The momentum for business to invest in ethical practices and sustainability is likely to increase in 2006 as investors and other stakeholders continue to focus on these issues. Progressive businesses are recognising this development and learning from leaders how to capitalise on the benefits of sustainable enterprise. Two leaders in the field of ethical investment and business in Australia share their views on developments in Australia and New Zealand.
Australian businesses are embracing corporate social responsibility (CSR) with gusto. That's the view of Michael Walsh--editor and publisher of Ethical Investor magazine, executive director of Corporate Monitor and a former chairman of the Ethical Investment Association. "While there remains a significant minority of companies that do not address environmental or social responsibility in their business model or public disclosure," says Walsh, "the majority has now taken up the CSR mantle. Those that have established themselves as leaders in the CSR field are forging ahead with new programmes, forcing others to lift their CSR game and still others to enter the fray."
Meanwhile, for Louise O'Halloran, executive director of the Ethical Investment Association, a red-hot issue, with activity and battles on all fronts, is Federal government inquiries into directors' duties and CSR reporting. These have come about as a direct result of the James Hardie claim that it was restricted in its efforts to put aside sufficient payments for outstanding asbestosis liabilities because of the Corporations Law requirement of directors to act only in the interests of shareholders.
O'Halloran, whose association aims to promote the concept, practice and growth of ethically, socially and environmentally responsible investing in Australia and New Zealand, breaks the activities down into three movements: the Corporations and Markets Advisory Committee Inquiry into Directors' Duties and CSR; the Parliamentary Joint Committee Inquiry into CSR and Stakeholder Interests; and the request by the Federal Minister for the Environment that the ASX broaden the ASX Governance Guidelines to incorporate a requirement for CSR reporting.
Award winning practices
Walsh believes that nowhere are environmental challenges potentially more important than the motor vehicle industry. Ethical Investor magazine recently reported that from 2020 cars would start to be quite different from today. Honda (whose New Zealand business was winner of the 2005 Deloitte/Management magazine Top 200 AUT Business Ethics Award) is a player in the hybrid battery/fuel car market.
"In coming years," Walsh notes, "we will probably see other players in this area, more vehicles configured for alternative fuel blends and hopefully the introduction of hydrogen fuel cell powered vehicles. We will also see big engines powered by gas rather than diesel. And more and more biodiesel will be used and blended with its fossil fuel based counterpart. There is a lot to happen between now and then but when a company like Honda puts this new vehicle technology into the market we call it leadership. It gets noticed and it gets tongues wagging."
Another example of what Walsh describes as the "great sustainability race" is for big business to demonstrate that it is not only concerned about climate change but that it has adapted its business to manage the risks of global warming. Walsh believes that Insurance Australia Group (whose New Zealand business IAG (NZ) was a finalist in the 2005 Deloitte/Management magazine Top 200 AUT Business Ethics Award) is a master at this. "From its CEO, Mike Hawker down, the company is convincing the community that a world with a clean environment, good security and fewer social problems will also have lower insurance premiums. This makes sense."
Walsh sees competition amongst companies in Australia to be considered the best corporate citizens. Westpac, for example, has been placing advertisements in national newspapers celebrating its bevy of CSR awards. …