Why you should care about where you keep your money
Most of us try to do the right things in life.
From a young age we’re taught to treat people and the environment with respect, being conscious of the impact our actions have on the world around us. We’re often told of the importance of minimising single-use plastics or buying fair-trade products and, for some, these can be really important ways to spend our money consciously.
While we can spend our money on things that resonate with our personal values and the type of world we want to see in the future, we also need to consider the impact that the banks we support are having. As a conscious consumer, sometimes we can forget one simple thing that can make a bigger difference in this world than most of our other monetary choices – our bank.
From the factory our shoes were made in, to the houses we want to buy and the energy that powers them. Everything in this world costs money. But where does this money come from? Most finance tends to come from banks, and other financial institutions. And it’s your choice of financial institution that actually influences where that money goes.
Sometimes we can feel as though we don’t have the power to change things, that we are part of a larger system and people in positions of power behave in a way that conflicts with our own values and principles. As individuals, we can make a difference.
Where we choose to put our money matters. And as Liza Minnelli so eloquently puts it – money makes the world go round.
Most of us probably still have the same bank account we had as a kid. There seems to be this combination of taboo and apathy that makes talking about money, frankly, a bit awkward. However, it shouldn’t be and it’s a conversation that we should have more openly. We have choice and agency when it comes to where we bank and finding an institution that aligns with our values and principles is really important.
There’s something tragic and ironic as a conscious consumer when we spend so much effort to live a more sustainable life only to have our bank, and inadvertently our money, undo all our hard work by funding, for example, a battery hen farm. It’s a moral contradiction that is very real and needs our attention.
To illustrate this point more clearly, a recent survey by the Lowy Institute found that roughly 6 in 10 Australians believe climate change is a very serious issue that needs to be dealt with. Despite this majority opinion, Australian banks have lent more than $44B to the fossil fuel industry since the 2015 Paris Agreement (to limit global warming to 1.5C), with more than $8.9B coming in 2020 alone. Overlay the fact that the four major banks in Australia hold more than 80% market share and we can immediately see that there’s a strong moral contradiction at play.
As we become more aware of the issues that are important to us it’s important to ask the question – is the money in my bank contributing to the problem or helping to solve it?
Banks can create a lot of good, but they can also create a lot of bad. For example, they can use their customer’s money (our money) and the interest paid to them on loans to help move young people with disabilities out of nursing homes and into purpose-built disability accommodation. And equally, they can just as easily provide funding to gambling companies to open new facilities.
There are plenty of examples on both sides and it can be complicated and difficult to find out what your institutions is doing (and it’s most likely a combination of both). But we do have the power to ask. There are also websites like MarketForces.org.au and Dontbankonthebomb.com that provide information that can assist in our decision-making.
We all need to realise the responsibility and opportunity that we have as customers of these large financial institutions. They need our money and our loyalty to operate at the scale they desire. We can use our power as customers to hold them to account and to drive change that positively effects people and the environment.
If there’s one thought to leave you with, it’s that what you choose to do with your money will have an impact on what the world looks like in 20-years. Where are you going to put your money?
Jack Thompson is a Banking and Finance Oath Young Ambassador. If you’re interested in taking the Oath visit www.bfo.org
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BY Jack Thompson
Jack is a purpose driven marketer currently working in finance [and proud pawrent to two groodles]. He is also a Banking and Finance Oath Young Ambassador.
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 Head of The Ethics Alliance and a Director of the Banking and Finance Oath.
Making the tough calls: Decisions in the boardroom
The scenario is familiar to us all. Company X is in crisis. A series of poor management decisions set in motion a sequence of events that lead to an avalanche of bad headlines and public outcry.
When things go wrong for an organisation – so wrong that the carelessness or misdeeds revealed could be considered ethical failure – responsibility is shouldered by those who are the final decision makers. They are and should be held accountable.
Boards of organisations, and the individual directors that comprise them, collectively make decisions about strategy, governance and corporate performance. Decisions that involve the interests of shareholders, employees, customers, suppliers and the wider community. They will also involve competing values, compromises and tradeoffs, information gaps and grey areas.
In the recent 2021 Future of the Board report from The Governance Institute of Australia, respondents were surveyed to consider the most valued attributes for future board directors. Strategic and critical thinking were once again ranked the highest, closely followed by the values of ethics and culture as the two most important areas that boards need to focus on to prevent corporate failure. A culture of accountability, transparency, trust and respect were viewed as a top factor determining a healthy dynamic between boards and management.
Ethics plays a central role in the decisions that face Boards and directors, such as:
- What constitutes a conflict of interest and how should it be managed?
- How aggressive should tax strategies be?
- What incentive structures and sales techniques will create a healthy and ethical organisational culture?
- What about investments in organisations that profit from arms and weaponry?
- How should organisations manage the effects technology has on their workforce?
- What obligation do organisations have to protect the environment and human rights?
Together, The Australian Institute of Company Directors (AICD) and The Ethics Centre have developed a decision-making guide for directors.
Ethics in the Boardroom provides directors with a simple decision-making framework which they can use to navigate the ethical dimensions of any decision. Through the insights of directors, academics and subject matter experts, the guide also provides four lenses to frame board conversations. These lenses give directors the best chance of viewing decisions from different perspectives. Rather than talking past each other, they will help directors pinpoint and resolve disagreement.
- Lens 1: General influences – Organisations are participants in society through the products and services they offer and their statuses as employers and influencers. The guide invites directors to seek out the broadest possible range of perspectives to enhance their choices and decisions. It also suggests that organisations should strive for leadership. What do you think about companies that take a stance on matters like climate change and same sex marriage?
- Lens 2: The board’s collective culture and character – In ethical decision making, directors are bound to apply the values and principles of their organisation. As custodians, they must ensure that culture and values are aligned. The guide invites directors to be aware that ethical decision-making in the boardroom must be tempered. Decision making shouldn’t be driven by: form over substance, passion over reason, collegiality over concurrence, the need to be right, or legacy. Just because a particular course of action is legal, does that make it right? Just because a company has always done it that way, should they continue?
- Lens 3: Interpersonal relationships and reasoning – Boards are collections of individuals who bring their own individual decision-making ‘style’ to the board table. Power dynamics exist in any group, with each person influencing and being influenced by others. Making room for diversity and constructive disagreement is vital. How can chairs and other directors empower every director to stand up for what is right? How do boards ensure that the person sitting quietly, with deep insights into ethical risk, has the courage to speak?
