Opening Q&A Forum – Gourlay Ethics in Business Week 2022
- Perfect early winters evening, it couldn't get any better. I start by acknowledging the custodians, the original custodians, of the lands on which we meet and they are Wurundjeri and Burrawang people of the Kulin nation. And I pay my respects to their elders, past and present. Trinity this year is celebrating its 150th anniversary. However, as we look back on the 151 cohorts of students who've passed through these doors, we can't help but reflect on the 5,000 generations of indigenous people who have cared for this land.
But it was only barely two decades ago in 2001, after more than 100 years of this college's history, that we admitted our first indigenous students, Lilly Brofy and Sana Nakata. I think that it's worth recognising this as we realise the importance of ensuring our community is one that is aware, educated, and dedicated to the support and success of our indigenous students, colleagues and friends. Trinity endorses the Uluru Statement from the Heart and an Indigenous Voice to Parliament, particularly pertinent this week. We're here this evening because of a generous endowment from longtime Trinity colleges supporters, John and Louise Gourlay, that in 2004, enabled the establishment, Trinity, to establish the Gourlay Ethics in Business Professorship. The Gourlays believe that uncompromising integrity is not only intrinsically desirable, but it delivers better business outcomes.
And they entrusted Trinity to establish and continue the professorship because Trinity shares these same values. The Gourlay visiting professorship is always an international professor who, while in Australia, promotes ethical practises in business to University of Melbourne students, and as in tonight, to the much broader community. This in Trinity's 150th anniversary, we thought that it was better, what better way to celebrate our sesquicentennial than to invite back the Gourlay visiting professors for a series, a weeklong series of events. And this is the kickoff of those events. And we hope that you'll join me in the four other events for the rest of the week. We're also, as you are recognised tonight, joined by a number of Australian experts in both industry and business ethics and the combination who will help us continue this discussion.
So tonight, we kick off with a Q&A on the business ethics issues that are front of mind or that perhaps should be. Please welcome journalist and broadcaster, Ali Moore, who will moderate tonight's session. Ali, as many of you will recognise, as all of you will recognise likely, is an experienced journalist who is a regular on the ABC having at times hosted Lateline Business, The 7:30 Report, and Lateline, and is sometimes presented for morning and afternoon shows on ABC Melbourne filling in for John Faine when he had that gig, Virginia Trioli, Ralph Epstein, and others. Ali has also been a freelance reporter and producer for BBC World News.
And now Ali, I'll hand over to you for the rest of the evening. Thank you. - Thank you, Ken. (audience claps) I feel really bad now, 'cause I was gonna do really short bios for our panels. So thank you, Ken. That was very generous.
Welcome everyone. This is such an extraordinarily timely conversation about the role of business with the various challenges that we have today. We didn't know when we organised it that it was going be two days after a federal election, which I think if you look at the primary votes and you look at the success of the many and varied independence in this election, it is in many ways a pox on both your houses to both the major parties in this country and climate change and integrity were obviously core for many voters.
And if I listen to what the ABC's very insightful, Laura Tingle said, she said that the election was a call for our political leaders to take the job of government seriously. And it's precisely arguably because our political leaders have not been taking the job of government seriously, that the role of business is so much in play today and the expectations on business are so high because there seem to be so many parts of our world where our politicians have simply vacated the space. If you look at the words and the thoughts of the former head of treasury and the former chair of the National Australia Bank, Ken Henry, he says the defining feature of capitalism is a business should not have a responsibility to do anything other than maximise profit, and like everyone else, obey the laws of the land, that's a very Milton Friedman view of the world, but he goes on to say that because of government failure, capitalism has been replaced by something called stakeholder capitalism. And it's up to the rest of us to elect governments to establish the rules of the game that make this single business focus on profits work for society. But what exactly does that mean for business? Because there are plenty of opportunities as everyone in this room knows where business has broken the rules of the game.
Just a month ago, Westpac was fined $40 million for charging fees to more than 11,000 dead people. There are also examples of where business has followed the rules, but clearly failed to meet community expectations. If we look at Rio Tinto and the blowing up of the Danggu Gorge in WA, the blast was actually legal, but it certainly didn't meet the expectations of the community. So we obeying the rules and pursuing profits enough to define the role of the corporation? And when you look at what company directors are mandated to do in this country, which is to act in the best interests of the company, how far do best interests run? Is it shareholders? Is it employees? Is it customers? Is it countries? Is it communities? Is it the world? How far does that responsibility go? So there are many questions and we have about 60 minutes, so I'm sure we'll answer all of them. And we will, of course, be taking questions, which we know are coming, in a very Q&A style like the ABC programme we know are coming from the audience. So to introduce our panel, at the end there, we have professor Ian Harper, who's probably known to many of you in the room, a member of the board of the Reserve Bank, and he's an economist and economics professor, and he's currently dean of the Melbourne Business School.
