Social activists have left a trojan horse at the ASX gate

JANET ALBRECHTSEN
AUGUST 29, 2018
The Australian
A very successful businessman is rebuffing efforts by bankers who are keen for him to list on the Australian Securities Exchange. “I would rather join the Green Alliance,” he told me. It’s an apt obser­vation.
And if you’re an average Australian who pays tax and holds shares, you are in for a double whammy. Not content with draining taxpayer funds to finance their social agendas, a bolshie group of activists is eager to get hold of shareholders’ money to fund and facilitate even more of their grand social plans.
Draft rules recently released by the ASX corporate governance council read as if they were written by Sarah Hanson-Young, Sally McManus and Gillian Triggs after a night on the drink, with input from US Democrat Elizabeth Warren. The most remarkable thing about this crusade to hijack corporate Australia is that the ASX has been duped on two critical fronts — activists have tricked them using clever language and also have deceived them about the state of law.
On the language front, the ASX has been hoodwinked by those who have put forward sweet-sounding words that will become Trojan horses for social engineers to storm the boardrooms with pet agendas. There are pages of directives about diversity policies, gender targets, social responsibility and a new reference to a social licence to operate in Principle 3 of the draft. It reads like a comic strip of social activism providing for everything from a “living wage”, not pursuing “aggressive tax avoidance” and satisfying “human rights”.
That last one is a doozy because “human rights” in the modern era have become a grab bag of everything that any group of loud activists deem to be human rights.
And activists have planned it this way. They deliberately choose vague, sweet-sounding words that can be moulded to push any social agenda under the ruse of sounding unobjectionable.
But, to paraphrase Christopher Hitchens, phrases such as a social licence to operate are coined by social activists used by cowards to manipulate morons.
Just read some of the submissions to the corporate governance council.
The RSPCA says the language of the new framework means companies must now give explicit commitments to improving the welfare of animals.
Relying on the wonderfully nebulous “social licence to operate”, the Red Cross says companies are now specifically committed to respecting international humanitarian law. This is like putting GetUp!, the UN and the Australian Human Rights Commission in charge of Australia’s corporate governance.
Our biggest companies will be the biggest targets because that attracts headlines that lead to corporate capitulation. Activists are already pressuring Qantas not to fly failed asylum-seekers back to their home countries. Under the new rules, these bullies can point to specific ASX principles to give their claim added compliance oomph.
And all the while, Australian companies will be consumed with matters other than making money, research and development, growing their business and creating new jobs. To understand how corrupted the ASX corporate governance council has become, keep this in mind: as investment banker John Wylie pointed out earlier this month: “In 55 pages of prescriptive values and rules for Australian public companies, it’s a remarkable achievement for our national securities exchange not to mention, even once, the words ‘grow shareholder wealth’ as a core goal.”
ASX chief executive Dominic Stevens says his “gut feel” is that the new draft rules “will probably concentrate down a bit”. It is super he feels that way, but the simple act of releasing such a dodgy document is a triumph for the activists on the council and an embarrassing defeat for those who are meant to represent good corporate governance.
In Curbing Corporate Social Responsibility, a report released last week by the Centre for Independent Studies, Jeremy Sammut proposes a new principle to replace the old notion of corporate social responsibility. He calls it the “community pluralism principle” and defines it to mean that “companies should consider the impact on all genuine stakeholders for the sake of shareholders”.
Unfortunately, Sammut’s suggestion is misguided and risks replacing one bit of waffle with equally vague notions of companies being “pluralistic institutions that respect, reflect and serve the whole community equally”. What on earth does that mean? Sammut’s proposal inadvertently shows how sneaky activists have convinced even smart people that Australia needs new rules because the old ones require or encourage companies to maximise short-term profits and prohibits them taking account of other stakeholders.
The truth, the bit social activists don’t know or are keeping quiet, is that for a very long time corporate law has empowered a company and its board to engage in social causes in the right circumstances and for the right reasons. Go back to 1883 when, in a famous judgment, Lord Justice Bowen said this of corporate law: “The law does not say there are to be no cakes and ale, but that there are to be no cakes and ale except such as are required for the benefit of the company …”
That was the law even in an era when companies defined their “objects” in their corporate constitution, and could act only in accordance with their objects. Company law has changed a great deal since 1883 but our modern corporations law still gives a board wide discretion, even a duty, to consider stakeholders beyond shareholders when it benefits the company to do so.
Bowen also provided legal guidance to board members who, like judicial activists, think their platform is a perfect launching pad to further their social preferences. He said: “Charity has no business to sit at the board of directors (as) charity. There is, however, a kind of charitable dealing which is for the purpose of those who practise it, and to that extent and in that garb (I admit not a very philanthropic garb) charity may sit at the board, but for no other purpose.”
Here’s the real sting in the fraud perpetuated by social activists. They want to require companies to consider social agendas and myriad stakeholders in circumstances that do not benefit the company. But they will never admit to this radical agenda. Instead, they have created a straw man, claiming that current corporate law focuses managers and boards on narrow and short-term profit maximisation.
The same tricks are being tried on by Warren. She has drafted an Accountable Capitalism Act that would require big US companies to obtain a federal charter to operate. Warren is doing the same as social activists here: pretending the law needs to change to consider other stakeholders when existing law already provides for that, and using nice words to justify theft of shareholder money to fund her chosen social agendas.
But as Black Entertainment Television co-founder Robert Johnson said, Warren’s efforts to channel Robin Hood has the “dangerous potential of chan­nelling Karl Marx”.
Like Warren’s agenda to rid us of capitalism, a ruse is under way here by social engineers trying to fleece mum-and-dad shareholders to fund their social plans.