- Lens 4: The individual director – Directors bring their own wisdom and values to decision making. But they also might bring their own motivations that biases. The guide invites directors to self-reflect and bring the best of themselves to the board table. How can we all be more reflective in our own decision making?
This guide is a must-read for anyone who has an interest in the conduct of any board-led organisation. That includes schools, sports clubs, charities and family businesses as well as large corporations.
Behind each brand and each company, there are people making decisions that affect you as a consumer, employee and citizen. Wouldn’t you rather that those at the top had ethics at the front of their mind in the decisions that they make?
Click here to view or download a copy of the guide.
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BY The Ethics Centre
The Ethics Centre is a not-for-profit organisation developing innovative programs, services and experiences, designed to bring ethics to the centre of professional and personal life.
The case for reskilling your employees
Futureproofing the workforce doesn’t just make good business sense, it simply makes sense, writes Paul Rodger.
Like it or not, we’re in the middle of a skills revolution. The effects of digital transformation, environmental change and economic uncertainty have disrupted conventional career pathways, causing businesses to question what skills the workforce needs now and tomorrow.
According to the World Economic Forum’s Future of Jobs Report, as many as 75 million jobs are expected to be displaced by 2022 in 20 major economies. The good news: the report predicts a net increase in jobs by next year – driven by a demand for new capabilities. The bad news: 54 per cent of all employees will need to reskill or upskill in order to meet the demand.
If the global pandemic has taught us anything, it’s that companies are capable of making decisions that can have a good social outcome, even if their motive is ultimately self-interest. Sometimes, doing the right thing just makes business sense.
“Most businesses are actually ethical in nature because to be otherwise is high risk,” says behavioural scientist Dr Attracta Lagan. “Businesses put systems and processes in place to maintain ethical standards, because it’s counter-productive for them not to do so.”
For James Mcilvena, Managing Director of Lee Hecht Harrison (LHH) South APAC, an employment advisory firm specialising in organisational transformation, the question of who should reskill workforces is a no-brainer. “Leaving aside for a moment the kudos that come with doing the right thing, it makes financial good sense for organisations to upskill and reskill their people,” he says.
Aside from keeping institutional knowledge within a business, there is the simple benefit that upskilling and reskilling workers can be done for significantly lower cost than undergoing a restructure, paying out redundancies, and then hiring new staff and onboarding them. Workers need to be considered renewable, not replaceable, Mcilvena says. “Treating people as single-use, like you would a plastic kitchen set, doesn’t make sense from a corporate social responsibility perspective,” he adds.
“Treating people as single-use, like you would a plastic kitchen set, doesn’t make sense from a corporate social responsibility perspective.”
– James Mcilvena, LHH South APAC
Employees who have worked for an organisation for several years have a knowledge of that organisation’s needs, protocols and partner relationships that can’t easily be replicated. An organisation with a flexible and committed workforce is also one that can readily adapt to new shifting business paradigms.
Retaining staff by equipping them with the means to take on new skills has the added advantage of helping a business attract new talent. Staff members who experience the benefits of ongoing career development will usually share their positive experiences with others. Instilling a culture of professional growth can thus help strengthen an organisation’s reputation and bring in new candidates who value reskilling and upskilling opportunities.
“Boards should be kicking arse if management isn’t looking at these aspects of their workforce management,” says Mcilvena.
The need for businesses to stay on the front foot is a view shared by Adecco Group ANZ CEO Preeti Bajaj, who states that organisations’ ability to adapt to digital transformation depends on their levels of maturity.
“We at Adecco work with a spectrum of companies from proactive companies through to those who react in the moment,” she says. “Those that have greater maturity in understanding the reskilling/upskilling challenge have already made the case for workplace change – they have made the case to us and they also drive it internally themselves.”
“[Companies] that have greater maturity in understanding the reskilling/upskilling challenge have already made the case for workplace change.”
– Preeti Bajaj, Adecco Group ANZ CEO
Bajaj strikes a positive note for businesses that have been able to reimagine capitalism and place good outcomes for workers alongside earning a profit. She puts forward the example of Unilever as a company that has successfully reshaped its business around sustainability and practices designed to encourage and retain staff.
“The important point to make is that digital disruption is driving the structural shifts that are forcing organisations back to the drawing board. We’re seeing organisations reshape their business models and using that as an opportunity to incorporate sustainable workplace practices into those business models,” says Bajaj.
Change for the good
When considering the role organisations have to play in safeguarding the employability of their staff we must take into account the interdependent relationship that exists between business and society. “Work is such a major institution that it isn’t right to separate the world of work from the rest of society,” says Dr Lagan. “Big companies around the world recognise that they have an ethical responsibility to ensure that their employees remain employable – if not with them directly, then with someone else.”
Barriers to change exist, as is often the case when there is a need to recalibrate long-held assumptions. Companies must start to consider staff reskilling programs as an investment rather than an expense on a P&L sheet. They must have confidence in their workforce analytics so they can understand what skills they need of their staff – and generate a roadmap so they can equip them with those skills. Governments, too, have a role to play in incentivising businesses, but they need to think beyond short-term election cycles.
On the flipside, there is agreement on how organisations can more readily adapt to change, such as recognising the need for reskilling and upskilling considerations to move outside of HR departments and have them form part of a wider organisational strategy – complete with input by boards and senior management.
“These days organisations need to be learning organisations – everyone needs to have the opportunity to reskill themselves in tune with changes in the marketplace,” says Dr Lagan. “Remember that the technological shifts we’re seeing at the moment can be both an enabler and a threat to employability,” she says. “At the end of the day, to apply an ethical business lens is to make a choice – and the best choice a business can make is one that impacts positively on their employees and wider society.”
“The technological shifts we’re seeing at the moment can be both an enabler and a threat to employability.”
– Dr Attracta Lagan, Co-Principal at Managing Values
Why you should prioritise retaining – not replacing – your employees
• Businesses have a responsibility to ensure their employees remain employable.
• They’re well-placed to understand what skills are needed in future.
• Failure to keep staff acts as a burden to governments, family support networks and an underfunded mental health system.
• Employees are inspired to work for an organisation with social purpose.
• The market will reward businesses whose reskilling programs allow them to remain competitive.
• A culture of upskilling allows for adoption of new technological solutions and innovative business practices.
• Providing personalised career pathways for staff is appealing to the next generation of talent.