To his right, we have Jo Hogan who is founder and co-CEO of Mecca. From the first store that was opened in' 97, Mecca now has more than a hundred stores in Australia and New Zealand and 4 1/2 thousand employees. Jim Craig is the former independent director and chairman of the Investment Committee of AustralianSuper, so quite possibly, he's been responsible for hopefully growing some of your savings.
On Jim's right is Dr. Jenny Grey, who's the CEO of Zoos Victoria, So she's charged with the operation of the Melbourne Zoo, the Hillsville Sanctuary, and also the Werribee Open Range Zoo. But Dr. Gray's also worked in the private sector and the public sector. So she's been in transport, airlines, and banking as well.
To her right, we have Professor Joanne Ciulla, who's a professor of leadership ethics and director of the Institute for Ethical Leadership at the Rutgers Business School in the US, and is one of the Gourlay visiting professors. She's come a long way and it's incredibly impressive that she looks as fresh as she does given the journey of the trip. And I might say the same of Andy Crane as well who's a professor of business and society and director of the Centre for Business, Organisations, and Society at the University of Bath School of Management in the UK, also a Gourlay visiting professor.
Please welcome our panel. (audience claps) So our first question tonight comes from Jenny Vacocox. - [Jenny] Well, thank you Ali. Given that businesses rely on shareholder investment, is a value framework essential to business, even if it's in paid potential opportunities, commercial opportunity. - That's a really interesting question.
I think the second part of that question is the core there. Now Jo, I'm going to put you on the spot here and you do run a business, you've got 4 1/2 thousand employers, 100 shops, how important is a values framework and what would it look like? - I think a values framework. - Yeah.
- Mic, great. I think a values framework is essential in business and certainly in a consumer facing business where there are expectations of the community. You talked about the community, you also talked about team members, they have expectations of how you will run the business, as do your customers.
And I think that to have a long term sustainable and growing business, you need to have a framework that has a very clear north star, everybody knows what they're going after, and once everybody knows the rules of engagement, making sure you stay on track with those values, I think is easier and everybody has to live them every day. And it's funny, I was talking earlier, I feel like from a business perspective, we do ethics from the ground up sort of every day and academically, it's a much broader subject and you plant flags for us as to where things are going, whether it's with modern slavery or different topics. But I think for business, yes, you need to have a very clear value framework and everybody has to be invested in it. - And in a practical sense, what does that look like? Because I remember years ago, I dunno if it's still the case, but you'd go into the ANZ and they'd give you one of those passes that you had to wear around your neck when you were wandering around head office and on the back would be the ANZ values.
And I used to think, well, that doesn't mean anything. It's like, you know, it's very nice and you've printed some lovely words, but what does it actually mean? - Again, I think that the values can either be a piece of paper fluttering on the side of the lift well or it can be something that you live every day that your team can talk to and that they see implemented. And it can be, for example, and I'll just use a Mecca example, but we believe that making people look and feel, more importantly feel, and be their best is our mission, is our key purpose. And we believe that education is a key lever to achieve that outcome.
And so we invest 4% of our turnover in team in education and engagement, which is totally outside the ordinary in retail. And because we have 4 1/2 thousand team members, of which 94% are women, it's like, okay, we really need to lean into this concept of making people be their best. We need to ensure that there's a quality. So we are flying the flag for gender equality, and that then informs things like maternity leave and paying super whilst people are on maternity leave. And we've had to take that step because at this point, government hasn't mandated some of these fundamental directives that are needed to ensure a quality in a country, which is advanced as Australia is, what, in the 70 countries ahead of it in terms of economic stability for women. - And that is really, I might just pick up on one thing there, the 4% that you put into education.
So there's an example where you could argue that 4%, If you take the long term view, probably gives you opportunities. If you take the short term view, that's gonna be less for a shareholder in a public company. So let me ask you, Jim, I imagine you could think of the odd example where values might get in the way of opportunity and profit? - Ali, let me just come back to the question of value statement first, and then go to your question.
In my experience, value statements only work if the people in the organisation make decisions based on them. So if people see the organisation actually living the value statement, it can be incredibly powerful, particularly organisations that are growing like Mecca, I imagine, it would be very important. So your question about value statement and where values trade off against short term profit, I think if you are a long term investor in any company, these days, you are really, really focus on social licence and ESG values. Because as a shareholder, you don't just care about return, you actually care about risk more than return and risk is significantly reduced if the company has good values and it has a strong social licence. - Okay, the question it all comes down to where the line is, doesn't it? So, Andy, let me bring you in here because in an Australian context, two quite specific examples, we had the Royal Commission into the banks and Justice Hayne made the point that companies are not faced with a binary choice between the interests of shareholders and those of customers. He said over time, the interests of different stakeholders converge, just the point that you were making.
