we trust regulators to protect the things that matter in our society most. Whether it’s holding institutions to account, or ensuring our food, water and transport are safe, a regulator’s role is to ensure society’s safety net.
But when something goes wrong, the finger usually points straight at the regulator. And while it’s tempting to blame regulators about why things have failed, new policy research from former Chairman of ASIC, James Shipton, suggests we’re asking the wrong question.
The real issue isn’t just who’s doing the job, it’s how the whole system is built.
Shipton is working towards optimising regulation by improving regulatory design, strategy and governance. As a Fellow of The Ethics Centre, he has engaged with industry to develop a better understanding of regulators and the regulated. This work aims to crystalise the purpose of regulation and create a pathway where that purpose is most likely to be achieved.
Shipton’s paper, The Regulatory State: Faults, Flaws and False Assumptions, takes the entire regulatory system in Australia into account. His core message is simple but urgent: our regulators are set up to fail by design.
Right now, most regulators operate in a system that lacks clear direction, support, and accountability. Many don’t have a clearly defined purpose in law. That means the people enforcing the rules aren’t always sure what they’re meant to achieve.
This confusion creates a dangerous “expectations gap” where the public thinks regulators are responsible for outcomes they were never actually empowered to deliver. When regulators fall short, they wear the blame, even when the system itself is broken.
Shipton identifies twelve major flaws in our regulatory system and while they might sound technical, they have real-world consequences. He starts with the concept that our regulators are monopolies by design. Each regulator is the only body responsible for its area – there’s no competition, no pressure to innovate, and very little incentive to improve. In the private sector, companies that fail lose customers and reputations, and customers are free to go elsewhere. In regulation, there’s no alternative.
The heart of Shipton’s argument is this: credibility is key. It’s not enough for a regulator to have legal authority, they need public trust. And that trust only comes when the system they work within is built for clarity, accountability, and ethical responsibility.
For example, in aviation, everyone from pilots to engineers shares a common goal: safety. The whole sector becomes a partner in regulation. But in most industries, that kind of alignment doesn’t exist, often because the system hasn’t been designed to make it happen.
Shipton stresses that design matters. Regulators need clear goals, realistic expectations, regular performance reviews, and laws that actually match the industries they oversee. We don’t need another inquiry into regulatory failure. We need to ask why failure keeps happening in the first place. And the answer, Shipton says, is clear: the entire regulatory architecture in Australia needs redesigning from the ground up.
This doesn’t mean tearing everything down. It means recognising that public trust is earned through structure. It means giving regulators the tools, support, and clarity they need to do their job well and making sure they’re accountable for how they use that power.
If we want fairness, safety, and integrity in the things that matter most, we need a regulatory system we can trust. And as Shipton makes clear, trust starts with design.
James Shipton is a Senior Fellow, Melbourne Law School, The University of Melbourne, Fellow, The Ethics Centre, and Visiting Senior Practitioner, Commercial Law Centre, the University of Oxford.
BY Cris Parker
Cris Parker is the former Head of The Ethics Alliance and a Director of the Banking and Finance Oath at The Ethics Centre.
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We’re in this together: The ethics of cooperation in climate action and rural industry
“We’re in this together” is easy to say, but much harder to do – especially when people’s livelihoods, land, and the planet’s future are at stake.
Australia is committed to reducing emissions and shifting to renewable energy. However, for many rural and regional communities – particularly those tied to coal, gas, or agriculture, they sit at the crossroads of opportunity and uncertainty. These areas are rich in culture, industry, and community and are also heavily shaped by commercial imperatives – the need for jobs, services, and sustainable growth.
Unfortunately, climate action can feel more like an impending threat than a shared opportunity. These communities often experience change as something done to them, rather than with them.
Bridging this gap demands more than just policy and technology. Climate change is one of the biggest challenges of our time, but tackling it isn’t just about switching to solar panels or building wind farms either. It’s about ethical cooperation – a commitment to fairness, transparency, and shared responsibility in how we plan and implement climate solutions. If not done ethically, commercial development can disrupt local culture, raise living costs, and put pressure on fragile ecosystems.
At its heart, cooperation is about shared goals. But in climate policy, those goals don’t always look the same to everyone. For city campaigners, a ‘just transition’ means phasing out coal and gas. For a local worker in Gladstone or the Hunter Valley, it might sound like job losses without a safety-net.
Different philosophical perspectives can help us to understand how we can apply ethical cooperation as we pursue our shared goals. Whether it’s about consequences, duties and obligations, or people’s rights, all are underpinned with the values and principles of transparency, fairness, and mutual respect and dignity.
‘Just transition’ sounds good, but what does it mean in practice? As researchers Marshall and Pearce put it: “Many people in regional communities have no concrete understanding as to what a ‘just transition’ refers to and do not find it to be authentically their syntax”.
The proposed Hunter Transmission Project in NSW, for example, has been met with strong resistance from landowners. While the project is intended to support clean energy infrastructure, many locals say the process lacked transparency and ignored community concerns about land use, agriculture, and environmental impacts.
British philosopher Onora O’Neill focuses on trust and consent in cooperative systems. She argues that ethical cooperation requires conditions where all parties have genuine capacity to consent, particularly in asymmetrical relationships (e.g. government vs local communities). These principles have been embedded in The Clean Energy Council’s national guide which advises that developers must prioritise “clear, accessible and accurate information” and ensure projects are co-designed with communities to reflect cultural, economic and environmental priorities.
When AGL closed Liddell Power Station in 2023, the company committed to a transition plan. But many workers reported uncertainty and a lack of clarity about what would come next. For a transition to be truly ‘just’, it needs to include more than retraining promises. It needs local job pipelines, early engagement, and co-designed solutions.