62% think businesses have a duty of care to reskill workers whose roles will be made redundant by automation.
– The Ethics Alliance Business Pulse survey
Reflection from Dr Simon Longstaff, Executive Director of The Ethics Centre
Economies are on the brink of changes that will be at least as profound as the Industrial Revolution in their impact on individuals and whole societies. Technological innovation has the capacity to reshape the world of work, finally relieving humans of the drudgery, exposure to danger and the back-breaking labour that has characterised the work of many, for millennia.
However, the promise of a ‘golden age’ casts a long shadow for those who might be displaced by the automated systems and robots that will usher in almost unimaginable prosperity. Indeed, if any force will slow the process of innovation, it will be the political weight of people who fear (rather than embrace) the future.
It follows that every business (and society as a whole) has a vested interest in ensuring that change is carefully managed in a just and orderly manner.
This article was published as part of Matrix Magazine, an initiative of The Ethics Alliance.
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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.
Hindsight: James Hardie, 20 years on
Two decades ago the scandal surrounding James Hardie switched from the health havoc its products caused to the mishandling of victims’ compensation. In this rare interview with The Ethics Alliance’s Cris Parker, former James Hardie chair Meredith Hellicar reveals how stepping into the firing line left her stronger for the experience.
Corporate scandals can create chaos indiscriminately, far beyond the organisation involved. Lawyers descend, social media accounts are cancelled, computer access denied and journalists start blocking the driveway. Everyone gets hurt. For those who stand accused of transgression, pain is unavoidable. While they try to manage their own crisis, the lives of their families, friends and workmates are also thrown into turmoil.
Meredith Hellicar, former head of James Hardie, is well aware of how unforgiving the Australian public can be. But she still believes it was her duty to step in and help the company she served and the victims of a terrible consequence of its business.
“It has always been inappropriate to speak of the toll this saga took on the personal lives of the board and some executives because of the extent of the horror of dying from mesothelioma,” says Hellicar.
“However, the Hardie people were all humans, too.”
“It has been inappropriate to speak of the toll this saga took on the personal lives of the board and executives … However, the Hardie people were humans, too.”
It’s well documented that ongoing chronic stress can cause or exacerbate many serious health problems. Hellicar says it’s “no coincidence” that one director died of cancer, another had a cancer diagnosis, an investor relations executive suffered a brain aneurysm, an assistant in the office suffered a miscarriage and one of the communications team committed suicide in the two years after the James Hardie scandal became front page news. “But, in the eyes of the public, none of these people deserved anything but derision,” she says.
Lessons learned
Looking back, Hellicar believes there are many lessons – both practical and ethical – from her story for boards and directors in corporate Australia today. Not least that, in a world that demands more corporate governance, keeping up with 1000-page board reports is increasingly impossible. In 2007, the High Court of Australia found the James Hardie board breached its duties by approving the release of a potentially misleading statement to the stock exchange in 2001.
In a world that demands more corporate governance, keeping up with 1000-page board reports is increasingly impossible.
That statement said that the company – which had once dominated the asbestos industry in Australia – had fully funded the foundation responsible for paying compensation to people suffering asbestos-related diseases, such as mesothelioma. It was later found that there was an estimated shortfall in funding of about $1 billion. Justice Ian Gzell of the New South Wales Supreme Court was moved to issue a scathing judgement – and single out Hellicar as “an unsatisfactory witness”.
However, his ruling was controversial. The directors had argued they had not approved the media release. And after appeals in which directors claimed they had been punished enough by the adverse publicity and strong support from prominent Australians, their period of suspension was reduced from five years to two. Talk to many of Australia’s business leaders today and they are quick to voice admiration for Hellicar and respect for the way in which she behaved under fire.
Hellicar had taken the chair of James Hardie from Alan McGregor in August 2004 when his health deteriorated. Hellicar says she wasn’t forced to take on the position of chair, but chose to just before a Royal Commission delivered its report and only weeks before the AGM. As a seasoned director she was well aware this meant she was ultimately responsible for the behaviour of the organisation by being answerable to/accountable for any wrongdoing, regardless of whether or not she was personally culpable and merited condemnation. But she says she felt she was the right person to ensure ongoing support to the victims and reward the shareholders for staying with the company. Australia has the second-highest mesothelioma death rate in the world, with about 700 people dying from it each year. James Hardie’s victims ran a strong media campaign for compensation, fronted by Bernie Banton.
[Hellicar] was well aware … she was ultimately responsible for the behaviour of the organisation … regardless of whether or not she was personally culpable.
At the first opportunity, despite pushback from lawyers, Hellicar apologised to the asbestos victims that the compensation fund had proven to be underfunded. During a judicial inquiry, an investigation and civil action by the Australian Securities and Investments Commission (ASIC), three court cases and a redetermination of penalties over a total of nine years, the seven board members argued they had not approved the statement about compensation funding. Nonetheless, the directors were banned from serving as board members for two years and three months.
Hellicar’s illustrious career had included board positions on AMP, Amalgamated Holdings and the Southern Cross Airport Group. She had also held executive positions such as chief executive of Corrs Chambers Westgarth and managing director of TNT Logistics Asia.
The ban was a shock and the whole process left her “completely destroyed” and “totally reviled”.
Pitfalls for boards
Hellicar speaks of being raised by a father who was a used car salesman and often sacked because he was “obsessed with honesty”. She says honesty is a virtue she herself holds dear. While maintaining that she had tried to do the right thing for people harmed by James Hardie’s asbestos products, Hellicar has accepted the board fell short in its oversight of the executive team.
One of the contributing factors, she says, was “the failure of we directors to fulfil one of the core expectations of company directors; namely, to maintain high-quality peripheral vision and to ask just one more question of management, even in the face of seemingly adequate explanations first time”.
People expect boards to be across absolutely everything occurring in their organisations, but Hellicar says this is an impossible task.
Legal minefields include the assumption of knowledge. If a director has been included on a distribution list of a document, they will have been deemed to have read it, she says.
“Politicians and the media educate society to think that, if you’re the CEO or the board, you have to know everything,” she says. “The moment a CEO says, ‘I didn’t know’, the response comes back: ‘Oh, come on, how could you not know?’”
Before each board meeting, directors receive a board pack of between 200 and 1000 pages that they are expected to read. They may have up to a dozen scheduled meetings each year, extra committee and ad hoc sessions, and serve on several boards.
