In the 1860s, Australian colonies adopted, virtually unaltered, the English Companies Act 1862. Despite initial distrust of this new corporate framework, by 1885 new company registrations had begun to increase rapidly, sparking a wave of economic growth.
A substantial part of the reason lay in the strength of the limited liability model. By striking the right balance between the need to take risks as entrepreneurs, and the reasonableness of those risks, the model fostered new levels of investment and innovation. As Nicholas Butler said in the early days of the 20th century, ‘The limited liability corporation is the greatest single discovery of modern times. Even steam and electricity would be reduced to comparative impotence without it.’
Butler could not have imagined the corporations of today, beholden to minority activists who demand they put progressive agendas ahead of profit. BHP, Rio Tinto and many law firms have jumped on the cause for an Indigenous Voice to Parliament, despite the fact that there is no ‘model’, no detail, no consensus even among Indigenous people about who it would include or what it would do. Witness Qantas in the Rugby Australia-Israel Folau stoush, or ANZ jumping on the bandwagon to hassle his wife. Particularly disturbing is outdoor advertising company Ooh, removing billboard advertisements paid for by pro-life group Emily’s Voice that politely state a simple biological fact that is inconvenient to the pro-abortion crowd: that a heart beats at four weeks’ gestation. No doubt censorship of the pro-life perspective played a role in the decision of the NSW Parliament, weeks later, to legalise abortion-to-birth.
Activists now undermine corporations under the banner of corporate social responsibility. In Corporate Virtue Signalling, Jeremy Sammut analyses on the cost of CSR programs. To date, few have questioned – let alone measured – the resources managers spend on CSR.
Sammut pinpoints CSR’s origins as a well-meaning project designed to encourage the exercise of good commercial judgement in the interests of a broader group of company stakeholders than shareholders alone, with the object of indirectly protecting and adding to shareholder value. He traces CSR’s evolution into an industry which has normalised paying increasing attention to gender, sexual and racial diversity within companies, as well as the adoption of environmental causes.
The problem with CSR activities arises when companies cross the line between their legitimate involvement in political issues that affect their stakeholders, and the far less justifiable involvement in political issues with little or no connection to shareholders’ interests.
This could be attributed to a misunderstanding of the issues that concern Australians. Shortly after the Federal election, Chris Lonergan, head of Lonergan Research, admitted the company had withheld the results of a robopoll they had conducted because the results—which showed Labor was on track to lose the election—did not match published polls. This phenomenon of ‘herding,’ led them to discard data that was better than that of their competitors. The willingness to shape evidence based on assumptions about what Australians believe, rather than allowing them to speak – either at the ballot box or the cash register – is the error corporate Australia seems to want to repeat. So effectively have activists shouted down those who hold conservative values that the illusion has been created that the hard left represents mainstream Australia.
Sammut argues that the CSR activists will not stop until their progressive agenda – and the industry upon which so many people now depend for their professional livelihood – is enshrined in legislation. Setbacks like the 2006 ruling by the Corporations and Markets Advisory Committee against mandatory CSR requirements, or even the 2019 election loss, are minor hurdles on their longer march.
Sammut suggests shareholders should push to introduce a Community Pluralism Principle into the governance of companies. Its purpose would be to hold Australian business leaders accountable for ensuring CSR activities don’t stray into meddling in contentious political issues and respect the different views and values of Australians. A Community Pluralism Principle would provide corporate leaders with the means to limit CSR’s influence on their operations without opening them up to accusations of not being ‘progressive.’
One factor Sammut does not consider is how to deal with the rising influence of union-dominated superannuation funds, which are often major shareholders and would oppose the introduction of such a principle.
Nevertheless, the proposal is a good first step towards providing support for business leaders who are currently too afraid to speak in defence of their traditional beliefs, and a clear voice to those leaders who need a direction from shareholders to send a message about the appropriate limits of CSR.
By providing a comprehensive analysis of the origins of CSR and the factors that gave rise to modern corporations teetering on the edge of self-destruction, Sammut casts a new light on the neo-Marxist takeover of Australian institutions. It facilitates a better understanding of how and to what end the Left have sought to seize control of our schools, universities and media, and provides a roadmap for action in these cultural spheres.
It is fundamentally contrary to our system of democratic representation and accountability to allow contentious political and social issues to be determined by unaccountable, faceless managers in major companies. On the flip side, it is equally unreasonable to expect them to cure social ills such as indigenous disadvantage, domestic violence or gender inequality. If we do ask companies to cure social ills, it will come at a high price.
Corporations, through the limited liability pursuit of the social good that is profit, have lifted the standard of living of people in democracies to levels never before been seen. Progressive activists — if they were to achieve their goal of mandatory CSR — would undermine the prosperity of all. Corporate Virtue Signalling is an invaluable tool to understanding the motives of the CSR movement, and the serious consequences that will follow if its march is allowed to proceed unchecked.
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