Israeli philosopher Yotam Lurie says that once people engage in joint activity, they take on moral obligations to each other. In the case of climate action, that means governments, industries and communities must not only work together, but they must also do so with care, trust, and respect.
Rural resistance often stems from real economic vulnerabilities and perceived exclusion from decision-making, not from climate denial.
Encouragingly there are areas where we are seeing ethical cooperation working well.
In Gippsland, Victoria, the Gunaikurnai people are working with renewable energy developers to co-design solar projects. These partnerships embed cultural knowledge, ensure local employment, and protect Country showing that ethical cooperation isn’t just a principle. It’s a practical strategy for success.
The First Nations Clean Energy Network has also shown how co-owned and co-designed projects can reduce costs, build trust, and deliver long-term economic and environmental benefits.
Climate change is often framed as a technical problem. But it’s also a human one. If we want a sustainable future, we must build it together with ethics, empathy, and equity at the centre.
As Australian philosopher, Peter Singer suggests, we are morally obligated to reduce the suffering of others which would support a coordinated action where affluent corporations aid vulnerable groups, such as rural or Indigenous communities affected by the energy transition.
Governments and companies have a responsibility to fund and support this process. That includes advisory boards, transparent impact assessments, and long-term partnerships built on trust.
If we want rural and regional communities to lead rather than lag in the net-zero transition, we need to take ethical cooperation seriously and build trust within the human system. Sometimes the hardest part is putting aside self-interest, regardless of the good intent and work together to understand the shared purpose. Acknowledging the tensions and being honest about the trade-offs is a strong place to start. This can be done through deep listening and ‘story telling’ that demonstrates respect for cultural and ecological values, rather than just economic ones.
Tackling climate change is not just about reducing emissions, it’s about justice and fairness, because “we’re in this together” only works when everyone has a say, and everyone has a stake.
The Energy Charter is a member of the Ethics Alliance and a one-of-a-kind, CEO-led coalition of energy organisations united by a shared passion and purpose: delivering for customers and empowering communities in the energy transition.
BY Cris Parker
Cris Parker is the former Head of The Ethics Alliance and a Director of the Banking and Finance Oath at The Ethics Centre.
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Ask an ethicist: Am I falling behind in life “milestones”?
Over the past couple of years I’ve noticed all my friends are either getting married, buying houses or starting families. I haven’t achieved any of these major life “milestones” yet and am worried I won’t any time soon. Should I be concerned I’m not keeping up?
Big life milestones – getting married, having kids, or buying houses are often seen as markers for success and there is no right way to go about them, if at all. It is a deeply personal choice influenced by individual values and principles, goals, and the society we live in.
In Western societies, there is often an unspoken expectation that by your mid-30s, you should have ticked off a checklist: education, marriage, kids, and a mortgage. But where do these expectations come from? And do they really reflect what we want for ourselves?
It’s easy to feel like you are falling behind when everyone around you seems to be hitting milestones at a kicking pace. Social media does not help – our feeds are filled with engagement announcements, baby photos, and housewarming parties, making it seem like these achievements are happening all the time. These “deadlines” are often arbitrary, and the pressure to achieve them can often come from unidentifiable places.
Beyond social media, family, culture, and tradition also play a significant role in shaping our expectations. Parents and grandparents often see marriage, kids, and home ownership as the natural and successful progression into adulthood. Friends, too, may unintentionally add pressure by assuming you’ll follow the same path they did – moving to the suburbs, starting a family, or planning a big wedding. These pressures can subtly reinforce the idea that there is a “right” path to follow.
Traditions can be comforting, offering a sense of structure and belonging. But they can also feel restrictive if they don’t align with your personal values. The key is to recognise that while traditions may have worked in the past, they don’t have to dictate your choices today.
Adding the external pressure, biases also shape how we interpret success and progress with the frequency of seeing these milestones online, reinforcing an availability bias where we may overestimate the prevalence of these “achievements”. False consensus bias can also make us assume that the choices of our friends represent a universal societal norm.
Let’s remember these milestones are not set in stone and differ from generation to generation. Societal norms are developed from the economic and social conditions of the time. A generation or two ago, settling down young was the norm. After World War II, single-income households could afford homes, birth rates were high, and religious beliefs strongly influenced family life.
But the world today is very different. Housing prices have skyrocketed, wages haven’t kept up, and societal values have shifted which mean these traditional milestones are no longer as achievable or even desirable as they once were.
The shift away from traditional milestones reflects broader changes in societal values. Within younger generations today, there is greater emphasis on personal fulfilment, career development, and experiences such as travel and education. These evolving values redefine what we think of as success and happiness. The focus on individual agency allows people to make choices that align with their personal goals and values rather than societal pressures.
The decision to have children has become increasingly complex. Many people grapple with the ethical implications of bringing children into a world facing environmental crises and geopolitical unrest. Add financial pressures and a growing lack of trust in long-term stability, and the decision to become a parent requires careful consideration and a strong alignment with personal values. It underscores the importance of being authentic and accountable for our decisions, as these choices reflect not just our desires but our hopes and concerns for the future.
At the end of the day, what really matters is whether your choices align with your own values and aspirations. Ethically, it’s important to question whether you are pursuing these milestones because they genuinely excite you, or because you feel like you ‘should’? There’s no right or wrong answer – just the one that feels right for you.
Success isn’t about checking off a list of expectations – it’s about living in a way that is aligned with what makes you happy and fulfilled. Whether that includes marriage, kids, homeownership, or something entirely different, the most important thing is that it’s your choice – not society’s.
BY Cris Parker
Cris Parker is the former Head of The Ethics Alliance and a Director of the Banking and Finance Oath at The Ethics Centre.
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Survivor bias: Is hardship the only way to show dedication?