In an attempt to ensure no stone goes unturned and fully informed decisions are made, corporate governance rules have created an environment that makes it extremely difficult for directors to do their job at the standards expected.
Corporate governance rules have created an environment that makes it extremely difficult for directors to do their job at the standards expected.
Recently at a Governance Institute of Australia function, Philip Chronican, the chairman of National Australia Bank, said: “It’s not enough to turn up to a meeting, review a paper and check that it complies with all the rules and policies … Unless governance has a purpose to it, then it’s just box ticking.”
Hellicar also issued a warning about the tabling of documents at board meetings, “particularly when directors dial into meetings”, she says. “Our US directors on the phone back in 2001 were found by the court at first instance to have approved the release (of the financial state of the compensation fund) because they had not expressly abstained or dissented – even though the court agreed they had not seen it.”
Whether company boards are now ‘fit for purpose’ was the subject of a 2019 paper by Stephen Bainbridge, the William D. Warren Distinguished Professor of Law at UCLA School of Law. “Although directors spend more time on board activities today than they did 50 years ago, they are still ‘part-timers, the vast majority of whom have … employment elsewhere, which commands the bulk of their attention and provides the bulk of their pecuniary and psychic income,” he writes.
Bainbridge argues that directors spend too much time on regulatory and compliance matters, rather than oversight, and suffer a serious ‘information asymmetry’ compared with the full-time executive team.
“Directors … suffer a serious ‘information asymmetry’ compared with the full-time executive team.”
A different standard for women?
Hellicar acknowledges boards have to be held accountable – but she says too often people are demonised when something goes wrong, or a mistake is made. And she feels it is particularly toxic when public shaming leans heavily on questions of sexism.
Catherine Brenner, who was appointed to the board of AMP Life (a subsidiary of AMP), chaired by Hellicar in 2007, stepped down from her role as AMP Chair in 2018. This was in response to issues raised in the 2018 Hayne Royal Commission concerning the preparation of the Clayton Utz report on AMP’s fee for no service issue.
Brenner has been cleared of any personal wrongdoing. However, she was subjected to widespread public criticism regarding her qualifications and much was delivered through a gender lens, describing what she was wearing and questioning her role as a mother.
[Brenner] was subjected to widespread public criticism regarding her qualifications and much was delivered through a gender lens.
Although Brenner stated, “I would not want my experience to prevent others considering a future on listed boards, particularly women, as they bring a very different perspective to men and have much to offer corporate Australia,” the reality is female leadership has stalled.
As of February 2021, 32 per cent of ASX 200 boards are women, but only 10 females hold the CEO roles. Playing an active role in Chief Executive Women (CEW) and the 30% Club, a movement for gender balanced boards, Hellicar feels strongly about the quota merit debate.
“If you have to ask for quotas ‘or’ [make hiring decisions based on] merit then you’re assuming that somehow women are less meritorious than men. There is no evidence at all that women are less intelligent or qualified, none at all!”
Are women subject to more scrutiny and personal abuse when forced to step down from powerful positions? Hellicar says the fact that she was a female in charge intensified reactions.
“I find it ironic that so many of the insults thrown at Julia Gillard – which have, rightly, horrified people – were hurled at me without a word of reproof,” she says. “I received a series of serious death threats, which required security around my home. The media staked out our house from before dawn until after dark, making the trip to school each morning with our daughter both hazardous and stressful for us all.”
Hellicar’s reading of the situation is backed by research, including a study of financial advisors by Mark Egan and colleagues at the Harvard Business School in 2018. Looking at what happens when advisors make mistakes, the researchers found that female financial advisors are 20 per cent more likely to be fired for misconduct than men. They are also 30 per cent less likely to find another job in the industry.
A lack of forgiveness, combined with the vilification of those who knowingly or unwittingly transgress, means that people are under enormous pressure to cover up their errors. The punitive response discourages the sort of transparency that leaders require to deal with risk.
Hellicar says if she had a magic wand, she “would simultaneously inject everyone with this huge dose of kindness and a huge dose of ‘speak up when you see something that you think is wrong’”. She quotes her former James Hardie board colleague, Peter Willcox, who said: “Bad news isn’t like wine. It doesn’t get better with age.”
“Bad news isn’t like wine. It doesn’t get better with age.”
Make a mistake and rebound
Losing her career in the boardroom has had bittersweet consequences for Hellicar. Psychiatry had been a consideration in her university days and realising no ASX-listed company would risk appointing her to the board for fear of persecution, Hellicar reinvented herself by studying a Masters degree in Psychotherapy.
She is now an executive coach (as Australia and New Zealand executive chairman of Merryck & Co.), volunteers as a crisis counsellor with Lifeline once a week and is a mentor for public school students. Hellicar feels you can’t be successful in mentoring roles “unless you’ve got things in your life you’d wish you’d done better”.
Hellicar believes our penal system should be focused on rehabilitation rather than punishment but says that people often (not always) deserve a second chance. She has found strengths of reserve to emerge from the corporate shaming she experienced and is now an active contributor to the ethical education of business leaders and corporate women.
“I have a view that, surely, people are entitled to do something stupid – and they’ll be forgiven. But that’s not how the community thinks anymore. For some reason, we don’t believe people should be allowed to recover from their mistakes,” she says. But “we know people can learn from their mistakes”. The very fact that people have faced a traumatic public failure will sometimes leave them “richer for the experience”.
“Surely, people are entitled to do something stupid – and they’ll be forgiven.”
She adds: “In the US, the more scar tissue you have, the more sought-after you are. Not in Australia.”
“Surely, people are entitled to do something stupid – and they’ll be forgiven.”
The Ethical Lens
Cris Parker
Head of The Ethics Alliance
The Ethics Centre Nearly two decades have passed since Meredith Hellicar’s experiences at James Hardie. What can we learn?
1. Respect for person is one of the primary principles in ethics and refers to the consideration and empathy that any human being deserves simply by virtue of being human. It calls on us to respect the intrinsic dignity of anyone. The way we behave towards other people is an expression of our own character and values and so treating people with respect is not motivated by whether they deserve it but rather because doing any less would diminish our own character.
2. Diversity is essential as boards look to navigate the increasing dynamic and complex issues organisations face today – not least to mitigate biases which can either silence voices, such as authority or status quo bias, or which can lead to individuals seeking out like-minded counterparts to corroborate their point of view, such as confirmation bias or group think.
