Mark Baker (Braddon, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the report of the Joint Committee on Corporations and Financial Services entitled Corporate responsibility: managing risk and creating value. The committee’s inquiry closely examined the increasingly important corporate governance issues facing Australian companies today. Corporate responsibility is an emerging issue of significance to Australia’s business community. This term is commonly described in practice as a company or organisation considering, managing and balancing the economic, social and environmental impacts of its activities. This is also referred to as triple bottom line accounting. However, until recently, this was largely a notion for discussion by academics, which resulted in sporadic corporate reporting on environmental and social impacts. However, over the past decade, corporate responsibility has developed into a practical mechanism for companies to assess and manage their non-financial risks and to maximise their long-term financial value.

We have seen in recent years how companies are increasingly coming under pressure from consumers and their own shareholders to consider the social and environmental impacts of their business decisions. We have witnessed a new group of investors who believe in the concept of socially responsible investments. This challenges companies to consider their ethical and moral obligations to the community. This charge has largely been set by the financial institutions who are at the forefront of this development.

An example I would offer, which underlines my strong views on corporate responsibility, is the manner in which Australian vegetable growers have been treated by some in corporate Australia. Last year, when the fast food chain McDonald’s chose early to cut a contract for potatoes from north-west Tasmania in preference to imports for a miserly sum of $4 million Australia-wide—or approximately 0.0c per packet of french fries—it raised in many of my constituents’ minds the question of whether such corporations have a social conscience. That decision by McDonald’s has had long-term ramifications for the vegetable industry not only in Tasmania but throughout Australia. It gave rise to the Fair Dinkum Food campaign, which I have supported and continue to support. It brought attention to the failure of large corporations to support the communities from whom they profit.

My complaint against McDonald’s, as a major buyer of produce in Australia, is that it did not once stop to consider its actions and the effect they would have on not only the short-term but the long-term viability of Australia’s vegetable industry. Nor did McDonald’s stop to consider the effect its actions would have on the communities in which it does business.

Corporate responsibility is not about dictating to companies such as McDonald’s that they cannot make decisions in the best interests of their shareholders but about encouraging companies to consider the social and environmental impacts of their actions as part of their decision-making process. I should also point out that, in my efforts to help Tasmanian vegetable growers, I have met with executives from other large companies, including Coles, who have demonstrated that they are prepared to listen to stakeholders. As a result of these meetings, an industry task force group has been set up and the fruits are starting to be delivered now, with Coles putting out contracts for some of the largest areas of peas to be grown in Tasmania next year.

This reinforces a finding of our committee’s inquiry that the vast majority of Australian company directors can take and sometimes do take an enlightened self-interest approach. This view essentially allows directors to consider and act upon the legitimate interest of stakeholders, other than shareholders, to the extent that these interests are relevant to the corporation.

The committee strongly supports further successful engagement in voluntary development and the wide adoption of corporate responsibility. The committee also believes that the recommendations contained in the report will play an important part in progressing the future of corporate responsibility in Australia, moving forward in a positive manner.