Survivor bias assumes a direct link between sacrifice and success, which risks creating rigid and unhealthy work cultures.
Meeting with young people in business can give a fresh perspective on an organisation’s culture. They bring new ideas and a clear view, often unclouded by the blind spots experience can create and their expectations for work are shaped by a completely different set of values and norms compared to previous generations. From seeking work/life balance to finding meaningful work, these evolving values can sometimes clash with the more traditional belief that success requires long hours, stress, and personal sacrifice. At a recent Young Person’s Alliance gathering, this tension was brought to light and named: survivor bias.
Survivor bias happens when those who’ve faced tough paths to success believe that’s the only, or the best, way to achieve it. For example, many senior leaders in corporate environments, particularly women in male-dominated fields, often had to adopt intense work ethics and make personal sacrifices. Stories of working late into the night or juggling work while caring for sick kids are worn as badges of honour.
This can lead to an expectation, conscious or not, that younger employees should follow the same path: that sacrifice builds resilience and proves commitment. “I’m actually really proud of the struggles I had, it taught me a lot and it’s made me who I am today. You miss out on that if everything comes easy”, remarked a senior leader.
But is hardship the only way to show dedication? Or is this bias simply a product of individual survival stories?
In conversations I’ve had with finance or law workers, this bias shows up as an “all or nothing” mentality. Leaders who built their careers on 80-hour weeks might see flexibility or work-life balance as a lack of commitment. For instance, a senior female executive who climbed the ranks through relentless hours said “We just got on with it, no one was holding my hand.”
While this impacts both men and women, the pressure is often greater for young women trying to balance career and family. Survivor bias fosters a “suffer to succeed” culture, where personal sacrifice feels like a necessary step toward leadership.
Survivor bias can also create a scepticism that can create a lack of generosity in the workplace as about resourcing good mental health opportunities such as counselling or other support and even stagnating salaries as leaders reflect on their own experiences. “I remember when I went through that in my life, I got through it ok, and I didn’t have nearly the same help as there is today”, said a senior not-for-profit leader.
This mindset isn’t limited to the business sector. It’s seen in politics, sports, law, and even nursing. Serena Williams, for example, has spoken about the pressures she faced to prove her dedication to tennis after becoming a mother. Similarly, Julia Gillard’s time as Prime Minister is often framed as a testament to resilience, overlooking the intense sexism and personal costs she endured to succeed.
The danger of survivor bias lies in how it normalises burnout and undervalues the priorities of today’s workforce, like mental health and diverse perspectives. It assumes a direct link between sacrifice and success, which risks creating rigid and unhealthy work cultures.
It looks to ‘survivors’ as the standards people should aspire to but the word survival itself represents the limited few who have overcome the odds at all costs.
The first step to tackling survivor bias is awareness. By reflecting on how past struggles have shaped their expectations, leaders can start recognising this bias. Mentoring programs can also foster conversations across generations, allowing senior leaders to share their stories while understanding new ways of thinking about resilience and success.
Many organisations already have flexible and inclusive policies like parental leave, but true change requires a shift in mindset. Leaders can redefine hard work to focus on efficiency and impact rather than hours worked. This sends a clear signal that organisations value healthier, more innovative approaches.
As we engage with a new generation of professionals, especially young women, there’s an ethical responsibility to create paths that don’t equate suffering with commitment. By challenging survivor bias and embracing the values of today’s workforce, we can build cultures where resilience, fulfilment, and success go hand in hand.
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BY Cris Parker
Cris Parker is the former Head of The Ethics Alliance and a Director of the Banking and Finance Oath at The Ethics Centre.
Ask an ethicist: How to approach differing work ethics between generations?
I place a great deal of importance on the work I do, I enjoy my time in the office, and spending time with my team. However, lately I have noticed a younger colleague of mine is slacking off. They frequently take sick leave, or call in to work from home, and it often feels like there’s no urgency to their tasks. I am starting to feel a growing sense of resentment, as this hardly feels fair to me or my colleagues. Is there a way I can approach what I consider to be a poor work ethic?
It’s natural to feel a sense of unfairness and frustration when you’re putting in the effort and others don’t seem to be keeping pace. After all, work is called work for a reason – it’s not meant to be effortless.
Addressing the fairness of workload and the impact it has on the workforce is being explored more and more as automation is being used to assist with tasks and we find ourselves for the first time working alongside five different generations.
As our behaviours are driven by our values and it’s worth considering how different generations bring different values and attitudes to the workplace. Research into generational attitudes toward work provides some useful insights:
The Silent Generation (1928-1945) value loyalty, job stability, long-term careers and staying with one company for decades.
Baby Boomers (1946-1964) value hard work, dedication, responsibility, job security and stability.
Generation X (1965-1980) value independence, self-sufficiency and personal responsibility.
Millennials (1981-1996) are the largest cohort working in business today. They seek purpose in their work, value personal development, and look for roles that allow for work-life integration.
Generation Z (1996-2010) value flexibility, work life balance, diversity, inclusion and well-being.
So, what does this mean for your situation? While each generation may have a distinct approach to work, shared values like fairness, accountability, and empathy can create not only common ground but also opportunities. Most employees, regardless of age, want to know that workloads are distributed equitably, and that everyone is contributing their part. When this balance seems off, frustration is understandable.
However, it’s worth considering that your colleague’s behaviour may stem from reasons beyond their control. They may be facing personal challenges or health concerns, and it’s helpful to understand that we’re often dealing with factors that aren’t always immediately obvious on the surface.
Accountability is another value shared across generations. Regardless of how we work – whether in the office or remotely – there’s an expectation that we should be held accountable for our work and deadlines.
It’s possible that your younger colleague isn’t fully aware of the expectations and may benefit from clearer communication, so they better understand the priority of their work. This could help address the perception that they lack motivation or urgency.