3. Decisions in the board room require stakeholder trade-offs. An organisation possessing a strong ethical foundation developed through a well-defined purpose, values and principles will assist boards as they navigate competing interests and guide decision-making that is just and good.
4. A positive culture in the boardroom is built on transparency and accountability. This means an environment where directors can ask the hard questions, and where executive management are encouraged to share bad news without fear of persecution.
This article was published as part of Matrix Magazine, an initiative of The Ethics Alliance.
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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.
Vaccination guidelines for businesses
Businesses are having to address complex ethical questions about the extent to which a person’s vaccination status should be a condition of employment.
Here are some guidelines to consider:
1. There is a difference between a mandatory requirement (where there is no choice) and a condition of employment (which people can choose to meet as they think best).
Many jobs impose conditions of employment that relate to a person’s health status (including whether or not they have been vaccinated).
2. Respect and promote the maximum degree of freedom of employees – limited only by what is required to meet one’s obligations to others.
In determining this it’s important to consider:
- The nature of any duties owed to other people – including employees, customers, and members of the community more generally.
- The specific context within which people will come into contact with your employees e.g. frequency, proximity, location – and estimate the way these variables shape ‘the risk envelope’.
3. Determine if a legitimate authority (e.g. a government) has made any rules.
This includes Legislation, regulation, public health orders, etc. that determine how the business must act. For example, governments may set license conditions that ‘tie the hands’ of specific employers.
4. Actively seek alternative means by which employees might perform their roles, even if they are not vaccinated.
Note, alternatives must be practical and affordable.
5. Determine who bears the burden (including the cost) of alternative measures.
For example, should employees who choose not to be vaccinated be required to be masked, or to use rapid antigen testing at their expense?
6. Consider how roles might be reassigned amongst the unvaccinated.
With priority given to those with medical exemptions.
7. Treat every person with respect – ensuring that no person is ridiculed or marginalised because of their choice.
But note that respect for one person or group does not entail agreement with their position; nor does it void one’s obligations to others or your right, as an employer, to advance your own interests.
8. Be prepared to adjust your own position in response to changing circumstances.
Including evidence based on the latest medical research relating to vaccine safety and efficacy, etc.
Read more on the difference between compulsory and conditional requirements here.
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BY Simon Longstaff
After studying law in Sydney and teaching in Tasmania, Simon pursued postgraduate studies in philosophy as a Member of Magdalene College, Cambridge. In 1991, Simon commenced his work as the first Executive Director of The Ethics Centre. In 2013, he was made an officer of the Order of Australia (AO) for “distinguished service to the community through the promotion of ethical standards in governance and business, to improving corporate responsibility, and to philosophy.”
John Elkington on business sustainability and ethics
John Elkington is a world authority on corporate responsibility and sustainable development. Elkington sat down with The Ethics Centre’s Simon Longstaff to chat about the future of business sustainability.
“I first got involved in the business world in the mid-70s, at a time when business really didn’t want to talk to people who were self-described environmentalists or anything like that. And yet I was an environmentalist.”
John Elkington believes his admiration for the natural world began when he was six or seven. He found himself alone in the middle of a field in Northern Ireland at night, in complete darkness, and to his surprise he looked down and his feet were surrounded by tens of thousands of baby eels. “I put my hands down in the dark and had these things wriggling through my fingers. And I had one of these sort of absolute panic attacks followed by something really quite profound, which has never left me somehow,” he says. “It was a sense of connection.”
Audio: Listen to John Elkington talk about his childhood experiences.
John Elkington has dedicated his professional career to corporate responsibility and sustainable development. In the early 80s, he set up a company called Environmental Data Services, and within 18 months was helping major companies write their first environmental policy statements. His idea was: you can make or save money by doing the right thing on resources and environmental protection. “Even if you’re a small or medium size enterprise you can have a catalytic effect,” he says. “But by the time you get to the size of an Exxon Mobil or a BP or a Shell then you really are having major economic impacts.”
John Elkington on the corporate responsibility movement.
“I think for the last 40 years, business has been encouraged to be more responsible. More transparent and more accountable. The responsibility agenda continues to evolve and expand. And now we’ve got wealth divide on the agenda. We’ve got public access to health care issues. We’ve got tax evasion – more and more issues are coming in which companies are going to have to deal with.
“But the problem is that the whole corporate responsibility movement, of which I’ve been part for so long, has failed in the sense that the systems that we depend on are all wobbling. Our economies are coming apart at the seams – our governments, the political systems, are doing the same. Our societies are under challenge and the biosphere is wobbling in a way that we haven’t seen for a very long time. So corporate social responsibility, as much as I love it, isn’t working.
“Our generational task now is economic, social, environmental, political and cultural regeneration. And the problem is that our current political classes weren’t trained for it. They talk about recovery, but they mean how can we get back on the previous set of rails? And I think the debate now has to be very different.”
Audio: John Elkington talks about the path ahead for corporate responsibility.
Is John Elkington optimistic about the future?
“I think people are increasingly aware that the old order can’t hold, things are coming apart and that’s not going to stop just because we have a new American president. We put on a conference in London in 2020, called the Tomorrow’s Capitalism Forum, and the tagline was “step up or get out of the way”. Now, if you’re in coal that’s not an idea you’d like to embrace if that’s your business. But I think we have misread the urgency of the sort of cataclysmic system changes that are coming towards us. It’s like a tsunami. And it’s very difficult to ride a tsunami. I think we’re now faced with the consequences of what we and previous generations have been doing since the industrial revolution, at least. And we have a very, very short period of time in which to get our act together.”
“I think at the moment, business leaders and some finance leaders are proving more interesting than many political leaders. But this is a political challenge and the politicians have to wake up and get involved.”
Audio: hear John Elkington talk more about tackling climate change.
What keeps John Elkington awake at night?
“We need system change and cultural shifts, which the older generations are going to find profoundly dislocating. One of the things that worries me more than almost anything else is the intergenerational dynamics in all of this. In so many parts of the world you have very rapidly aging populations, and an aging population takes people increasingly to conservatism because they’re only investing for a shorter period of time. So I think there’s a real potential for anger to build up in younger populations. I’m surprised we haven’t seen more of it.”
“I’m 71 but oddly, I feel the next 15 years are going to be the most exciting of my life and the most challenging and the most dangerous politically.”
