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Let’s Use This Crisis, Corporate Australia!

July 1, 2021

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Australia is not just The Lucky Country – we are spoiled rotten.

It is a good place to live, we pay high taxes so our living environment is well tended, we sail through global economic storms relatively unscathed and we have not faced an earth-shaking crisis on home soil since the bombing of Darwin in WWII.

That is before you even start on the abundant natural resources, weather and other fortunate abiding conditions identified by Donald Horne in his 1964 pop-sociology polemic “The Lucky Country”.

But we must ask ourselves to what extent we have continued to squander our serendipity. The Economist’s Innovation Index for 2020 placed Australia at 23rd in the world – down for two years on the run, and down on 2014. We ranked sixth in South-East Asia, East Asia and Oceania.

It is just one symptom of an endemic complacency that still lurks deep in the corners of many of our workplaces and institutions, bred by more than two centuries of being the lucky country far away from most of the world’s trouble spots.

Now we face triple trouble: a global pandemic that we have fallen behind in our response to, a geopolitical crisis with our biggest trading partners China and the US, and a slow-moving existential emergency in the shape of Climate Change.

And what has our country done in response? We have shut our borders, erected Fortress Australia, put our heads under our covers, our hands over our ears and gone “nurrrr, we can’t handle what is going on right now, sorry”.

Okay, confession. I write this in a state of intense frustration as a road warrior CEO and company director, Mum of two, locked down in Melbourne (again) – a people person banned from seeing people in person, two million per cent sick of Zoom.

I do of course acknowledge that Australia has done some things right. We have suffered very low numbers of COVID deaths versus many other less fortunate countries. And yes, we have also come through drought, fire, flood and pestilence once more in a spirit of social cohesion.

But I am convinced that these three crises present us with a once-in-a-century opportunity to make our own luck and make our country its best self, and that the CEOs and boards of Corporate Australia must play a lead role if it is to happen. That means looking outside at global best practice, sticking our necks out - not pulling our heads in – and leaning into hard problems.

Employees and customers are on our side (trust across Australian institutions recently hit an all-time high) because we have treated them with appropriate humanity during COVID. Now they and our other stakeholders want a better tomorrow rather than just a profitable one – and they, and our ESG-minded investors, want businesses to help lead it.

In case you are on the few who still think this is just a case of lip service greenwashing at the moral laundry, spin is dead and the science is in. According to recent data from the Edelman Trust Barometer two-thirds of Australians believe CEOs should step in when the government does not fix societal problems, 72pc say CEOs should take the lead on change rather than wait for government to impose change on them, and 78pc believe CEOs should hold themselves accountable to the public, not just the board or shareholders.

It behoves us as business leaders to step up. So how do we do it?

Well, of course many Australian companies already are. Here are just a few examples that spring to my mind, all born from some kind of adversity. They are many more and these are only intended only as inspiration and a recognition that yes, we can do this.

Almost six years on from the failure of Samarco’s Fundão Dam in Brazil, BHP has shown a consistent commitment to do the right thing and make amends as best it can. That includes ensuring full and fair remediation and compensation for the damages to the communities and environment that have been affected.

Likewise, BHP’s initiative last year to set a $US400 million climate investment program was inspired. It is prioritising projects, partnerships, research and development and joint ventures to reduce emissions, offsets and support technology to create change.

One of the early projects is a five-year partnership with steel producer China Baowu to focus on reducing the greenhouse gas emissions in the global steel industry, an initiative that will make a real difference, is the right thing to do and is politically savvy.

Like BHP, we all need to be humble and learn from our mistakes.

National Australia Bank (NAB) took serious missteps in the Australian market, was slammed by the Royal Commission and was shown to be misaligned with community expectations in the way its previous Chairman and CEO were running the business.

So, what did it do? It hired Ross McEwan who has operated in one of the most challenging markets in the world, who turned around RBS and has now used that global experience to come to Australia and turn around NAB.

McEwan and his team have worked tirelessly to streamline costs, products and processes whilst looking to the long term and are now well placed to take advantage of the recovery. But they have also learned that the industry’s sole focus on shareholder returns, rather than ensuring products are right for customers, was damaging, and are far more mindful of their social licence to operate.

For instance, NAB is training corporate and institutional bankers to support the low carbon transition plans of its 100 heaviest emitting customers by helping them to reduce their climate risk in line with net zero by 2050 Paris agreement pledges.

Likewise, I recently consulted to a diversified Australian ASX 20 business on a sustainability project. It was wonderfully refreshing: not once did anyone in the team talk about the constraints of the Australian economy or the fact that Australia is so poorly setting the country up for climate change.

What they asked is: “What is the world going to be doing in 10 years’ time, and what can we do as an organisation need to do to be fit for purpose to meet the world’s demands in 10 years’ time (not just Australia’s)?”

This is not even a dual-listed company but it is considering its global responsibilities. It has lifted its head above the parochial and the mundane to identify who is doing the best thing in this space in the world and asked how it can, not only learn from, but improve on that global best practice?

We all know that none of our corporations are even close to perfect. But my point is that good leaders will disrupt the status quo and will challenge. We need to imbue these skills in our next generation of leaders as they enter and rise through the workforce so we can do justice to the graduates coming out of our universities, which rank 6th in the world for quality.

Moreover, in all of the examples above – and doubtless you have plenty of your own – leaders have been given the support of a board that understands the issues and cares about them (these are not just boards that lip-synch “we want to be the best and be different” then keep hiring the same type of people for the same old roles).

My point is this. If we as business leaders and company directors miss the opportunity these crises present we may lose the new-found levels of trust we have earned with our stakeholders and we may not get it back until the next pandemic, by which stage it may be too late.

However, if we can wake up, step up and get curious, we have a unique chance to purge ourselves and our organisations of the lingering lack of innovation and ambition that Donald Horne first identified more than five decades ago.

As a nation, we really will have earned our luck, and this time, we actually need to.

The views and opinions in these articles are solely of the authors and do not necessarily reflect those of Teneo. They are offered to stimulate thought and discussion and not as legal, financial, accounting, tax or other professional advice or counsel.

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