SPEECH BY MICHAEL CHANEY AM CHAIRMAN, NATIONAL AUSTRALIA BANK

Transcription

1 SPEECH BY MICHAEL CHANEY AM CHAIRMAN, NATIONAL AUSTRALIA BANK OFFICIAL LAUNCH OF THE CSR PUBLICATION BUSINESS COMMUNITY INTELLIGENCE Smarter Business, Better Communities, Venue: Deloitte, Melbourne Date: Wednesday, October 5, 2005 Business Community Intelligence is a joint initiative of Deloitte and Our Community (

2 Minister, distinguished guests, ladies and gentlemen: Thanks very much, Rhonda, for those kind words. I must say that it s great to see such a large crowd here. If we d had this function 10 years ago, I suspect we could have used a much smaller room. It s interesting, looking back at that time, to remember the attitude that prevailed then in a lot of Australian boardrooms and the comments that you used to get -- It s not our job to give away shareholders money, or to provide community support. That s the job of our shareholders -- or the government -- or in any case, someone else. I have to say that I don t think you d hear that comment in boardrooms today. It s much less than ten years since the Prime Minister (Howard) made his comment about the need for Australian companies to provide community support. That was met with howls of disapproval from some quarters, who I think totally misunderstood what the PM was saying. We heard complaints such as It s not companies jobs to provide social welfare, that s the government s job -- but I don t think the PM ever intended that, and in fact he d made a prescient statement about the need for companies to engage in these activities to provide community support in all sorts of ways. Today, I think, there is widespread acceptance in corporate Australia of the need for companies to be seen to be acting as good corporate citizens and to be operating in a sustainable way. That doesn t deny in any way the fact that the greatest social contributions companies make is through the goods and services they provide and the wealth they create through the employment that they generate. However, I ve never seen any conflict between profit maximisation, shareholder focus, and community support. In my view you can t achieve good shareholder returns without focusing on being a good socially responsible company. One of the problems, I think, in this whole debate arises from definitional issues. We hear lots of terms bandied around, like corporate citizenship, triple bottom line, corporate sustainability, license to operate, corporate responsibility, corporate community development, and so on. There is, of course, no formal definition of

3 corporate social responsibility (CSR) but I must say I like the Business Council of Australia s definition, which is that CSR broadly involves, and I quote, Corporations operate within the community. For corporations to be sustainable and successful in the long term they need to engage with the community and take account of community attitudes. Successful companies therefore factor into their forward strategies activities that manage the challenges and the risks to the community and capture the opportunity to fully engage with the community. To be valid, these activities must deliver benefits both to the community and to the shareholders of the corporation. As I say, I ve never seen any conflict between those two aims. That view is well supported by a book I read last year by Ira Jackson and Jane Nelson with the terrific title Profits with Principles: seven strategies for delivering value with values. In that book they showed how the most successful and competitive companies are those that demand explicit commitment to advancing the public interest. Certainly, my experience at Wesfarmers over several decades supports this. We decided very early in the nineties to take a very proactive approach to CSR and to include community support programs into our basic strategies. As a result, I think, the reputation of the company was greatly enhanced. I could cite many examples where a good reputation opened up commercial opportunities -- the acquisition of finance, for example but I won t go into details here. One other interesting and unexpected effect of that proactive approach was in employee engagement. Rhonda mentioned the Generation Y attitude. We found out afterwards that people stated I joined you because of what you were doing with community engagement, or with the arts, or whatever. People today potential employees and employees within the company do expect the company to be there for more than just providing profit to shareholders. Today, all reputable companies embrace CSR strategies as part of their business. As an example of that, 80 out of the top 100 companies in Australia report publicly on their CSR activities, many through their annual reports and and I m glad to say that the NAB is one of them -- through stand-alone sustainability reports. It s a phenomenon which continues to gather strength (and which has a long way to go) As you may be aware, there are two separate federal parliamentary enquiries currently taking place into corporate responsibility and triple-bottom- line reporting, and specifically into the extent to which organisational decision makers have regard to the interest of stakeholders other than shareholders, the extent to which the

4 current legal framework encourages good practice in this regard, whether legislative changes are needed, and the appropriateness of reporting requirements associated with these issues. Those inquiries are, I think, a direct result of the James Hardie experience in Australia. Legislators felt that there was some public questioning about whether those issues should be looked at. I must say that I believe it would be most unfortunate if any attempt were made to legislate mandatory CSR activities or reporting formats. Firstly, defining CSR for all companies across the board would be counterproductive -- and in fact impossible, because every company s activities in the community are different. The CSR activities currently being undertaken by Australian companies reflect each company s unique operational experience and expertise. They vary depending on the nature of the corporations, their activities, their impacts, and the communities in which they operate. Accordingly, what s meant by CSR will depend on a range of factors. What s an appropriate CSR activity for the banking sector would be very different from the activities pursued in the manufacturing sector. Similarly, the CSR definition usually requires the identification of the stakeholders the company should consider in discharging its CSR role, and while some stakeholders, such as employees, will be common to all corporations, many others will vary significantly. A mining company, for example, is likely to place a higher priority on environmental issues than an accounting firm would. Secondly, Australian companies are already engaged in a wide range of innovative CSR activities that reflect the separate and distinct issues arising from the companies business activities. I believe that any attempt to define CSR and mandate actions or reporting will diminish the creativity and innovation being shown by these companies with respect to activities that do suit their own circumstances. That leads me to the Business Community Intelligence Newsletter, and why I was willing indeed, enthusiastic in accepting the invitation to launch it this evening. My view is that this publication is just what s needed at this time in order to selfregulate CSR activities and to allow Australian companies to achieve their full potential. One of the challenges with implementing CSR programs in Australia today is that while the practice, I think, is terrific, discussion, knowledge, and research on the area is lagging behind actual practice.

5 Business Community Intelligence will play an important role in plugging that gap. It seeks to do that by highlighting best practices, by highlighting new ideas and initiatives, and by describing what other research is out there. As Dr. Annie Duncan, the editor with whom I ve had a long association over in Western Australia said in the first edition, it s about trying to unravel some of the magic, mysteries and myths about business and citizenship. The Newsletter, as you know, is a joint initiative of Our Community and Deloitte, and of course Dr. Annie Duncan is heavily involved. It really is great to see this collaboration between business and community in this way, and I d like to congratulate the people and organisations concerned, particularly Rhonda Galbally, Annie, and Frank Ford, for their support of this initiative, and I have great pleasure in officially launching the Business Community Intelligence Newsletter. ********************************************************************** To download a complimentary copy of the first edition of Business Community Intelligence or to order a subscription please visit For a copy of the launch press release on Business Community Intelligence visit The Business Community Intelligence newsletter comes out quarterly. The subscription newsletter is available by visiting ing service@ourcommunity.com.au or by calling (03) A copy of the first edition of the newsletter is now available for viewing online at NB: See our news releases and research at For further information: Brian Walsh Director of Communications, Our Community Mobile: Tel: +61 (0) brianw@ourcommunity.com.au Jane Kneebone Communications & Media Manager, Deloitte Mobile: Tel: +61 (0) jakneebone@deloitte.com.au

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