The Curse of a Corporate ‘Conscience’

gay qantasShayne Elliot, Chief Executive of ANZ, was reported to have said the Liddell coal power plant “would be very unlikely to meet our [environmental] standards so we wouldn’t finance it.” Mr Elliot said that the ANZ cares about these things. Bully for the ANZ, but who or, more appropriately, ‘what’ is the ANZ? Or, for that matter, the CBA, Westpac or NAB – all of which apparently declined to comment on their willingness to finance coal power.

The ANZ and other banks, and other companies outside of banking, are corporate entities. They are artefacts. They have no minds of their own. They can’t have opinions.

Let me please explain. If Pauline Hanson said that her fish and chip shop objects to the wearing of burkas in Parliament House, the ABC and other left-wing media would have a field day. All other news would be dropped. You can almost hear the superior guffaws; the suggestions that she had completely lost her mind. Yet Elliot’s statement is just as nonsensical.

I was a shareholder of Westpac in 2014 when Gail Kelly, the then chief executive, announced that Westpac would donate $100 million to set up Australia’s largest private scholarship program. I recall her being interviewed and, to my mind, being somewhat taken aback when asked whether Westpac’s shareholders were supportive of this generosity. I don’t believe it had crossed her mind that shareholders, whose money it was, should have a say.

Julie Bishop lauded Westpac’s “extraordinarily generous gift”. She was right about its mind-boggling size. Westpac’s chairman, Lindsay Maxsted, said the company wanted to set up an “enduring initiative.” The company “wanted to.” Here it is again, an artefact with a mind; with wants.

No-one asked me, as the part owner of Westpac, whether I wanted to give away so much of mine and my fellow-owners’ money. Subsequently, no-one thanked me for my gift. Which is perhaps just as well. I was a reluctant giver and given the opportunity would have put the kibosh on this extraordinarily generous gift. Why am I telling this story? I am telling it to illustrate the point that the managers of corporations are out of control.

It is absolutely true that shareholders delegate to a board and, through a board, to management, the running of a company’s affairs. It could work no other way. General meetings of shareholders are convened to agree and set a company’s broad strategy and direction but a whole lot of initiative and all of the day-to-day operations are left in the hands of the board and management. But there is an important qualification.

Boards and managers work to further the financial interests of shareholders. They don’t have carte blanche to do whatever they fancy, in the company’s name, outside of running the business.

Alan Joyce, for example, has responsibility to run an airline. This primarily entails taking people from one point to another in a timely, comfortable and safe manner while, at the same time, maximizing shareholder returns. As applies to all companies, he also has to see to it that his airline operates within the law and, beyond that, ethically.

With all the slack in the world, it is a complete stretch to think that Mr Joyce can speak for Qantas in supporting same-sex marriage (SSM). “I think it is very important for our employees, customers and our shareholders, and that is why Qantas is a supporter of marriage equality,” he was quoted as saying. I have no quarrel with Joyce personally supporting SSM. But where in the world does he get authority to speak on behalf of the artefact?

To say that shareholders of Qantas support SSM would be meaningful. But I doubt they’ve been asked. And, even if they were, it would require 100 per cent support. I mean, people don’t own Qantas shares to have their views on SSM sought, publicised and miscategorised. That’s no part of the deal. They own shares in the hope of part owning a profitable airline not a campaign organisation supporting du jour social engineering.

Go back to the ANZ. Suppose the Government was to put together a deal for a company to buy Liddell off AGL, and to run it under a contract with the Government. Assume the Turnbull Government made it clear that its objective was to keep the lights on and power prices down; and, incidentally, that it would underpin much need employment in the Hunter Valley.

Now take a leap into what can only be described as La-La land. A major Australian bank refuses to provide finance for the deal – not, for example, because it is too risky — but because the chief executive of the bank and the board claims that it offends their climate sensibilities. I do not believe for one second that all of ANZ’s shareholders are Al Gore supporters. Elliot and his board would be acting well outside of their legitimate reach.

Bear in mind that a banking licence is ultimately a gift of the Australian people; a gift that keeps on giving to generously paid bank directors and executives. I don’t normally like the idea of governments heavying public companies. I would make an exception in this case.

You just can’t have bank boards and managers running around making up capricious lending criteria which undermine Australia’s competitive position; which damage people lives and livelihoods; and which, in this case, if power cannot be reliably supplied at an affordable cost, might result in the death of the poor, the infirm and the aged. It is beyond disgraceful and puts Joyce’s high-handed activity in the shade.

19 thoughts on “The Curse of a Corporate ‘Conscience’


    Well designed machines or organisms can accept a certain amount of damage, and repair themselves. When the damage or corruption exceeds the tolerable limit, collapse or death occurs.

  • ianl says:

    > “You just can’t have bank boards and managers running around making up capricious lending criteria which undermine Australia’s competitive position …”

    Indeed, but there is little to stop them.

    Replacing hard-edged engineers with economists and their MSM enablers to run the country’s power grids has had a similar effect. We now have people with unfettered access to the public megaphone (MSM) making decisions on how to run our lives who do not know the difference between MW(or KW, or GW) and MWh/ KWh/ GWh – and see no need to know.

  • kingkate@hotmail.com says:

    Keep in mind that AGL can close down two smelters if it wants to – Portland and Tomago. That is without the government stepping in. I’ll bet $100 this whole thing about liddell is about tomago. Can you imagine rio tinto trying to sell tomago off, which it is rumored to be trying to do. It’s worthless without a cheap electricity contract. Then can you imagine what the closure of tomago would do to the region of newcastle?

    Liddell has had it. AGL is correct in descibing it as a bomb. It was virtually given to AGL in 2014. It’s too old and has never really operated that well.