Focusing on outcomes rather than physical presence can bridge generational differences and shift the conversation towards ensuring the work gets done effectively, no matter where it’s completed.
At the same time, empathy and understanding are important, especially when considering values related to well-being. If your younger colleague is frequently working from home or taking sick days, it may be their way of managing their health in a more proactive manner than what might have been typical in earlier generations. This could be an opportunity to reassess your own attitudes to work and question how helpful it is to be working when you’re not feeling 100% or trialing different approaches to prevent burn-out.
Rather than letting frustration build, consider having an open and supportive conversation. This could open a dialogue that leads to a better understanding of how to ensure both their well-being and their work responsibilities are met.
Ultimately, acknowledging and recognising the different generational values can open up new ways of working together. Conversations can explore the impact of those differences and find solutions to any tensions. Addressing these issues through a balance of our shared human values such as fairness, accountability, and empathy can create a more harmonious work environment for everyone.
As Bob Dylan famously said, “The times they are a-changin’” and if you’re asking, “who’s Bob Dylan?”, check him out, I think you’ll love him.
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BY Cris Parker
Cris Parker is the former Head of The Ethics Alliance and a Director of the Banking and Finance Oath at The Ethics Centre.
People first: How to make our digital services work for us rather than against us
Advancements in technology have shown greater efficiency and benefits for many. But if we don’t invest in human-centric thinking, we risk leaving our most vulnerable behind.
As businesses from the private and public sector continue to invest in improved digital processes, tools and services, we are seeing users empowered with greater information, accessibility and connectivity.
However as critical services for healthcare, lifestyle and support systems have become increasingly digitised, the barriers for vulnerable, remote or digitally excluded individuals must also be considered against these benefits.
It’s no wonder the much-maligned MyGov app underwent an audit review earlier this year, resulting in a major overhaul of the service. Reading through their chat rooms and forums where customers can express their experiences, comments like these fill the pages:
“…If you’re trying to do something online, even if you’ve got a super reliable connection, you can spend hours wandering around in a fog because there’s no transparency about – they’re not trying to make it easy for people.”
“You need to have acquired the technology to do it, but you get on their websites, and I don’t know who designs their systems. But you’ve got to be psychic to be able to follow what they want. In order to get what you need, you’ve got to run through this maze, it’s complete bullshit.”
“And you’re already putting elderly people and keeping them in a home, it all goes online and digital, they stop having that outside interaction. It’s another chip away of community. That’s where the isolation comes in.”
Reading these statements, you get a sense of the frustration and confusion felt, not just due to time wasted but also the loss of a personal connection and agency. These experiences can lead users to doubt the reliability of business’ processes and chip away at the trust in their systems.
The Australian Digital Inclusion Index cites digital inclusion as “one of the most important challenges facing Australia.” Their 2023 key findings presented that digital inclusion remains closely linked to age and increases with education, employment and income.
So, as technology becomes more ubiquitous in our lives, how do we maintain human centric thinking? How do we avoid exacerbating existing inequalities while maintaining respect, autonomy and dignity for all?
Looking for some answers, I spoke to Jordan Hatch, a First Assistant Secretary at the Australian Government and someone who is passionate about designing for user needs. Hatch is currently working with the care and support economy task force in the Department of Prime Minister and Cabinet, exploring some of the challenges and opportunities across the care sector.
Hatch is acutely aware that amidst this digital transformation, the welfare of vulnerable individuals remains a priority. He explains human-centered design principles must play a crucial role in shaping digital solutions. Importantly, understanding the user base, including different cohorts and their specific needs, is foundational to designing inclusive services. Extensive research and involvement of First Nations communities, individuals with low digital literacy, or limited internet access are also essential to developing solutions that address their unique challenges.
Hatch explains how technology is transforming the face-to-face experience. He says the digitisation of services has prompted a re-evaluation of the role of physical service centres. The integration of digital and in-person channels is allowing for streamlined processes and improved customer experiences.
A great example is Service NSW, which has become a centralised hub offering access to several support services. The availability of digital options has not led to the exclusion of those who prefer face-to-face interactions. On the contrary, it has allowed for a more comprehensive and improved service for individuals seeking in-person assistance. The digital transformation has become a means to augment the service experience, rather than replacing it. When visiting a Service NSW centre, you are met by a representative who directs you to a computer and, if required, walks you through the online process, offering personalised support. This evolution caters to diverse needs, ensuring that the face-to-face experience remains valuable while offering alternative modes of engagement.
Of course, increasing the capability and use of technology has its downside. Digital interactions have become a societal norm and an opportunity for scams. This has led to a number of digital hoops users are obliged to make in an attempt to protect their data and privacy. This process can impact the users’ wellbeing as passwords are lost or forgotten and the digital path is often confusing.
Hatch explains in this learning journey, how a shift in his perception occurred regarding the relationship between security and usability. Previously, it was believed that security and usability were at opposite ends of the spectrum—either systems were easy to use but lacked security, or they were secure but difficult to navigate. However, recent technological advancements have challenged this notion. Innovations emerged, offering enhanced security measures that were user-friendly. For example, modern password theories promoted the use of longer passphrases consisting of simple words, resulting in both stronger security and increased user-friendliness.
Technological transformation is a process and technology is not a panacea – it is a steppingstone and an opportunity for simplification and identifying unique solutions. What we can’t do is allow technology to overshadow the need to address regulation and the complexity it can create.
Hatch shares an insight from Edward Santos, the former Human Rights Commissioner to Australia: the prevalent mindset of the technology world being, “move fast and break things”. This is often seen as innovation, and an opportunity to learn from failure and adapt. However, in the realm of public service, where real people’s lives are at stake, the stakes are higher. The margin for error in this context can have tangible consequences for vulnerable individuals.
