Boardroom

Boards could be forgiven for keeping a lower public profile this year. As the Financial Services Royal Commission exposes bad behaviours, and as anti-business sentiment rises, the best response by boards, publicly at least, could be with actions rather than words.

Public commentary is not just a growing risk for listed-company directors. The Charities Act 2013 sets out “advancing public debate” as a charitable purpose, under certain conditions. But a December 2017 University of Melbourne study found many NFPs were staying silent on public-policy issues for fear of government funding cuts or political payback.

Several charities expressed concerns earlier this year that the Federal Government’s proposed legislation around foreign donations would curtail issues-based advocacy by NFPs.

But is this precisely the worst time for boards to have less say in the national debate?

As community trust in Australian institutions falls, across business, government, media and non-government organisations (NGOs), should directors lift their voice in public debate?

These are vexed questions. Some directors believe that they, speaking as individuals rather than on behalf of their organisation, have every right to comment on public matters. And that the public opinion of respected directors, speaking on matters that go beyond individual or organisation self-interests, carries significant weight in the community.

Qantas Airways and Myer Holdings’ comments last year on the marriage-equality debate attracted much attention and showed that companies will stand up for beliefs, even though the views could have hurt profitability if they had incensed customers against same-sex marriage.

Others say shareholders do not elect directors to use their board position as a soapbox to comment on public debate or raise their profile. And that directors cannot separate their personal brand from the organisation’s brand when making controversial public comments.

Nevertheless, as boards and executive teams strive to lift organisation reputation, it is worth asking whether they should be more active in public debate. And if expressing a well-considered, balanced, selective public view is part of corporate social responsibility.

Case for advocacy

Maurice Newman, AC, FAICD, believes boards should push back against growing anti-business sentiment. The veteran director, a former chairman of the Australian Broadcasting Corporation and the Australian Securities Exchange, and a former Chancellor of Macquarie University, is known for his forceful opinions as a columnist in The Australian newspaper.

“Too few in business are prepared to stand up and push back,” says Newman. “Directors think a lower public profile is the way to go. But by not standing up for its beliefs, Australian industry faces more regulation and anti-business propaganda. Companies are allowing those with an anti-business agenda to have too great a share of the national debate and sway public sentiment and regulators.”

Newman says industry needs to make a stronger case to the public. “There is too much rhetoric about the big end of town making billions at the expense of ordinary workers. We don’t hear enough about the jobs and wealth that big business creates for the community. Or how saddling industry with excessive regulation will have unintended consequences by crippling risk taking, investment and credit supply. Business is sliding further down a slippery slope.”

Newman agrees that directors must tread carefully when commenting publicly. As chair of the ABC and ASX, and as a member of the now disbanded Prime Minister’s Business Advisory Council, he was careful not to make public comment that compromised those roles. But there was always scope as a director to contribute to national debate.

“All too often, directors stay silent or hide behind their organisation’s brand rather than rely on their individual authority. I believe the public wants to hear from business people who can put forth a reasoned opinion on important issues. And that the views of respected business leaders make a difference.”

“Being on a board does not disqualify a director from having a voice in public debates, on issues they feel strongly about,” says Newman. “All too often, directors stay silent or hide behind their organisation’s brand rather than rely on their individual authority. I believe the public wants to hear from business people who can put forth a reasoned opinion on important issues. And that the views of respected business leaders make a difference.”

An opposing view

George Savvides, FAICD, has a different view. As a former CEO of Medibank Private, he had to lead in the highly regulated, politically sensitive, health-insurance industry. Savvides is the current Chair of Macquarie University Hospital, Kings Transport and Next Science Group, Deputy Chair of SBS and an independent director of Ryman Healthcare NZ.

“Time spent in public-square debate is not in the non-executive director’s job description. This is not to deny every citizen’s right to promote their views and opinions, but not by leveraging the corporate platform.”

Savvides says directors should refrain from public debate when it could imply they represent company views. “Time spent in public-square debate is not in the non-executive director’s job description. This is not to deny every citizen’s right to promote their views and opinions, but not by leveraging the corporate platform.”

Chairmen who serve on several boards risk creating confusion with public comments, he says. “Chairs or directors who speak publicly over the top of the CEO, (go over) the company line about industry regulation, or critique government policy, fall into the trap of potentially confusing stakeholders on business priorities and inadvertently undermining the role of the CEO or executive leadership.”

The exception, says Savvides, a former Chair of World Vision Australia, might be in some charities where the Chair is a person of influence who is specifically recruited to be a part of the organisation’s communication and advocacy, working closely with the CEO.

He says business people should present a strong collective voice in the national debate through industry associations. “The AICD presents an excellent forum through which board members can express views on a wide array of public policy, governance regulation and political policy debate. Comments made by board members on an AICD platform or in the Company Director Journal will more likely be interpreted as an individual position, not a company view linked to the board directorship of the individual.”

Savvides says an organisation’s CEO is best placed to influence debate around regulatory change. “If in my own case as chairman of a healthcare board I wanted to see policy reform or regulatory change in the healthcare sector that I have been involved in for 30 years, I would be ensuring as a board member that the CEO and executive team had a well-developed policy reform argument, supportive research, and a well-resourced stakeholder engagement and communication plan.”

He adds: “I would then monitor the CEO’s progressive implementation of that plan and provide practical counsel and advice if required. If because of my sector experience I had contact with key stakeholders, I would try to make introductions to assist the CEO.”

NFPs and advocacy

John Barrington, FAICD, says advocacy through public debate is appropriate for Chairs of not-for-profit organisations, within reason. Barrington, a Perth-based strategy and governance consultant, chairs the Perth Festival, Anglicare WA and Curtin University School of Management Advisory Board and last year was awarded the AICD PwC Director Award for Excellence in the NFP Sector.

“It’s entirely appropriate for NFP Chairs to make constructive, responsible public comments on matters that affect their organisation and the community,” he says. “The comments must be fair and balanced, not overly partisan and made in consultation with the executive team.”

Barrington has written several high-profile columns for The West Australian newspaper this year on the arts, human services, innovation and other issues affecting the state. He has not shied from presenting opinions that challenge aspects of government policy.

“I serve in the arts, human services, education and new-energy innovation sectors and believe well-reasoned public commentary can highlight issues and foster debate on matters that affect the entire community. It all gets back to directors having the right intentions when commenting publicly and being prepared to make fair, evidence-based arguments.”

Barrington says directors who accept the role of chairing an NFP have a responsibility to stand up for the organisation and its cause, and most importantly the people it serves. “If you can raise the profile of an issue through public commentary and get the community, government and industry thinking constructively about it, that’s valuable. All organisations are actors in their sector and the community; they need to find their voice on issues that matter.”