Then we have Ken Henry who says it's plain silly to expect that community and shareholder interests will converge, because in the long run, their aspirations are mutually exclusive. Every customer in a business wants a more competitive market with lower prices, whereas every business will prefer less competition, or workers want job security, whereas all business wants job flexibility. So it's all very well to say, yes, they're going to converge, but when the rubber hits the road, where do they converge? - Yeah, it's an interesting question, Ali. There's always the opportunity for convergence, but we can't assume it's always gonna be there.
It takes creativity, imagination to find those sweet spots where they converge. But I think the natural way of things is that they do not converge as you say, I mean the second comment there, there's a natural instinct that people are looking after their own interests as different stakeholders of companies. And so you have to make tough choices. And going back to what Jim said, yes, if you're a long term investor, then you may well be taking into consideration the long term interest of your stakeholders, 'cause it's in the long term interest of your company, but how many investors are in it for the long term, right? We have so much high frequency trading where people own shares for microseconds. You know, they don't care about the long term interests of the stakeholders of the company.
So that's where the challenge comes, right? Do you have investors that are with you, they're gonna have patient capital that's gonna grow with the company, grow with your stakeholders benefiting, or are you gonna have investors, which they're gonna look for short term profitability, they're looking at the next quarter's earnings, and they're looking for you to make redundancies to shore up the value of the company. So those are the challenges that managers have to face then in balancing off those expectations from short term oriented shareholders with their other stakeholders. - Jenny, in your, probably less your current role at zoos, but in your previous role, maybe banking is a really good example, can you think of examples where values maybe ran up against opportunity and potentially profit? - Yeah, I think when we think of values, we remember that this is where people spend a lot of their lives. And whether you're an employee, or a stakeholder, or a manager, or in governance, you have an expectation of how you would want to be treated for those nine hours and all the talent you've put into this.
And I don't think that shareholders want to be lied to, or treated badly, or robbed, or undervalued, and disrespected. I think shareholders want to be treated well. I had great difficulty when I was in banking working for people who cheated on their wives, because why would I then trust them not to cheat in business? Why would you hire someone who cheats on their wife and think that he won't cheat you? And so because he has no principles, he'll be good for your business, that seems crazy, right? And so I love the formulation of values as always. And so you want to be able to say, we will always be trustworthy and whether that's to our employees, or to our customers, or to our shareholders, we will always hold that value. And if you can't say always at the front of your value, it's probably not your value and you may need to look a bit further. And so either in our roles at Zoos Victoria, we are very strongly values led and we use those formulations and they've worked well for us.
Through COVID, we talked always optimistic and always truthful. And so I would be optimistic and always calm, that's one of our favourite values. And so we were able to say, how are we gonna address the staff this week? We gonna be truthful, calm, and optimistic. I have no idea what's gonna happen next week.
I'll tell you about it as soon as I know, but I'm not worried right now. And so once you live values, you start making more money for your stakeholders. - And what do you think of this conversation around values? And even if it means less opportunity. - I'd like to open by talking about value, singular.
The role of business in my book is to create value and value for the various stakeholders, value for those business serves, value for those who work for the business, value for those who've stumped up the capital for the business. And in order to create that value, there are certain ethical principles or standards that need to be observed. After all, it is a form of cooperative human venture.
We get together as human beings and we interact with one another for this particular purpose. That's not the only type of association that we use, but it's an important one. So I think there's a great deal of consonance between values, plural, and the creation of value. And I think the other speakers have sort of been more or less saying the same thing.
Although I do agree with Andy that there are fault lines, there are areas beyond which it becomes necessary to undergird these values in the business of business, with the law, with regulation, with prohibition, and with sanction. And that is the business of government as it interacts with this. - So that actually goes back to what Ken Henry saying.
- Yeah, well, I think Ken has expressed the view very starkly as you've quoted him. And I wouldn't express, although we are fellow economists, I must say I'd have a somewhat more nuanced view. I dunno what the context was in which Ken was making those remarks, but I don't think it serves at all to be as black and white about that as other speakers have pointed out, that you can't create long term value, right, in many cases you can't even create short term value if you systematically ignore the wishes of the customers, those who want to work for you, those who are prepared to invest in your business, if you treat them with contempt, then the market will treat you with contempt. So it seems to me there's a great deal of consonance rather than tension there. - I'm sure we'll come back to this point because it's all about just how clear it is.
There are some instances where it's patently clear and it's some not so clear. Jen, what do you think? - Well, it's interesting. Well, first of all, I'm fascinated by the idea that people at zoos have to stay calm. (audience laughs) Yes, always calm, that's important. I'll keep that in mind the next time I'm at a zoo. Well, part of it is how you set up the problem with a question.