Slowing down is not necessarily the solution, particularly when you see or experience the harm caused by a misalignment between requirements and the capacity to meet them. It is the work Jordan Hatch describes where the issue is not when, but how services are designed and delivered that will make the difference.
The intersection between technology and policy creates an opportunity for regulators and digital experts to come together. Rather than digitise what exists, they can identify the unnecessary complexities and streamline the rules. This then creates a win-win situation – through the lens of human-centred design, it facilitates the digitisation process and creates a simpler regulatory framework for those who choose not to use a digital process.
With this approach we can design technology to work for us rather than against us.
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BY Cris Parker
Cris Parker is the former Head of The Ethics Alliance and a Director of the Banking and Finance Oath at The Ethics Centre.
ESG is not just about ticking boxes, it’s about earning the public’s trust
If businesses want to earn the public’s trust, they need to take ESG seriously, and communicate what they’re doing authentically and transparently.
In the eyes of today’s public, businesses must do more than just provide quality products and services, they also have a responsibility to be good corporate citizens and make a positive contribution to society and the environment. This is one reason why so many businesses have made a commitment to Environmental, Social and Governance (ESG) standards.
ESG is a framework used to assess a business’s activities and performance on ethical and sustainable issues. This includes an organisation’s ability to safeguard the environment, manage relationships with employees, supply chains and the community, and how company leadership, shareholder rights and internal controls monitor the outcomes. Importantly, the framework serves as a tool to assess how an organisation manages risks and opportunities in our changing world.
The problem is that most members of the public don’t have a good understanding of ESG. According to the SEC Newgate ESG Monitor report, only 12% of Australians had a “good understanding” of ESG. This disconnect between ESG activities and public perception is a problem because it undermines trust in business, especially if ESG activities have been misrepresented.
Members of the Ethics Alliance gathered in April 2023 to discuss the importance of SEC Newgate’s research and consider challenges that organisations face in the way they address ESG and community expectations.
For starters, the ESG Monitor indicated that 38% of Australians feel completely uninformed about companies’ ESG activities. Interestingly, it also suggested 72% of people either “never” or “rarely” look at the ESG reporting, while only a mere 8% of people trust ESG reporting.
Some of this scepticism around ESG may have been cultivated due to it politicisation. In April 2023 the leader of the opposition, Peter Dutton, commented: “To be frank, some business leaders need to stop craving popularity on social media by signing up to every social cause, even though they may not believe in it.” This attitude acts in contrast to the global research from the 2023 Edelman Trust Barometer that shows 82% of people expect CEOs to take a public stand on climate change. And to Dutton’s point, they certainly expect authenticity.
The public holds high expectations for businesses to use their influence for good. SEC Newgate’s study showed that of those surveyed, 80% agree that companies have a responsibility to behave like good citizens and consider their impact on other people and the planet. It also showed that 66% of people are also willing to give a company a second chance if it was transparent about its mistake and stated how it would do better in the future.
If businesses want to live up to community expectations and strengthen their social value, then they need to carefully choose which ESG initiatives to focus on and ensure they have legitimacy in those areas. When evaluating, they should ask the following: Is it genuine? Is it meaningful? Is the organisation committed? And how do I know for sure or where is the proof?
By demonstrating a clear link between sustainability efforts and overall strategy, businesses can better align their initiatives with community expectations.
One starting point is a materiality assessment, which is a process to identify and prioritise the most relevant and significant ESG factors that have a substantial impact on the business’s operations, financial performance and stakeholder interests. This exploration can help identify the most pressing issues that align with the purpose and resonate with the community.
Other principles for organisations to consider when developing their ESG framework that emerged from The Alliance’s discussions were:
- Ethical conduct – including treating employees fairly, avoiding unethical practices, and minimising environmental harm.
- Giving back – which may involve investing in local communities, adopting environmentally friendly practices, or supporting social initiatives.
- Transparency and accountability –stakeholders, including consumers, employees, and shareholders, often have differing perspectives on ESG issues, making it challenging for businesses to balance these conflicting demands and trade-offs.
Communication also needs to be well considered by organisations in order to address the disconnect between the community’s need for transparent ESG information and their desire to learn about it. Connecting with stakeholders transparently about an organisation’s progress and mistakes can help meet these challenges.
ESG is about more than just accounting. It’s demonstrating a business’s responsibility and recognising the importance of sustainable practices in safeguarding our planet. ESG needs to be a whole company effort that is undertaken authentically and communicated transparently to the public that reflects its purpose, values and principles. The more businesses that do this, the more the public will understand what ESG is and the more they will come to trust businesses as being responsible corporate citizens.
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BY Cris Parker
Cris Parker is the former Head of The Ethics Alliance and a Director of the Banking and Finance Oath at The Ethics Centre.
BY The Ethics Alliance
The Ethics Alliance is a community of organisations sharing insights and learning together, to find a better way of doing business. The Alliance is an initiative of The Ethics Centre.
Volt Bank: Creating a lasting cultural impact
Looking back, Steve Weston says, that Volt Bank, an innovative new player that intended to crack open the Australian banking oligopoly, was well positioned to show that banking could be done in a better and more ethical way. Unfortunately, it wasn’t to be.
“There was no one else in Australian banking that was doing what we were doing. We built something that didn’t exist elsewhere,” Steve says.
“I’m proud of so much, but I’ll take to the grave that feeling of disappointment of having to close the doors. We were so close to a full launch and being able to show everyone what we had built.”
It’s this kind of benevolent aspiration that characterises Steve, Volt’s founder and chief executive. The very same thing that prompted former customers to write to him, not in anger but in sympathy, following the collapse of the neobank in June last year.