    The reality is the state government has to step in and build a new coal fired power generator in nsw if they want tomago to survive.

    The other thing is that the banks have lost so much money in coal. And on the coal ports they are still exposed.

    AGL could be described as hypocrites because even when liddell closes they will still have the biggest coal fleet in the country. They certainly don’t want another coal fired power station to be built because they are building renewables and because they want high prices. They have low priced coal contracts so hence their profits are very healthy.

    Because of AGL’s self interest vs newcastle the government needs to step in. But not with an insincere solution of extending the liddell. The better solution is to build a new plant without which nsw will lose industry. After tomago, it will be the steel works at Port kembla.

    • pgang says:

      Yes, and it all comes back to the shocking rent seeking enabled by the RET. However, I think you put too much faith in the NSW govt caring about Tomago. It would be a first for them to care about anything beyond Balmain, least of all people’s jobs. Newcastle was utterly raped when the ports were leased. Genghis himself couldn’t have done a better job of pillaging and burning the city.

      A few years ago I worked on the Bayswater B project, which had investors looking at building and running a state of the art coal fired power station alongside the current Bayswater/Lidell complex. Of course it was still born, killed off quietly by sovereign risk. What an unmitigated disaster.

  • Wayne Cooper says:

    Possibly time our 4 cloistered banks were exposed to some competition? When the money-lenders start thinking they run the country, it is time to change the money-lenders.

    • whitelaughter says:

      But if the reason for the high bank profits is Aussies being unwilling to spend the time to compare financial options, will we change for more abstract reasons?

      Oh well, can anyone recommend investment advisors who can steer you away from institutions that will fritter away your profits on virtue signalling?

  • bemartin39@bigpond.com says:

    Peter’s vigorous objection to managements of public companies speaking and acting as if on behalf of shareholders is very valid indeed. They “derive” their authority, it would seem, from running their enterprises successfully enough to the satisfaction of their shareholders. They could be reigned in if enough shareholders were to divest themselves of their shares in protest. That, however, is not very likely to happen. Not many shareholders are likely to sell shares in companies which perform to their satisfaction on account of the management getting involved in socio-political issues, such as SSM, phasing out coal and the like. I reluctantly and somewhat shamefully offer myself as an example.

    I have a very modest portfolio of shares in half a dozen or so relatively successful public enterprises, which provides very handy supplement to my also very modest retirement income. Some of those companies have pronounced on societal issues which riled me at times, although nothing as drastic as those mentioned by Peter. I have to admit that I would be very reluctant to sell any shares returning decent dividends as an objection to management promoting attitudes I disagreed with.

    Similarly, I buy both my gas and electric power from AGL. I was for some time annoyed by management’s constant heralding of their “socially responsible” attitude concerning coal. When I first heard of their sanctimonious announcement of closing down Liddell Power Station, I set about to investigate alternative options. It turned out that I am on the best deal available. Am I going to change suppliers to my financial detriment? Still considering it but probably not.

  • Gregbuc@bigpond.com says:

    Yes. As a shareholder of QANTAS I’m still awaiting my letter from Mr Joyce asking me if I approve of SSM and want the company to spend shareholder funds in promoting it and permeating such policies throughout the company. *** crickets ***

  • Jody says:

    I spoke to one of my sons about this on the weekend and he said, “yes, everybody is soft; they find it easier doing that than being hated”.

  • Stephen Due says:

    Joyce and other business leaders have actually said that they support SSM because it is “good for business”. This is such a stupid statement that one assumes there has to be an ulterior motive. Or perhaps not. Perhaps they really do not know what is good for business. Or perhaps, being gay or having gay friends, they just want society to validate their personal lives. This explanation fits in quite well with the general picture of extreme narcissism that emerges from the upper echelons of Australian management. The obscene salaries probably makes extremes of self-adulation inevitable.

    • Jody says:

      I agree with everything you’ve said except ‘obscene salaries’. They are not now and never will be ‘obscene’ when you compare what a movie star like Nicole Kidman earns from a public company for about 4 months’ work. Flop or hit, she pockets the dough. Not responsible to shareholders or accountable for companies with asset values in the billions (like BHP) she gets this extortionate amount of money (she and others like her). If you don’t see any inconsistency in your argument then you certainly ought to!!!

  • padraic says:

    I agree with you Peter on this issue, especially spending profits on social engineering or virtue signaling projects. I fail to understand why public companies, sports organisations, and other corporate bodies feel compelled to take sides in divisive political debates. The bit that got me with Qantas was that I thought Qantas was 51% Government owned, so if that is the case why is the Government apparently taking sides in this debate? They should have been able to rein in Joyce – and painting a Qantas jet in gay colours – I could not believe it.

  • Jody says:

    I could tell you stories about the behaviour of AGL which would curl your hair but I’m bound to secrecy about it. I’ve dumped my shares and sacked them as domestic energy providers because I won’t do business with incompetent fools and idiots and a Nostradamus acolyte. If you’ve got their shares you’d be wise to dump them too. The company is so appallingly badly run that you just couldn’t make it up!!!

  • Finn MacCool says:

    The company I work for is going the whole hog on this stuff. One view of this is that it softens the image of the company. I worry because I think it is indicative of irrationality, something I don’t want to see in a CEO. Of course he should not push his personal beliefs using the company. What next, telling us there is a company view on how to vote?

    Some employees argue that we have supported other social causes but now it is descending into identity politics.

    Diversity in hiring? What about merit? Gender gaps? What about equality of opporrtunity not outcome? I keep my mouth shut because I only have a short time left, but I do think it is weakening the company.

    Diversity + Proximity = Conflict

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