“We’re in a time of immense turbulence and people will suffer. There will be conflicts, tensions and stresses, which at times will be off the scale. But at the same time I think this is the most exciting period in our collective history, probably for hundreds of years. I’m very excited about the potential because I think it is when old systems come apart that the potential to drive systemic change goes off the scale. So the challenge for leadership I think is immense. And I think in many ways universities and business schools are not yet properly preparing people for that new world.”
John’s advice for future business leaders:
- Get out of your comfort zones and be exposed to different realities.
- Challenge your sense of who you are and what you should be doing.
- Question whether the systems you work in are still fit for purpose.
Audio: Listen to the podcast of John Elkington’s full discussion.
John Elkington is a world authority on corporate responsibility and sustainable development. He is currently Founding Partner and Executive Chairman of Volans, a future-focused business working at the intersection of the sustainability, entrepreneurship and innovation movements.
This episode was made possible with the support of the Australian Graduate School of Management, in the School of Business, at the University of New South Wales. Find out more about other conversations in the Leading with Purpose podcast.
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The Ethics Centre is a not-for-profit organisation developing innovative programs, services and experiences, designed to bring ethics to the centre of professional and personal life.
Holly Kramer on diversity in hiring
Holly Kramer, Non-Executive Director on the Boards of Woolworths and Fonterra Group, and Pro Chancellor at Western Sydney University, sat down with the Ethics Centre’s Simon Longstaff to chat about the future of business sustainability.
Holly Kramer believes that responsible management has grown in significance exponentially over the last five to ten years. She suggests the old Milton Friedman view of shareholder primacy is a thing of the past, and shareholders are now holding businesses to account and demanding they do the right thing for society.
“There’s a spectrum of different approaches to business stewardship,” she says. “There are those people who don’t understand the way the world has shifted in its attitudes toward corporate responsibility at all. There are those who do understand and “do the right thing” because they know that’s what’s expected of them, and then there are those who do the right thing because it’s simply the right thing to do.”
In the past, business decisions were generally made through the lens of profitability, and the time frame was – at most – a three year view; whereas today, management and boards must take into account the impact of their decisions on multiple stakeholders over longer time horizons, which can sometimes make those decisions seem more challenging.
“Companies are trying to change their metrics of performance. In many companies I’m involved with, you’re measured on financial and non-financial measures; and there is consideration of not just what you’ve achieved but how you’ve gone about it. They’re sometimes called “softer” skills or metrics, but I don’t agree with that characterisation. Acting sustainably requires a broader skill set and tough decisions. A new generation of business leaders are coming through, and they believe it’s important for businesses to be sustainable on every dimension – including diverse and inclusive workplaces, climate friendly practices, meaningful community engagement and leading with purpose.”
“At the end of the day, it’s critical that you hire the right people, people who understand that the decisions they make have a broader impact than just the bottom line. That’s what’s going to make the biggest difference for your business in the long run.”
Audio: Listen to Holly Kramer chat about reconciling doing the right thing with remaining profitable.
Holly Kramer on her career challenges.
“When I was in the telecommunications industry, there was a lot of money to be made from complexity. There were multitudes of calling plans; customers usually struggled to figure out what was the right solution for them. Customers told us that they wanted simplicity. Yet every time we looked at how to make them more simple, we couldn’t make the business case stack up. And so there were often internal struggles within the organisation. We were told: ‘look, if you do this, it will be an NPV negative business case, so we just can’t do it’.
“And while we battled with one another internally, ultimately what happened was that the competitors got there first, gave customers what they wanted and we lost market share as a result. I’ve always believed that when, on first glance, the numbers may not stack up, ultimately either competitors or customers will have the final say.”
Holly Kramer on responding to consumers.
Holly Kramer got her start in marketing, and she leveraged that skill when she started running an affordable fashion brand, so she was well aware that for a business to be successful it must reflect changing consumer needs. “Our starting point was to try and understand our customers as well as we could. Lots of research, lots of personal interaction. We learned early on, for example, that the industry’s idealised version of clothing models – young, skinny, and not diverse – didn’t resonate at all with our customers. They wanted to see the clothes look good on people that looked like them. And to feel good about themselves without the industry defining beauty for them.”
The problem with fashion supply chains.
Simon: “The fashion industry is now having to deal with the question of supply chains. There’s the modern slavery legislation, there’s a consciousness about environmental, social, a range of different issues, but I’m particularly thinking at the moment in the fashion industry where people were selling things like a $1 t-shirt – I really don’t know how anyone can think it’s possible to produce something for so low a price without it having adverse effects for the labour standards in the countries where they’re produced. And I think you encountered some of this during the time you were in the industry?”
Holly: “I was in the fashion industry … when the Rana Plaza tragedy happened in Bangladesh, which focused a lot of the world’s attention on human rights and ethics in the supply chain. However, I was working for a business in Australia that was owned by a parent company in another country. They were from a disadvantaged part of the world that had different standards for what was acceptable practice. And I remember getting challenged about our sourcing decisions because they (the parent company) simply had different standards and priorities than we did. But we had to do what we thought was right and also be consistent with community standards in Australia, where it was important to ensure fair employment practices were maintained in the companies who supplied us.
“The other issue was that a lot of the companies, to mitigate their reputational risk, just pulled their business out of Bangladesh. The problem with that is that you put jobs at risk in countries where the employees are most vulnerable. We had to ensure that our business was commercially viable, but also that we were doing the right thing by the countries we were sourcing from. It’s important to remember that there are no simple solutions. Companies need to consider the outcomes from a number of different angles.”
Audio: Listen to Holly chat about grappling with the ethics of fashion supply chains.
On accounting for diversity.
Over her decades working in the business sector, Kramer has seen boardrooms grapple with the idea of diversity and representation. “Gender is just one proxy for diversity,” she says. “It’s a starting point and it’s easy to measure.”
Kramer believes true diversity lies in having an array of people contributing ideas and solutions and having an environment where different ideas are welcomed. “It’s definitely important, but I don’t necessarily see gender as the most important starting point for diversity. I find it is usually cognitive diversity. Introverts and extroverts. People who like data and people who use intuition. Risk takers and those who are more risk averse. She says she’s always looking for new people who think differently to her because it makes good business sense. Gender is important, and thankfully business has made a lot of progress in that space, but Kramer feels there needs to be ethnic diversity, socioeconomic diversity, as well as generational diversity, which is just as important to achieve.