If you start to look at business as something separate from society, it's a highly, highly faulty beginning, 'cause business is not business and society, it's business in society. And so in terms of the values itself, they have to be values that start with a congruency with the values of a society in which you live. And if you don't start there, it's somewhat problematic. So I think that, and the issue of consistency in values is also really important, not only in congruence with society itself, but consistency in terms of having policies, procedures, and other things that align with them, 'cause all too often, I've worked with companies where you see they have a set of values, but then you look at their policies and procedures, their incentive systems are really big, that don't seem to work with those values. So I think having a more holistic view of business as part of a system, the values as part of the system within the business, that that's what's really important in getting the behaviours that I think are important to society.
- I think we're gonna stay relatively close to this conversation with our next question. We've got a question from Pip Saldi? - [Pip] Should the corporation's law be changed to specify an additional director's duty to conduct the activities of the company sustainably given that society increasingly expects companies to actively invest in sustainability initiatives, such as getting to net zero and ethical sourcing and these investments usually do not deliver a short to medium term financial return to stakeholders? - That actually does more specifically drill down into this sort of broad subject. So Jenny, let me go to you. Do you think sustainability needs to be spelt out, needs to be added to director's duties beyond the broad brush of best interests? - I'm finding myself a little contested because we get so many things we are told we have to do in a way that it implies we wouldn't do it if we weren't forced to. And I think when we are forced to do things we don't want to do, we get quite smart, we are very clever about how we then find the line and skirt around it.
I think running a sustainable operation should be in the heart and mind of everyone today. We've been operating as a carbon neutral, certified carbon neutral, since 2012, well ahead of the curve, first zoo in the world to do that. And actually it's saving us money, it's sharpening our pencil all the time. We look at what we are going to do and decide whether there's a better way to do it and it creates a culture of smart. If there was a rule to say you had to do it, we'd shrug and find the way we could do it as cheaply as possible with as little effort as possible. We do it 'cause we believe in it.
And so I'm not necessarily a fan of being forced to do it, but sometimes there are people who won't. So yeah, maybe sometimes we need the forcing as well. - Jo, what do you think? because particularly the second part of that question too, the fact that these sorts of investments are not short term responses, and I know that there's been a couple of instances in the past, including one that was not to do with sustainability, I think it was to do with corporate or executive pay, but when a company tried to go the more friendly, less financially driven route, it was voted down. I mean, to what extent are people prepared to pay the price of short term losses for long term gain? - That's a really good question because shareholders talk about wanting long term sustainable business and yet their one real lever, if you like, is voting on remuneration.
Remuneration that trades off short term but trades off sort of long term sustainability, long term social licence issues compared to short term profit, we would vote against. So we think, sorry, we would vote against the short term profit compared to the long term social licence issues. But I can think of a number of instances as you're referring to where shareholders as a bloc have voted in ways that it's hard to reconcile that issue. - Is that though, partly, because it's not always clear exactly what's gonna be short and what's gonna be long? And let me throw you a hypothetical, I could spend a billion dollars cleaning up my emissions, cleaning up the emissions of my customers, and ramming my way through to net zero, and my shareholders would be pretty badly off probably for the next decade until I managed to get everything lined up.
Or I could spend a quarter of that, still look like I'm doing something probably even meet, well, certainly the previous government's 2030 targets, and my shareholders would be way better off. So which is the right way to go? - Yeah, so we would say it's a balance and you've got to come up with the plan that trades off the different interests in it. Spending the billion dollars to accelerate it without any value being created, take ends language, where we would not support shareholders, support companies that are going to develop sensible transition programmes over reasonable periods of time. Well, all of these issues tend to be balancing lots of issues, but the issue for a shareholder is often, all you get to do is vote on the remuneration and the remuneration is often a lot more nuanced than one particular issue that you're trying to think about. - Ian, what do you think of mandating? - Yeah, thanks. I'm going to jump in there.
Obviously Jim is right about shareholders voting on particular issues that come before an annual general meeting, but not just the shareholders vote on the company's strategy, the entire market votes on the company every second that the market is open of every day. And there is the, if you like, the informed and collective view of whether the strategy of the company's pursuing makes any sense at all either. Well, does it create value? Not just naked financial value, but broader value.
The market will have it say. I thought our questioner had in part answered her own question by pointing to the evidence, which is quite clear, the longer term probability of certain of these sorts of strategies, and to the extent that that is true, the market finds its way there. And I think I agree with Jenny that there's one thing, sure, as they say, I'd never even considered expectorating until I saw a sign on the tram that said no expectorating, right? It's the same basic principle that if there's a rule, I don't know that you need a rule, certainly not within the corporation's law, I don't think, right? The company's law boiled down says that the directors are to look to the interests of the company at all times. Now we're talking about what's in the interests of the company and believe me, investing in assets that are likely to be stranded because of climate change is not in the interests of the company.
