Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Hansard source

I rise to speak on the motion moved by Senator Chapman in relation to the tabling of the report entitled Corporate responsibility: managing risk and creating value by the Joint Committee on Corporations and Financial Services, of which I am a member. I am very pleased to be able to speak, albeit briefly, on a very important report in relation to an inquiry that Labor promoted to the committee and has, over a number of months, spoken about at length publicly and to the business community. I start by thanking the secretariat staff, a couple of whom are in the gallery, for their support and assistance. This was a very lengthy inquiry with a lot of evidence. We in the opposition—and, I am sure, all senators and members on the committee—are most grateful for the assistance provided.

I also want to make a couple of points in response to Senator Chapman. Given how far many of the committee members who perhaps were initially a little doubtful about the thrust of the inquiry have come, it is unfortunate that Senator Chapman feels the need to attempt scare politics—not very effectively, I might say—on the position Labor has taken on this report. If he were to understand the nature of the supplementary report and recommendations that Labor has made, perhaps he would be a little less polemic in his response.

This inquiry was sought by the Labor Party because it seems quite patent to us—and many Australian businesses already understand this—that, in terms of meeting the challenges, current and future, social, economic and environmental, that our society faces, corporations have to be part of the solution. Our future economic viability, environmental sustainability and social cohesion are not matters that government alone can assure. It is important that business is part of the solution and that the full potential of business to be a force for good in meeting these challenges is realised. We on this side of the chamber believe—and I suggest that the report from the entire committee indicates—that corporations can and do offer something to deal with many of the challenges we are facing.

I want to make this point: corporate responsibility is fundamentally an issue of economic, environmental and social sustainability. It is the firm belief of Labor that business must be part of the solution when dealing with emerging sustainability challenges. The fact is that positive social and environmental outcomes are no longer the sole domain of government or community groups. Businesses, along with various stakeholders in business activities, are becoming aware of this fact.

The first and probably most important point where Labor’s supplementary report perhaps goes a little further than some of the recommendations of the committee is that we say that government should lead by example. You cannot lecture Australian business about the need to integrate non-financial risks and sustainability issues in their business operations if, in government, you are doing far worse than the private sector. The committee had some fairly cogent evidence from government departments that demonstrated that the reporting of non-financial risk, the reporting on sustainability issues and the reporting on environmental targets was very poor in government agencies. It seems quite patent to us that you cannot be in a situation where business is lectured about its behaviour and the government is not leading by example. One very important aspect of Labor’s recommendations is that we are seeking far better leadership from government when it comes to sustainability reporting and performance.

On the issue of directors’ duties, we shared the view of all parties that it is not appropriate to amend directors’ duties in the way sought by a number of the submitters. When it comes to reporting on non-financial risk, can I say that Senator Chapman might try to dress this up as an enormous imposition; in fact, the recommendation of the committee that deals with listed companies is effectively an ‘if not, why not?’ reporting approach. The approach Labor are taking is a similar approach—that is, mandatory reporting on an ‘if not, why not?’ level. However, our view is that it should apply not only to listed companies but also to large proprietary companies which also have potentially significant impacts on society, the community and the environment. If we are serious about trying to engage business in a cultural shift, reporting is one of the ways in which we can try to pull through that cultural shift. As I said, we are proposing a flexible mandatory minimum. It is an ‘if not, why not?’ approach without a requirement as to how businesses chooses to report it. I suggest that the way in which Senator Chapman has sought to characterise it is hyperbole, to say the least.

We have also suggested, consistent with previously announced Labor policy, that a national sustainability council be established to deal with a range of issues which are discussed in the report. We need thought leadership on sustainability and we need national targets on sustainability issues across both the public and private sectors. In our view, we need a body such as a national sustainability council to deal with these challenges.

One thing that was quite obvious in the evidence was that there is fragmentation in the way in which government corporate responsibility programs are currently delivered. That comes through even in the majority committee report. It is important that the government consider some of the recommendations of this committee and try to get a more coherent strategic framework for the government to encourage more sustainable business practices, or ‘corporate responsibility’, depending on the definition. There are a great many recommendations in the majority committee report that Labor support. There are about five areas where we go further. They centre on the issues that the government has to lead by example and that there has to be a better framework for engagement within government.

I want to place on record my thanks not only to the secretariat but also to the many witnesses and submitters who made submissions to this inquiry. The opposition members have had extremely good dialogue with some of those organisations within the business community that are leaders in this area. It is our hope that through this discussion the current government and future Australian governments can perhaps do a little better both in terms of their leadership and in terms of engaging with the broader business community to try to get it to step up to the plate, as many Australian corporations currently do.