Volt Bank returned $100 million in deposits to all customers and handed back its banking licence after it couldn’t raise enough capital to scale up its operations, leaving 140 staff and a despondent Weston in the aftermath. Everyone was disappointed.
“I got a lovely note from a guy… his dad is 96 years old and had put $240,000 into a Volt Bank account a couple of years ago as an inheritance for his grandkids. He opened his account using his phone without any help.”
“And his father told him how disappointed he was that Volt was so great and that they were closing down, and he’d had to take his money back.”
Rewind three years to January 2019 and North Sydney-based Volt Bank had become the first Australian startup to get a banking licence, following a rethink of the rules under the Morrison government prior to the damning findings of the 2018 Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Steve and his team were determined not to squander an opportunity to offer Australians a better and fairer banking experience, building what the AFR described as “arguably the best mortgage lending platform in the industry”. Remarkably, Volt Bank’s innovative technology could issue mortgages in just 15 minutes as opposed to several days with most lenders.
Organisationally, Volt remained in the pilot phase and never opened its deposit book to the public, but the neobank did forge tough-to-secure industry partnerships with big names like PayPal, Cotton On and AFG.
There was a lot at stake, Steve remembers, in building something that could compete against established lenders like the powerful big four, but with prior positions at NAB, St George and more recently Barclays on his resume, Weston felt ready to give it a go.
Since arriving back in Australia in 2016, Steve had been vocal about the negative behaviours and systems he witnessed in the UK being repeated here in Australia. In 2017 at a Banking and Finance Oath conference, he implored the audience to consider necessary changes to ward off mistakes that were being made here that he had seen in the UK including lack of transparency, fairness and poor customer practice.
Not only did Steve seek to rethink banking, but he also sought to provide staff with an innovative and embracing environment where they could live and work within the values that Volt was offering to new customers.
“We made it fun like many fintechs, we did yoga and meditation, we had beers and the like,” he recalls.
“But more importantly, we were also about changing the world and doing things in a different and better way … there were great people on the team – not just technically smart, but good people who would walk over broken glass to make a real difference to society.”
“Our ambition and values were genuine, they weren’t just words on the wall. Our customers, business partners, shareholders, staff and even regulators could see and feel the different approach we were taking.”
Whilst Volt Bank had raised over $200m, to scale up it needed to raise significantly larger sums.
Turbulent market conditions – including the post pandemic economic downturn, Ukraine invasion and climbing interest rates the world over – and the 20% cap on single shareholders in Australian banks saw scores of large potential investors steer clear of investing in the Aussie neobank. Steve says they looked everywhere for capital, leaving “no stone unturned”.
Unable to raise the capital it needed, and the board voted to fold the bank on June 29th.
Steve says a fold is about so much more than a shortfall of capital, in banking or beyond – it’s about making the tough decision after weighing up ethical considerations. He hopes that other challenger banks will get an opportunity to bring the sort of change to the Australian banking market that the public is so keen to see. He says that is not just about offering fairer pricing and better service levels, it’s about bringing improved ethics to banking.
“When we talk about ethics, it’s not just about the issues highlighted in the Royal Commission like breaching regulations and charging dead people,” Steve says.
“It’s about not telling customers that you are going to put their interests at the heart of everything you do and then pricing products that only favour new customers. Banks can price products as they see fit but they should be far more transparent when the interest rates are not as good for loyal customers; the same ones that are supposedly being put at the centre of banks post-Royal Commission more ethical approach.”
Steve says he was comforted by the fact that almost all 140 staff at Volt went on to be snapped up by finance and tech titans ANZ, Commonwealth Bank, Xero, and Atlassian, and often with higher salaries too, he adds.
“We had more than 100 companies approach us, saying ‘we’re happy to take your staff’, including big banks, small banks, tech companies, retailers – many did pitches to the staff,” he remembers.
“And as it turned out, we didn’t only help our staff polish up their CVs and fine tune their interview skills, we also helped staff articulate the value they would offer to new employers.”
It’s this empathetic duty of care from Volt’s management that set the neobank apart – and Steve hopes that despite Volt not being able to continue under its own steam, that its impact will bring a positive impact to society.
“We spoke with our staff about taking their learnings from Volt about doing the right thing, to their new employers. It means Volt will have a positive rippling influence on a variety of industries, about how you should work – the culture, the ethics, and the integrity.”
The pain and shame of failure is often sought out by venture capitalists and business leaders in the US. It is viewed positively and seen as an opportunity for learning. Steve himself remains as determined as ever in the wake of Volt Bank’s collapse to shake up an industry mired by a reputation of misconduct and this time; he comes armed with the potent learnings of a failure done ethically. Whether that is embraced in Australia is yet to be seen.
“We were, in some ways, a poster child in terms of ethics, governance, compliance, openness … And like I said, the feedback from people was overwhelmingly positive, but we just couldn’t raise the capital we needed,” he says.
“I still have a fire in my belly to do right by society and it’s now burning more than ever because I’ve got to redeem myself and I’ve learned so much.”
And what of Volt’s industry-first 15-minute mortgage technology? Steve says, a sales process is underway. He’s hoping the technology can find a home and deliver improved outcomes for customers, something he admits will be an “interesting feeling” after the rise and fall of Volt Bank.
“On the one hand, that would be a kind of validation of what Volt’s tech was going to deliver, and on the other hand, it’ll be: ‘Why the hell couldn’t we raise the capital and have done it ourselves?’”
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BY Cris Parker
Cris Parker is the former Head of The Ethics Alliance and a Director of the Banking and Finance Oath at The Ethics Centre.
Do organisations and employees have to value the same things?
You’re at your desk when a complaint comes in about a comment by a senior employee on their social media account.
The post had nothing to do with their job, yet the complainant was able to track the person down at work – helped by the fact the same photo appeared on both the employee’s personal account and your company’s website.