Holly’s advice for emerging leaders:
- Doing the right thing is good business
- Approach challenges with a long-term lens
- Put yourself in the position of your customers
AUDIO: Listen to the full podcast with Holly Kramer here>>
Holly Kramer is a Non-Executive Director on the Boards of Woolworths and Fonterra Group, and she is Pro Chancellor of Western Sydney University. Formerly, she was Deputy Chair of Australia Post and Chief Executive Officer of Best & Less. She has more than 25 years’ experience in general management, marketing and sales including roles at the Telstra, Pacific Brands and Ford Motor Company.
This episode was made possible with the support of the Australian Graduate School of Management, in the School of Business, at the University of New South Wales. Find out more about other conversations in the Leading with Purpose podcast.
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The Ethics Centre is a not-for-profit organisation developing innovative programs, services and experiences, designed to bring ethics to the centre of professional and personal life.
Does Australian politics need more than just female quotas?
The Labor Party’s recent decision to parachute Kristina Kenneally into the ethnically diverse electorate of Fowler came at the expense of Tu Le, a female Australian lawyer of Vietnamese background.
The decision revealed two things about politics in Australia. First, that female quotas work. Second, that if you are an Australian of Asian heritage, it’s difficult to join the political class. This is not news. The 2018 report by the Australian Human Rights Commission found that while nearly 21% of Australians are from a non-European background (excluding First Nations people who comprise an additional 3%), they make up just four per cent of Australia’s federal politicians.
Scrolling though the list of Australian leaders reveals this lack of representation. Scott, Dom, Dan, Mark, Steve, Pete, Andrew and Mike run the country, alongside one woman, Annastacia. Not one is of non-European background.
It is hard to understate the importance of a representative political class. A political class that acts in its own interests, or in the interests of a select few, is quite simply, not a democracy. A monarch rules to ensure power stays in the family line. An autocrat rules in his self-interest. In a civilian dictatorship, political decision-making rewards some and punishes others, as shown by the Russian and Chinese experience (think Chechens and Uyghurs respectively).
But a democracy is different. And democracy, at its core, is political decision-making that reflects the preferences – and better still, the interests – of the electorate. It is what drives democracy’s ability to achieve broad based economic growth. And it is what underpins the Nobel Prize winner Amartya Sen’s findings that “no substantial famine has ever occurred in any independent country with a democratic form of government and a relatively free press”.
When a democracy’s political class fail to reflect their society, they almost certainly fail to make decisions that best serve the electorate’s interests.
Consider Anthony Albanese. Albanese knows his own interests. He will have a reasonable understanding of other fifty-year-old blokes from Marrickville. But the further he moves out, the less understanding he has. I suspect he does not properly understand the concerns of a typical thirty-year-old woman, and I am nearly certain he has no real sense of the needs and wants of politically under-represented groups such as the Vietnamese community. When Albanese makes decisions that affect politically under-represented communities, it is hard to see how he could be appropriately informed.
An identical point can be made with respect to the Prime Minister, Scott Morrison. Simply replace Marrickville with Cronulla. It is this very reason why country folk want their local members to be country folk, and not people who, living in the city, neither understand the nuances of rural issues, nor have the same “skin in the game”, so to speak.
There are three principal ways to achieve a more representative political class: grassroots movements, targets and quotas. The logic for grassroots movements is that when party members better reflect Australian society, this translates into a similarly representative political class. But the proof is in the pudding. The Liberal and Labor Party have been compelled to introduce female quotas and targets because they have found grassroots movements to be insufficient. Targets are what is hoped for, but are not binding. But based on the Liberal Party’s experience with its target of 50% female representation across Australian parliaments by 2025, targets seem similarly impotent. Women account for just 28% of Liberal parliamentarians.
The most effective method to ensure the political class reflects society is quotas, something borne out by the international experience in Canada, New Zealand, Mexico and Sweden, and the domestic experience of the Australian Labor Party. When Labor first introduced female quotas in 1994, 13% of federal Labor parliamentarians were women. Today it is 48%.
There are a number of arguments against quotas. One is that quotas undermine politicians who are members of the quota group. But is Penny Wong’s career tainted by the fact that Labor has a female quota? And would we really think any less of Julie Bishop or Gladys Berejiklian had the Liberal Party had female quotas?
Another is that quotas are not “very democratic”. But this misunderstands democracy. Democracy is about collective decision-making that is responsive to the interests of citizens. It is not an unfettered Labor and Coalition duopoly, led by a handful of party executives and the estimated 1% of Australians who are party members (and if you think it is not a duopoly, try and name the last federal cabinet minister who wasn’t a member of one of these parties). Both groups have obligations that stretch beyond party members, and extend to all Australians. But do they recognise these duties? And how easily are they set aside when at odds with the interests of the party or the individual politician?
The argument against quotas that appears to have some merit is that quotas risk overruling other desirable characteristics such as intellectual capacity, political charisma or work ethic. This is not to say that under-represented groups don’t have equally great candidates. Rather, it acknowledges that in snap elections, or when relevant political branches or parties are disorganised or dysfunctional, the need to meet quotas may trump other factors.
And yet this overstates the purity of our preselection system. Deals get done. Mistakes happen. There are poorly qualified politicians who have won out over better qualified people. Sometimes the individuals we elect are criminals and other times they simply aren’t up to the job. It is unlikely well-defined quotas undermine the quality of our political class. Indeed, the evidence is pretty clear that the current system has led to the election of people who would never get into parliament if merit was the determining factor.
The argument for quotas based on ethnic or cultural background, sexual orientation or disability status, is not a popular one. Yet if female quotas are justified, it is difficult to see how quotas for other under-represented groups are not equally justified. There is, naturally, a limit to the number of groups that can be included. Groups would need to have a certain critical mass, be qualitatively different to other groups and be comprised of members of relevantly similar backgrounds.
But if we are serious about the need for the political class to reflect society, we should be serious about quotas for more than just women.
A qualification to this general argument is that all who are elected in a representative democracy are bound to bring their best judgement to bear when acting in the interests of the electorate as a whole. That is, the fact a person comes from a particular group does not mean they are its ‘delegate’. The point about quotas is not that one’s identity enables or precludes the possibility of providing ‘representation’ in this broader sense. Rather, quotas ensure that a diverse electorate can have confidence that when judgement is exercised then it will be informed by a range of considerations that include the experiences of all.