And alright, in the short term, the corporations of law may have nothing to say about that until such time as the company starts to trade insolvent, then it has a lot to say. - But Ian, you are putting a huge amount of faith in your fellow man. I mean, we just saw, - Oh, indeed, we just saw last week, the Woodside- - What else would you like me to do out there? - But the Woodside takeover of the BHP oil assets, for example, I mean, we haven't seen that share price crash. And they're opening up huge new fields.
So I think that the argument that the market is always right. - Well, I don't think I'm asserting the market is always right, but I am asserting is that that judgement is refreshed every day or every second of every day that the market is open as people are judging one way or the other what to do there. So it isn't just the opinion of the managers, it's not even the opinion of those who happen to have shares on the share register at that particular time, it's the opinion of all of those who potentially could acquire this asset or sell this asset. And clearly, Ali, none of us has a crystal ball in these matters, right? So if you were to say, well, alright, where else do I put my faith, right? You know, when the facts change, I change my mind. What do you do minister, right? So where would you go? There is no outside force that is telling us exactly what to do, where we can consult. So we find our way through this.
Now in some cases, of course, we have to decide this politically rather than in a business structure, but we'll come back to that issue. - Ali, let me take another example, not the Woodside one, but the trading prices of coal companies. It was really four or five years ago that the debate about investing in coal companies really started to hot up. At that time, the market as a whole started changing the pricing of coal companies.
You could see it sort of pretty much across the board. This was the consensus view that coal companies probably didn't have as good a future, and secondly, their cost of capital was going up sharply, thirdly, a lot of people were pricing in the cost of carbon. The impact of that market move overall, it wasn't one person saying that, it wasn't one investor, it wasn't one manager, but it was a consensus of everyone looking at it saying, how do these companies create value? Which I think is what Ian's getting into.
- At a sort of more basic level of question would be, is this happening quickly enough? You know, that would be the key question because it looks like climate change is a burning platform and business seems to be quite slow to the party. So it may be happening, but is it happening quickly enough? And therefore, if it's not, should we be given a bit of a hurry along by some sort of government directive? - And I know that there's another question that moves us along a little bit, but before I do take that question, let me ask you, so go back to the question of Pip, an additional director's duty to conduct the activities of the company sustainably, hands up, should we put it in our director's duties or do we just assume it's gonna happen? Ian? - Neither. (all laugh) - Oh, I didn't realise there was a middle road.
And he wants the middle way. - There's absolutely a middle road. I mean, I think that you put in director's duties, it's fiendishly difficult to implement them because we have to decide what sustainability is then, and then introduce that into the law and then be able to implement it in some way.
So I don't think that's necessarily the solution, but you absolutely don't leave it to the market. I mean, you don't want the future of the planet in the hands of investors. I mean, have you met investors? You know, do you really want them to be in charge of the future of the planet? No.
At the margins, sure, they're gonna have an important role to play. So the question then is, well, how do you introduce some kind of commitment to sustainability and enforce it legally? And there's a variety of other ways. So thanks for the question, Pip, you know, the question raises what sort of ways should we implement this? So going back to say, Jim's, point about remuneration, you can, for example, require firms to have sustainability targets as part of their remuneration packages. And then it's up to them to decide which sustainability targets they want to introduce and what proportion of remuneration, but you can fix those things into the law. And so the question is not having one way of doing this through a director's duty, but the range of different legal instruments you can take and using the kind of incentives of companies to be innovative, to be creative, to find solutions to the problems that you set, but you have to put the legal conditions to set the kind of goals that you want in the first place. - And that does lead us nicely to our next question, which is from, I think it's also on sustainability, Julie Filer.
- [Julie] Hello. The concept of social licence to operate is associated with business legitimacy, credibility, and trust. What does the panel see as the primary differences between what businesses are doing now and what they need to do in the future to maintain their social licence, particularly concerning wicked problems, such as climate change? - Thank you, Julie. This sort of flows on from what you were saying. So Jim, I'll go to you on this one to start with, I suppose it's a question of how much more or what businesses need to be doing to maintain this social licence.
And climate change is an interesting one because it's one where you'd be really hard pressed to find a business, certainly a bigger business in this country, that has not been ahead of government policy on climate. - Well, that was exactly the point I was gonna make, Kelly, but that social licence, social expectations have really driven what companies have needed to do. And governments had been behind that. One of the big messages from the election on Saturday night was that governments had really been behind that. And I think it was companies that picked that up and were ahead of that with social licence, licence style investments, if you like.
