Shayne 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.