Government ministers’ rebukes of corporate leaders who comment on social issues have received news coverage again in recent days. The Assistant Minister to the Prime Minister, Ben Morton, criticised companies acting as “self-appointed moral guardians”. This is consistent with 2017 remarks by Minister Peter Dutton that companies should “stick to their knitting” rather than using the company’s brand to advocate for “political causes”.
These public comments occur in the context of push-back against the way corporate social responsibility (CSR) obligations have been interpreted by various companies. Arguments for curbing CSR are charted in a paper by Jeremy Sammut and published by the ASX.
Recognition that commercial and not-for-profit activities occur in social settings, and that they impact on the environment and other stakeholders (many of whom are well beyond their immediate markets), has long underpinned the expectation that CSR considerations will be addressed within the governance framework.
When we ask directors to ensure that their organisations are ‘good corporate citizens’, we expect them to do more than merely serve the interests of shareholders and an inner circle of stakeholders.
The loss of trust in so many of our institutions in recent years can be attributed largely to decision-making which failed to take account of these wider concerns – beyond the economic and financial performance of the entity. Opposition to the inclusion of a governance principle related to the ‘social license to operate’ appears to have persuaded the ASX to shift ground towards curbing corporate engagement with social issues.
In my view, while this may change governance codes, it won’t change community attitudes, and the expectation that organisations in all sectors must do more to address global sustainability development goals.
In the meantime, social impact investing, social enterprises, B Corporations, and the rise of the fourth sector have already embedded a broader view about CSR into our social and economic structures. These are the enterprises that will rebuild trust in institutions through ethical governance and a commitment to serve the wider society in which they work.