What are the big issues that social licence will go to in the future? At the core it's what does society expect the company to do. What will make employees excited to come to work? What will bind them together? You know, and what is just unacceptable behaviour these days? So it's very hard to specify what that's going to be in the future, and it will continue to evolve. If you polled this room, I suspect everyone would have a slightly different answer. - Jo, and do you have a view on that? From particularly, I suppose, a more international view, not just a domestic view? - Well, yes, I mean, both the last two questions have both raised the question of the difference between ethics and the law. And the interesting thing about ethics is it's very much enforced and developed through social sanctions, through taboos, through industry leadership where you have one company that does something powerfully wonderful, I'm thinking of the case of river blindness and Merck, and they donated the drug for it, and what's interesting about a case like that is that once one company does it, gets some attention, there's a lot of me too going on. And so we really have to think of companies sometimes almost like teenagers, that if all the kids start doing it, they'll start doing it.
And I think that's why sometimes key companies that set that example and raise the bar, raise the rest of them. And that's what's really different about ethics is that that's how it actually works. So the comments earlier about being forced to do it, well, you sort of take away also what's self-rewarding about ethics, which is that you are giving something and that is something that's wonderful about our humanness. - Our next question is from Bianca Brew. - [Bianca] Hi, as media becomes politicised and privatised, it becomes less impartial. This undermines our democracy because people are making decisions about their political representation based on misinformation.
Should there be an enforceable code of conduct regarding truth telling by media outlets? - Thank you so much for that question. (audience laughs) There is, of course, yeah. There is, of course... Well, in fact, I did hear a very interesting conversation yesterday about how you really couldn't think of news corporation as a media organisation any further, which I thought, well, maybe that puts that one out. We do have a press council, which investigates and adjudicates and mediates, we have a media union code of ethics, which is not, obviously is not enforceable, just to put some background there, but well, okay, Ian, I'll put it to you.
Do we need an enforceable code of conduct for truth telling? - What is truth? (audience laughs) Said Pilate, right? As he walked away, what is truth? The difficulty is that, well, difficulty, we live in an age when people believe in their own truth, what's true for me is what's true. And so let's just say it would've been easier, I think, to answer the question when I was growing up when there was a stronger sense of what was right and wrong, what was true and not true, but these matters have evolved and are actively debated, as you would know, within institutions like this one. So even if I were to exceed to the notion that we should legislate for truth, I'd be back, I think, in Andy's box. I'd be thinking, do I then hand that to a judicial authority to decide what is actually true and on what basis would the judicial authority make that decision? So it's tough. But having said that, clearly we do have laws which proscribe defamation and the telling of lies where it can be demonstrated that these statements are contrary to the evidence, right? And who determines that? Well, it may be a jury of our peers, it might be a bench of judges, right? And then even they, however, and that necessarily going declare that this is true, what they're going to say is that on the evidence, right, beyond reasonable doubt, those sorts of qualifying statements, which is the way we've operated the law, at least in a sense, Magna Carta, basically.
It's not flawless, but I can't think of an alternative at this stage. So I think that's where I'd be. - What do you think, Jenny? And I mean, I suppose the thing is that truth is not, I would argue, truths are not facts and facts are not truths, necessarily. - Lies and truth telling is one of these areas where the law and ethics aren't perfectly aligned all the time.
And when we think it's illegal to lie, we tell you very clearly. Now, now it is illegal to lie. You must put your hand on the Bible and you must swear to tell the truth. You must sign this affidavit to say, I know this to be true. So in a lot of ways, we already have codified where we believe it's really important to tell the truth. And in a lot of other ways, we rely on society, your followers, people to give you those social cues, that lying's not cool.
'Cause we rely, as a social being, on social beings on truth telling. If we were all to lie, our society would fall apart. And I'm sure it's one of those cases you teach over and over that there's an inherent flaw in saying it's okay to lie because if it's okay to lie and everyone lies, then we'd never trust each other and then it wouldn't make any sense to lie anyways. - So put that in the context of the election we've just had where I reckon you'd be hard pressed to find a politician that hadn't lied. I mean, whether they were doing it deliberately, but the facts that they throw out left, right, and centre about this, that, and the other, and then you go back through the fact checking, and more often than not, they're not actually right with their numbers or whatever it is they've claimed.
- I can't. I mean, I think it's almost like they've taken a, and once we enter this caretaker window, it's okay, we can say whatever we like about each other and we don't get defamation. They behave in in ways, I was astounded when I moved to Australia, on some of the ways we behave in Parliament House and think it's okay.
If you behave like that in my workplace, it's not okay. And so, yes, I think there are some places we need to start saying in this world where you are to be trusted. - So do you think we should have an enforceable code of truth telling for media? - I'm kind of back to, I don't know what enforceable codes are, and so I would hate to be the truth police, you have to show up and find that out. But I think we do have to say when you put an advert up in public, it should be true, when you put up election signs, it should be true, and these are the times you put your hand on the Bible and tell us it to be true.