What should you do? How do you reconcile the employee’s right to express their personal views with the need to protect your organisation’s good name?
At a recent gathering of The Ethics Alliance, members agreed that such dilemmas are increasingly common.
It’s a complex and rapidly shifting environment. Organisations are or are expected to be driven by purpose, one which considers society as a whole in its pursuit of success and can lose community trust if they fail to satisfy their multiple stakeholders. In parallel employers encourage diversity and inclusion, while asking staff to be authentic and “bring your whole self to work”. Tensions will inevitably arise.
In today’s organisations, people need to do more than just comply with rules – they are often required to make judgment calls. This became more formalised in the early 2000s when codes of conduct started being replaced by codes of ethics.
This stems partly because of the rapid rate of change in business: products and services can be replicated so quickly that companies are known not so much for what they make, but for what they “mean” and how they behave.
So what happens when differing values between individual and organisational values play out through social media?
One key insight shared at the Ethics Alliance gathering is that both risk and responsibility are greater for people who are more senior in the hierarchy. There was a consensus that clear policies are crucial, but that there is no one-size-fits-all solution, incidents need to be seen through multiple lenses and considered on a case-by-case basis.
For example, an organisation has an obligation to protect staff who speak out on its behalf from trolling, and to recognise that just as corporate values evolve, so too do the personal values of individuals. And if a complaint is judged to be trivial or mischievous, a representative might offer an apology on behalf of the organisation but not even inform the person targeted, because that would be neither necessary nor helpful. In such a grey area, flexibility is vital.
Law firm Gilbert + Tobin’s social media policy prohibits posts that are illegal, are derogatory of G+T, its employees or clients, or constitute serious misconduct such as disclosure of confidential information. As well, staff must not publish or post material that may reasonably be considered offensive, obscene, defamatory, threatening, harassing, bullying, discriminatory, hateful, racist, sexist or homophobic.
The policy has flexibility built in. Anna Sparkes, Chief People Officer says that if a post could be associated with Gilbert + Tobin, the poster must add a disclaimer stating that their views do not represent those of the firm. And if a complaint were received, the outcome would depend on the actions, whether the individual could be identified as being an employee, and whether there was a direct breach of the social media policy.
For property investment fund Charter Hall, if a senior executive has views that do not accord with major tenants or investors, there is the potential to affect the business. This is true of many organisations.
Charter Hall’s Head of People Emma Stewart says: “If I sign a contract that says, I’m signing up for this, knowing that I’m agreeing to not bring the brand and reputation of the organization into disrepute, then unfortunately or fortunately I’ve got to accept that that may come with some compromises, and I’ve got to be okay with that if I’m prepared to continue the employment arrangement.”
Organisations also need to be aware that if the compromise is too great within the workplace, the employee may be at risk of “moral injury”. Psychiatrist Jonathan Shay, the foundational voice on the subject, describes it as “the soul wound inflicted by doing something that violates one’s own ethics, ideals, or attachments”.
In such a case, both the organisation and the individual may need to decide whether the relationship is tenable. For the employee, prolonged pressure to act in ways that feel inauthentic and not aligned with personal values may also affect their ability to perform well in other aspects of their job. For both psychological safety and practical reasons, it may be better to part ways.
Tim Costello, the Director of Ethical Voice and former CEO of World Vision Australia, shares these concerns about “the interdependence and the extraordinary shared vulnerability between a corporate reputation and an employee’s own convictions”.
“You’re so entwined. It’s got really tricky in my own mind now,” he said.
Tim also feels the online world has hampered his ability to tailor a speech to a particular audience. “It has profoundly limited free speech.”
And he laments the loss of “that private area where you work out where you’re at, rock on rock, stone on stone, sharpen and revise”.
“I’m an extrovert, I process things aloud,” he said. “Anything can be tweeted in real time while you’re talking, before you’ve even finished your point.”
Ideas about social media and the public expression of values are being put to the test with a federal government bill suggesting changes to governance standard three in the Australian Charities and Not-for-profits Commission Regulation 2013 to expand the scope of impermissible activities that registered charities must not engage in or promote others to engage in.
Consequences are that charities will be stripped of their Deductible Gift Recipient status if an employee or volunteer commits a minor offence.
For example, a charity could lose DGR status if a staffer put up a social media post in support of a rally that turned violent, or if a volunteer put stickers on private property.
While it is widely understood that the proposed law is aimed at environmental groups, Tim Costello says the bill is “legislative over-reach” that would stifle all organisations’ ability to do advocacy.
Certainly, such a law would impose a “one size fits all” approach to a varied sector and a huge range of behaviours when multiple lenses are vital.
For organisations navigating these waters, it is essential first to clarify what they stand for and then to communicate these values to all stakeholders, particularly employees. When it comes to resolving problems, policies on social media and other out-of-work-hours behaviour provide a strong foundation, but complex situations require a flexible approach. Today’s solutions may need to be adapted to work in the evolving world tomorrow.
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BY Cris Parker
Cris Parker is the former Head of The Ethics Alliance and a Director of the Banking and Finance Oath at The Ethics Centre.
Recovery should be about removing vulnerability, not improving GDP
Vulnerability demands attention and, in the past, where profits were prioritised business was preoccupied and vulnerable customers harmed.
Because of Covid 19 we can expect to see more vulnerability with multiple drivers. The pandemic has reminded us that we can all be vulnerable if the right (or wrong) circumstances occur.
A year ago, your vulnerable customer probably didn’t look like my daughter and her friends: cashed-up twenty-somethings, single, easy going and living alone. Nor did a dual-income household with primary school-aged kids automatically raise any red flags.
