In Greenwashed: the strange triumph of eco-Toryism, (The Spectator Australia, 15 June), Ross Clark describes how Conservative party leadership contenders are desperate to be seen as environmentalists. Clark writes, ‘While the leadership hopefuls argue over Brexit, they seem to be falling over themselves to say the same thing on climate – only louder than their rivals’.
In his recently published book, Corporate Virtue Signalling. How to stop big business from meddling in politics, Dr Jeremy Sammut, Senior Research Fellow at the Centre for Independent Studies, describes how, like UK Conservatives, virtuous Australian business leaders are desperate to outdo their peers.
This syndrome, which is rapidly infecting Australian boardrooms, has seen prominent businessmen and women commandeer their company’s valuable brands for their own political hobby horses. Encouragement, (if any is needed), for corporate leaders to become prominent political players, comes from both inside and outside businesses.
According to Sammut, ‘professionalisation of “corporate social responsibility (CSR)” has become a recognised field of business management. It is now incorporated in normal strategic and commercial operations’. Its inclination is to virtue-signal and to politicise companies from the inside. From the outside, industry superannuation funds pursue an aggressive, CSR agenda. They use shareholder voting rights, vested through their members’ investments, (do they have permission?)to politicise boards and to influence corporate support for Leftist policies.
This push is reminiscent of 1936 Germany when state propaganda, rather than trade union pension funds, reinforced the notion of corporate ‘social responsibility’ for ‘the higher good’. There are no jackboots in today’s Australia. But spooked by ‘ethical investors’ and social media campaigns and beguiled by government incentives, boards and management have become increasingly susceptible to the ‘social licence to operate’ concept.
Leading science blogger, Joanne Nova, identifies two types of ‘virtuous’ companies – the ‘badgered’ and the ‘profiteers’. The ‘badgered’ corporations are usually socially unpopular and fearful of reprisals. Financial services companies are among the badgered. At the banking royal commission and since, their leaders have demonstrated little stomach for prosecuting a rational narrative which puts their vital economic functions and serious misconduct into perspective. Or to argue the need for structural reform. Fearing push-back and, even harsher regulatory treatment, bankers have thrown in the towel. As proof of their new bona fides, all four major banks have ceased or reduced their lending to Australian coal projects. On the other hand, the ‘profiteers’ thrive on rent-seeking. According to Climate Change Business Journal, the global warming industry alone is worth at least US$1.5 trillion annually. Why wouldn’t a system which provides such taxpayer largesse and regulatory protection produce the very model of a modern chief executive, who views competitive capitalism as a relic of the past?
This carries sinister implications for a free and open society. It portends what Ayn Rand describes as ‘the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission.’ In such a society business does the bidding of the political class, even acting, when expedient, as partisan advocates. As Sammut notes, ‘today’s expansive view of environmentally and socially responsible business practices… simply parrot left-wing “progressive” values and beliefs’.
We have seen this in the appalling behaviour directed towards Israel Folau. The withdrawal of his crowd-sourcer, GoFundMe, is typical of threatened corporations yielding to sides, not principle. Worse has been the bullying of Folau’s wife Maria, for publicly supporting her husband. Corporate netball sponsors, ANZ Bank and HCF, somehow found it appropriate to parade their ‘progressive’ credentials by criticising her. This soft-left bias has made middle-management easy prey for hard-left vigilantes like, Sleeping Giants and GetUp!, who use spurious customer complaints to demand companies pull advertising from non-compliant media. This is intended to bully right-of-centre outlets into removing offending commentators and to ensure opinions and expressions of contrary views are received by ever-diminishing audiences.
Repeating left-wing social and environmental narratives may play well for directors and managers at networking shindigs or in the media, but it is not without risks to shareholders. The now infamous Gillette advertisements, scolding men for ‘toxic masculinity’, sent the company’s brand from seventh in a list of 45 health and beauty products to bottom.
Indeed, corporate critics of Israel Folau should consider that the Australian Christian Lobby is understood to have received some $15 million in donations and pledges for his defence. These are not virtuous press statements or tweets, but ordinary people putting their money where their mouths are.
Still, influential business forums, like the ASX Corporate Governance Council and the Australian Institute of Company Directors, favour the corporate social responsibility and social licence line. They challenge the long-held view that, under the Corporations Act, the primary responsibility of directors and managers is to shareholders and the maximisation of profits. Sammut recommends that those who genuinely wish to curb the role of CSR should support introducing into the language and practice of corporate governance an institutional framework and a set of ground rules which he calls the ‘Community Pluralism Principle’. He acknowledges this would not restore a golden age when business’s business was business. Nor would it, of itself, guarantee that CSR activities are limited to profit-maximising parameters. But at least, if the CPP was included as a brake on corporate political-activism in company constitutions it could deter further politicisation of corporations. The sudden ‘wokeness’ of Australian business is a deeply disturbing development. It is antipathetical to wealth creation and encourages risk aversion, delusional box-ticking and asset misallocation. Worse, it interposes activists, regulators and politicians between boards and ordinary shareholders, leading to the reality that capitalism has become an elitist closed shop.
If corporate leaders continue down this narrow path, they will eventually prove Vladimir Lenin right. ‘When it comes time to hang the capitalists, they will sell us the rope’.