- Ian asked, you know, what is truth? I think another question in this day and age is what is media, because we are talking about whether it's election signs or TV or radio, but if you think about Facebook's ability to, well, allegedly swing elections by feeding misinformation to very targeted groups. So if you look at that and you go, well, does that need to be regulated? There has to be a point, I think, where it's not just the truth in traditional media, but as what media means completely morphs. How do you approach that and how do you regulate that? - Andy, it's a global problem, isn't it? - Well coming from the UK, I must say having a legal requirement for politicians to tell the truth would be nice. - Yeah, what about the media? - But the media, again, I think it is a problem of enforcement. I mean, I think we have various roots that we currently have around slander and libel laws, et cetera.
So it is possible to have restrictions on telling untruths. But I think going to the last point there around what is the media now, it becomes more and more difficult. If the media becomes as much of just communication, we don't have laws against us as individuals not telling the truth. And as the media becomes a representation of people talking to each other, the idea then of trying to legally prescribe some forms of speech is difficult to implement. So I'm generally against something like that, I can certainly see what's behind it, 'cause we are in such a world of disinformation, but I wouldn't start with the media. I mean, I think the media in some ways is doing probably a better job at holding politicians to account for not telling the truth and holding corporations to account for not telling the truth.
I would rather give more freedoms to the media because of the important role that they play as the Fourth Estate, rather than restricting them. - I'd just say, I'd say two optimistic things on this, one is the huge number of media organisations that now run fact check units. I think they're brilliant. And not just one, there are a number in this country, and also no one's come out and questioned the result of the election.
So I mean, that's, let's take that as a positive. We have another question and it's from Sophia Mowbray. - [Sophia] My question is how worried should we be about businesses taking and using our personal information? We have to hand over so much these days and what guarantees do we have that it won't get into the wrong hands or be used to help businesses profit and not help the consumers? - Thank you, Sophia. Jo, I'll put that to you first because I know, as one of your customers, that you collect quite a lot of information on us. (audience laughs) Should I worry about that? - Well, the good news is we only keep the information specifically for the reason it was collected.
We don't share it with anyone, so your secrets are safe with us tonight. We won't tell everyone what shades of foundation you use, for example. And so we are incredibly mindful of this because yes, we have an enormous customer database and our customers have told us very clearly that they like to be able to access the information on their previous sales and put all their previous purchases. And increasingly with AI, they telling us that they like getting the personalised emails with the information that's really specific to them. And at the same time we look at it and go, well, how do we make sure we don't make this creepy, and look like we're stalking you and how actually we have a hierarchy. How do we make sure that the information is safe? And we work with, what are they called? Ah, they're called ethical hackers.
There you go. I got to say the word ethical tonight, great. Ethical hackers to make sure that- - To test your systems. - To test our systems, because making sure the data is safe is really important. And then we make sure that we don't use it for any other purpose.
We don't share it with anyone. And we are really clear about that and we have a statement that you can access on our website so that there's absolute transparency around that. And we really do obsess about how we use that data because we realise it's the most precious commodity and it's so fundamental to the trust that we have with our customers. And if you ruin that, you know, if you are not respectful of data and treat it as the incredibly precious commodity it is, that gets you into enormous trouble. - Jenny, what do you think about this? And I know that it's changed in recent years, but it's taken business, I think, a long time to catch up with the need to be digitally on it.
And to have someone on their board who absolutely gets what big data can mean for a company? - I think you're right and it's growing. You know, we are only just scratching the surface of what big data can and will do. And more importantly, how you do it in the non creepy way and being respectful, but also wanting to provide the opportunities that it allows. And we've been just amazed and COVID fast tracked us into actually a whole lot of new platforms when everyone has to check in before they go to any attraction or to any restaurant, suddenly you have a wealth of information that people give to you because they need to know.
And making sure that you have the authorities, you leave the power with the customer to check the block off, yes, you can use my data and share for global research on what shade of lipstick is best, but- - But the problem with that is that that might be on page 959 of what you've had to read to sign off on the conditions. I mean, there's also got to be an onus to make it. - Really upfront.
- User friendly, too. - Absolutely. And it should be right up at the front of where you're doing your transaction of, I do want in more information, I don't. You can contact me, you can use my data.
And I think we're going to be forced to do that because people are very conscious of this and aware of it. - Well, the data right, exists, right? That that has now been established. So whether it's on page 966 is irrelevant, Ali.
That the data belonged to the consumer, right? And if it's mishandled, then the consumer has rights of egress that they can then pursue. - Sorry, the default is you can't use it. You wanna give a check block that says you may. You can't default to we're - Right, because it belongs to the customer. - just gonna use your data however we feel. You actually have to ask for permission.
