The constant tension boards face in meeting the needs of stakeholders and shareholders was a key focus of this year’s Australian Governance Summit. In the session Nowhere to Hide: Shareholders, stakeholders and the role of the board at the 2021 Australian Governance Summit in March, attendees were warned of the risks of failing to address gaps between the stated values and actions of the organisation.
Nowhere to Hide: Shareholders, stakeholders and the role of the board
The gap between the stated values of some companies and their negative actions was highlighted by a number of speakers at this year’s Australian Governance Summit.
In particular, the destruction by Rio Tinto of the Juukan Gorge sacred Indigenous sites was a shock for many shareholders and showed a disparity between the company’s stated principles and its actions, said HESTA super fund chair Nicola Roxon GAICD.
HESTA, an institutional investor, owns $300 million in Rio Tinto shares and $2.5 billion in the broader mining community, Roxon said. “So when that terrible incident happened, HESTA started working with the mining industry and Indigenous communities [to make] sure it does not happen again.”
A continued mismatch between community expectations and the actions of mining companies will cause a sustained downward spiral in value for mining companies, she warned.
HESTA doesn’t “buy into” the simplistic stakeholder versus shareholder distinction, added Roxon. “Good stakeholder management delivers good share returns.”
Companies should carry out an independent stakeholder audit and ensure that strategy is aligned with the interests of stakeholder groups, said Pru Bennett GAICD, Partner at Brunswick Group and Chair of the National Foundation for Australia-China relations.
Other panellists included Alan Kirkland MAICD, CEO of Choice and Mark Morey, Secretary of Unions NSW. Watch the full video for more on how boards can fulfil their duties when competing interests are at stake.