Ethical Performance
inside intelligence for responsible business


funds challenge Aussie businesses on ethics

July 2005

Five superannuation funds have urged the directors of Australia’s largest companies to encourage good business ethics to protect themselves against regulation, litigation and reputation risks. They had found that the boards of 83 per cent of listed companies did not monitor activities for unfair practices.

Their research, conducted by the BT Governance Advisory Service, the investment risk management consultancy, showed that more than half the companies did not report how they achieved consumer privacy, and nearly half did not mention staff or contractor training on product safety or the handling of hazardous materials. Nearly half failed to say how they protected whistleblowers, and more than half did not deal with responsible marketing and promotion issues such as fair trading and advertising.

The funds that commissioned the research were Catholic Super, Emergency Services Superannuation, Northern Territory and Public Authorities Super Scheme, the Public and Commonwealth Superannuation Schemes, and VicSuper. Together they invest almost A$7billion ($5.2bn, £3bn) in Australian equities.

Erik Mather, head of the advisory service, emphasized that bad ethics meant bad business. He said: ‘Irresponsible marketing, poor product safety, pricing collusion and breaches of consumer privacy could create major costs for companies and their shareholders.’

Bob Welsh, of VicSuper, pointed out that under new legislation companies could be fined up to ten per cent of annual turnover for colluding with competitors.

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