An Australian parliament without women or Indigenous people, without rural representatives, or without people of Asian heritage, cannot meet the range of interests of the electorate.. A broader quota policy would help Australia realise a more legitimate version of democracy. It may also mean that added to the names of Bob, Paul, John, Tony, and Julia, is a name like Tu or Dai.
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BY Joshua Pearl
Joshua Pearl is the head of Energy Transition at Iberdrola Australia. Josh has previously worked in government and political and corporate advisory. Josh studied economics and finance at the University of New South Wales and philosophy and economics at the London School of Economics.
Dame Julia Cleverdon on social responsibility
Dame Julia Cleverdon DCVO CBE is a passionate and practical campaigner who has gained an international reputation for ‘connecting the unconnected’. Cleverdon sat down with The Ethics Centre’s Simon Longstaff to chat about the future of business sustainability and social responsibility.
Dame Julia Cleverdon remembers working in the business world in the UK in the early 1980s. Margaret Thatcher had been in power for a few years and had made clear her position to not intervene to save shipyards or coal mines. To Cleverdon, it felt like “the whole country was in flames”. In 1981, there was a series of flash riots across Britain largely triggered by high levels of youth unemployment, particularly in some of the poorest areas in Britain: Nottingham, Liverpool and parts of London.
At the time, Dame Julia was working for a leadership organisation called the Industrial Society, and was tasked with answering the question: what can businesses do to make a difference in communities? “We discovered that you were five times more likely to be unemployed if you were a black teenager than if you were a white,” she says.
“Although the riots weren’t race riots, they were young people in mass affected by what was going on in society. And the business world with whom I had been working quite closely at the Industrial Society were absolutely amazed and said ‘where’s this come from? The Molotov cocktails bouncing our boardroom tables is very bad for business. Where’s this come from? And what should we do about it?’”
Answering these questions became Dame Julia’s defining agenda for the 1980s.
“Being responsible was going to be a better long-term business than being irresponsible.”
Dame Julia Cleverdon has been in business for over four decades and says a lot has changed. “Some businesses that I’ve known for 40 years have not wavered from believing that there is only a commercial case,” she says, “while other businesses have had something in their DNA which means that they are more likely to care about the impact they have on society.”
She jokes that she read The Times death column every morning in order to see, “which maddening old culture has popped their clogs and was no longer running their business,” so she could try to persuade their successor to do business differently.
When asked whether business leaders have learnt from the mistakes of 1981, Dame Julia isn’t sure. “I think the UK is very interesting and specific. It has a great challenge because in a way so much of our success in the last 20 years has been built on the financial services and the enormous growth and power of London.
“London’s a global centre for private equity, for technology, but not enough people have come out of that overblown size to understand what was actually going on in the North. And if you look at some surprising decisions that Britain has taken in the last 10 years or so you say ‘what caused you to believe that coming away from Europe and the European relationships that you had since the Second World War, why did you think that was a good idea?’
“And you look at where the voting patterns were – the voting patterns were almost entirely the part of the North. Where Boris Johnson and this government are at the moment is that they won this enormous landslide last year, the 80 seats that had previously been owned by the Labor Party, because their approach on Brexit was what accorded with those in the poorer places of the North.
“They don’t know what life is like up here where fishing boats aren’t working, businesses have shut, our schools are very poor. Nobody seems to care about the quality of education.”
“In the lead up to 1980 business failed to notice this bubbling discontent, which then erupted into riots and cities burning. In the 2000s, they failed to notice the discontent in the North, which then gave rise to Brexit, which was clearly something that the business community did not welcome for the most part. And so on two occasions within the memory of people alive today, there’s been a failure.”
Julia Cleverdon on her ‘teach first’ initiative.
“One of the things that causes me to reflect is that between 2001 and now, 20 years later, I’ve seen the most enormous growth of graduates in Britain who want to come into the front line of public service as teachers, police officers, social workers. I was there at the start of something called Teach First, which was persuading the cleverest university graduates in Britain that they should come and teach in the poorest schools. The mating call of the posh ‘come and work in this unbelievably swanky very well-paid private sector, commercial job’, and I would say to them, ‘no, no, you can go on and do that later but first come and understand what the issues are of educational inequity in Britain’.”
What are the major challenges for the role of business in society?
“The issue is about whether businesses listen to what’s going on in society. When you listen to the people of Blackpool gathered together for two hours on a Zoom call during a global pandemic you think this is absolutely indescribable.
“Take the inequity of access to broadband, digital and tech kit. What COVID lockdown in the UK has shown us is that actually probably 70% of kids in the poorest communities have no access to digital kit at home. You may have one phone between the family and you’re not going to get everybody’s lessons downloaded on that one phone. The cost of being on Pay As You Go to get the lesson downloaded means that you can be spending £160 a week on data getting a family of six kids their lessons.”
AUDIO: Julia Cleverdon on her work within the Blackpool community.
Is Dame Julia Cleverdon optimistic?
“The thing that keeps me optimistic is, I’ve always worked with young people, but I never worked so extensively with young people as I have in the last seven years on a great campaign called the #iwill Campaign. And what has really fired me up is the passion, energy, belief and purpose of under 25-year-olds. I do believe that the business world par excellence has to innovate all the time to be ahead of the game. And the cleverest businesses understand that innovation is best done through diversity and diverse experiences. Therefore how you recruit, how you manage, has got to ensure that you’ve got a diversity of views.”
“The other thing is the passion of the young for the causes that I’ve cared about all my life. So I don’t worry anymore about climate change. You watch Greta [Thunberg], you watch the primary school strikes that we had in Britain and you see corporates realising they’re not gonna be able to survive and thrive if they don’t take that into account. So no, I remain an optimist even though I’m 70.”
AUDIO: What keeps Julia Cleverdon optimistic.
Julia’s advice for emerging business leaders:
- Spend time embedded in different communities to enhance your perspective
- Don’t just learn from books – get out into community
AUDIO: Listen to the full podcast with Dame Julia Cleverdon.
Listed by The Times as one of the 50 most influential women in Britain, Dame Julia Cleverdon DCVO CBE is a passionate and practical campaigner who has gained an international reputation for ‘connecting the unconnected’. She co-founded Step Up To Serve. The #iwill campaign, of which Julia is now a trustee, aims to get 60 percent of young people involved in practical action in the service of others by 2020.
This episode was made possible with the support of the Australian Graduate School of Management, in the School of Business, at the University of New South Wales. Find out more about other conversations in the Leading with Purpose podcast.
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