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

I rise this evening to speak on an issue that is very close to my heart: the issue of corporate and social responsibility. When I addressed the House on this issue last year, I spoke particularly about the report of the Joint Committee on Corporations and Financial Services entitled Corporate responsibility: managing risk and creating value, which closely examined the important corporate governance issues facing Australian companies and the challenges faced by government in promoting corporate and social responsibility, CSR, in Australia’s corporate and business sector.

I also spoke about the decision by McDonald’s to cut a contract for potatoes from north-west Tasmania in favour of imported goods which gave rise to the Fair Dinkum Food campaign, of which I am a proud supporter. As I stated then, the vegetable industry sector well illustrates my concerns about corporate and social responsibility and the failure of large companies to support the communities supplying the goods which provide the company profit. This evening, however, I wish to address the accountability factors associated with corporate and social responsibility and, more specifically, the movement of Australian jobs offshore. But before I do so, I would like to take a few moments to define corporate and social responsibility.

The World Business Council for Sustainable Development defines corporate and social responsibility as ‘the business commitment and contribution to the quality of life of employees, their families and the local community to support sustainable economic development’. Companies are facing increasing pressure to consider the impacts of their business decisions and corporate and social responsibility. This demand for greater consideration is being driven from opposite ends of the corporate world—by consumers and by investors—and many businesses now acknowledge the growing necessity of addressing corporate and social responsibility in their business activities. As I have said before, intangible assets such as brand, reputation, accountability and transparency have become increasingly important in a world of empowered consumers. In an increasingly competitive marketplace, those businesses which demonstrate good corporate citizenship are more likely to succeed than those which ignore the importance that shared values can play in a consumer’s decision-making process. We probably remember well the 1990s worldwide boycott of Nike products following revelations of exploitative labour practices.

This ‘moral’ argument remains strong within current corporate and social responsibility thinking, as does the principle of sustainability—the so-called ‘triple bottom line’. Corporate and social responsibility is also increasingly being used by business as a tool for competitive positioning in the marketplace or to refute consumer criticisms—for example, the current marketing trend of fast food companies such as McDonald’s to market their products as healthy, in part a direct response to community concerns about nutrition and obesity.

Often the term CSR is applied, somewhat erroneously, to describe charitable deeds by a company—a donation to a good cause, for example. But CSR goes well beyond that, and the public is becoming more and more cynical of ‘corporate philanthropy’. For example, the recent Woolworths National Drought Action Day provided some $3 million of drought relief. This was a generous action, which I am absolutely sure was greatly appreciated by Australian farmers. Nevertheless, as one of the two duopoly players in the red meat market, Woolworths has enormous control of the market sector, and whilst the prices paid to farmers for their product have been falling substantially those applying to consumers at the supermarket have not. I do not use this example in any way to accuse Woolworths of profiteering—I understand that the profit it takes from beef has in fact been reduced—but rather to draw attention to the public concern that the drop in livestock pricing has not been matched in the retail sector.

One aspect of accountability would be to look at how corporations take on the responsibility not only to act legally in their business endeavours but also to act in a socially responsible way. The proposition that all types of corporations and organisations should be good, ethical citizens, as well as conforming to the laws of the land, raises some particular issues—for example, when do their responsibilities as good corporate citizens override their drive for profits? How do they deal with financial risks in negotiating ethical management processes and outcomes for workers, clients, suppliers and the community, as well as shareholders? These are interesting points, because the Corporations Act, which is specifically designed to give institutions legal rights and protections, does not extend to the social responsibilities and consciences expected from others.

Corporate and social responsibility is not about government dictating to companies how they should operate; rather, it is about encouraging companies to adequately consider the social and/or environmental impacts of their actions as part of their decision-making processes. This debate should also encompass shareholders who have a strong influence on business strategic decisions to ensure a policy that encompasses all the good things the Australian public deserves. (Time expired)

David Hawker (Speaker) Share this | Link to this | Hansard source

Order! It being 8 pm, the debate is interrupted.