However, we are now realising the various ways that changes in circumstances can quickly render us vulnerable in both financial and non-financial ways. The physical, emotional and financial impacts of the pandemic challenge business to find new ways to recognise and forecast when people are experiencing hardship. Not least because many people who find themselves in hardship may be less likely to seek support.
We live in a society where wealth is a sign of success – particularly for those who have grown accustomed to a certain level of financial wellbeing. In this context, to be labelled vulnerable is a suggestion that you have failed in some way. There’s an element of shame or even a stigma attached to the label.
Vulnerability is so often positioned through an economic lens, the term synonymous with poverty, diminished capacity or poor decision-making. This means singles struggling with the mental health impacts of isolation and parents collapsing under the pressure of home-schooling may baulk at the idea of being labelled ‘vulnerable’.
Our new reality also requires fresh approaches to handling people who have experienced a sudden change in fortune. People who managed just fine in the “gig economy” are now in a precarious position in “insecure employment”. Those who took on huge debts to buy homes in our major cities are also under extreme financial pressure as the economy continues to slide.
I recently participated in a discussion with customer advocates from the financial services sector. One advocate revealed that estimated calculations were that we can expect around 30,000 homes to be lost as a result of the pandemic. A month ago (which seems an age in COVID-time), the Lowy Institute reported the number of unemployed would soon exceed 1.3 million. The jobless rate will climb to 10 per cent by the end of the year and still be above 8 per cent by the end of 2021, according to the Reserve Bank of Australia (RBA). In short, all evidence points toward an explosion in the amount of vulnerable people businesses are dealing with.
“Measured as Gross Domestic Product (GDP) per head, Australia’s average living standards are falling and will take several years to return to the pre-pandemic level,” says the institute’s John Edwards, a former member of the Board of the RBA, and Adjunct Professor with the John Curtin Institute of Public Policy at Curtin University.
Our economy’s health is measured by our GDP. It’s the magic acronym: – the more it goes up, the better off our society is, or so they say. However, given the anticipated explosion of vulnerable customers and people facing financial hardship, it might be worth revisiting the role GDP plays in our understanding of economic health.
If our GDP recovers, but we see minimal reduction in the amount of vulnerable people – financially vulnerable or otherwise – is this really a recovery at all?
Measuring a society’s health by GPD can be a useful rule of thumb, says business ethicist Dr Ned Dobos, Senior Lecturer in International and Political Studies at the UNSW Canberra. However, it would be “wrong-headed” to put too much faith in it, Dobos argues that we need different metrics than relative material wealth to measure how we are going.
Dobos points to the research conducted by Daniel Kahneman and Angus Deaton, showing that more money will only make people happier up to a certain point – around $US75,000. But while extra money may make them feel more successful, it will not make them feel happier beyond that threshold.
“We’re continuing to measure the welfare of our society in terms of GDP, even though GDP has no proven connection to our sense of wellbeing anymore,” he says.
“We have fetishised material wealth, even though it’s not connected to the things that ultimately matter.”
Dobos hopes that a silver lining from the pandemic will be that, as a community, we have more understanding of people who are unemployed and that we realise that poverty is not a character defect.
“Surely people, after a period of time, would have to appreciate that with a million people in this country unemployed, [unemployment] must be something that is not entirely within their control,” he says. “We can’t have that many degenerates.”
Susan Dodds, Professor of Philosophy at La Trobe University, agrees. She says she would like to see a recognition that attaining wealth requires a fair degree of luck, rather than it being something one “deserved”.
She would prefer the discussion of economics shift from GDP to “talking about what makes for a decent life.”
There are large numbers of people who are working as casual, low-paid, low-skilled, itinerant workers – moving between nursing homes. There’s a reason for that: they’re not doing it because: ‘gee whiz, I’d love the flexibility’,” says Dodds.
Dodds says the pandemic is an opportunity to have another look at what a reasonable expectation of profit is. “The idea that we can get, year-on-year, a two per cent reduction in our costs in order to get an inflationary increase in our profits, making me comfortable with the amount of dividend I get, is really exploitative.”
What gets measured gets done. If our recovery is determined exclusively in terms of GDP, it might mean creating more vulnerable people, as organisations are incentivised to pursue relentless growth.
There has been a global push for more purposeful capitalism; Blackrock CEO Larry Fink wrote a letter to 500 CEOs last year addressing this issue. Closer to home, this year New Zealand is the first western country to design its entire budget based on wellbeing priorities. “We’re embedding that notion of making decisions that aren’t just about growth for growth’s sake, but how are our people faring?” Ardern said.
The ACT has identified that economic conditions, important as they may be, are not the only factors that contribute to the quality of life of Canberrans. In releasing the Budget in March 2020, the ACT Chief Minister Andrew Barr stated, “We are more than an economy – we are an inclusive, vibrant and caring community where we aim for everyone to share in the benefits of a good life both now and in the future.” The ACT Wellbeing Framework will inform Government priorities, policies, investment decisions and Budget priorities.
In his recent Ted Evans lecture, economist Professor Ian Harper, an RBA board member, reminded economists to talk to the public, to keep in touch with what the community thinks are important priorities.
“Apart from anything else, you learn so much about what really matters for people. Whether it’s the level of minimum wages, a level of interest rates, how banks are supervised, where you can open a pharmacy, when you can open a supermarket or where you can get treated for infectious disease,” says Harpers.
“No one should be surprised that an economist should worry about the human dimension of his craft – social science, it may be, but economics started out as moral philosophy.”
“Our quest to raise community welfare cannot be divorced from its foundation in a moral calculus. More to the point, if it is divorced from its moral foundations, then economic policymaking is more likely to diminish than enhance economic welfare.”
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BY The Ethics Alliance
The Ethics Alliance is a community of organisations sharing insights and learning together, to find a better way of doing business. The Alliance is an initiative of The Ethics Centre.