- So I wanted to make the point and then answer to the question in particular that not only the Competition Policy Committee, which I had the privilege of leading, but the Productivity Commission as a result of advice from the government or directive from the government following that review has made a substantial start on defining the consumer data right and establish the conditions under which that operates. The banking industry's been all crawled through about all of this. So this is well underway, which isn't to say that we've got no reason to be concerned, but it has moved on from thinking somehow the data are out there and I don't know what's going on, I don't, no, no, no. It's become much tighter than that. - Yeah, I mean, I think that, yes, we should be concerned. Companies that their entire business models are based on extracting our data and using it.
But I think what I think in some ways doesn't count here, I'd like to put it back to Sophia because when I speak to my students about these issues around data privacy, they generally, you know, people of a younger generation seem to have very different idea about this and are much less concerned than I am about things like data privacy. And I couldn't see very well cause the light in my eyes, but Sophia seemed like she was younger than me, certainly. (audience laughs) Quite considerably.
So do you and your peers, do you worry about this? - [Sophia] It's actually quite an interesting topic because we actually talked about this in one of the subjects I was doing the other day and it kind of became a question, are we concerned? And to an extent, yes, but also we willingly put ourselves on social media and put our information out there for people to see. So to what extent does that become our problem in terms of privacy and how much we give the businesses to use? Because it does work in our favour in a sense. You know, we get customizable emails and everything and what we wanna buy is just from our doorstep. So it's quite convenient, but then it can flip the other way.
- So are you prepared to take the trade off? - [Sophia] It depends. It depends what I'm giving up, you know? A name and a phone number and do I like this perfume or do I not, you know? Then that's fine, but something a bit more private might be a bit different. - Yeah. - Let's look at the evidence in front of us. Yes, people are willing to make that trade off.
I mean, it's clear, right? Billions of people do every day. - But again, it's to a point, isn't it? There's always a line, that that's the issue. Our next question comes from Jackson Stratup. - [Jackson] Hi guys.
My question is how much clarity should businesses have? Like how far down the supply change should you check that your values are being upheld? - So this question goes, thanks Jackson, to the modern slavery laws that we now have in this country and many other countries, this is Andy's particular field of research. It is, on the face of it, not a fraught question, but in practise, it is a fraught question, isn't it? - Yeah, it's extremely difficult to know what kind of risks you have in your supply chain. Most companies will have a pretty good idea about what happens tier one, right? They're immediate suppliers.
And if you're talking about a large multinational corporation, that could be even up to several thousand suppliers, even in tier one, but some of the most risky parts of their operations, the deepest, darkest corners of their supply chain is where the worst kind of exploitation happens. And so that then becomes incumbent upon the company. They don't want to be complicit with a very severe human rights violation.
They need to work out what's happening down there at the bottom of their supply chain. And that means a kind of transparency, going to your question, that just is extremely hard to achieve. That's not to say it can't be done, but in terms of the commitments companies are making towards this at the moment, the kind of tools that they have to do it, the kind of detection that they're enabled, they just don't have the capability to do it right now. Or at least they're not willing to put in the kind of resources that are necessary to do so.
- So Jenny, let me ask you, okay, you're a zoo, you're not selling your animals, but you've got merchandise there, you've got the cup, you've got the photo frame, you've got the plastic, whatever, how far down the chain do you go to know that what you're selling is made well? - We go as far as we can. One of the campaigns that we care very deeply about is unsustainable palm oil. And when we've done our research, we talk to all the manufacturers, particularly of the kind of things that little people eat while they're at the zoo, chocolates, ice cream, et cetera. And we got to a point where we had asked suppliers repeatedly to give us their statements to tidy up. One of the big chocolate manufacturers was walking away from the round table on sustainable palm oil and fairly clearly saying that they would continue to in their supply chain procure unsustainable palm oil. And so we took them off our shelves and it was very public.
It was in all the media. And I got a call from the, well, his PA called my PA to say, the CEO of this local company needs to come and talk to us. Not necessarily what you want to do, but he came in and the first thing he said is, "Please, can you help us? My staff are deeply embarrassed. My staff satisfaction surveys are plummeting. My staff don't wanna go to barbecues anymore because as soon as they say where they work, people say you're killing orangutans and they don't want to do that." And so we worked with them and over the course of about 12 months, they completely tidied up their supply chain and they got it down to where they're saying it's now as far as practically possible, there's one colourant that still we can't get that does, and we are like, okay, we won't worry about that, and we got them back on our supply chain.
And so we are an enormous driver of change when we use our supply chain sensibly and with truth and with credibility. - Jim, you see this as going further than just supply chain, don't you? It's about how you deal with all your employees. - Yes, I think we've had a number of questions about social licence and at the core, a lot of social licence issues really is employment relationships, bullying, harassment, inappropriate behaviour, and modern slavery is the most extreme of them. But that today is core to most companies and most of them think about it. Can I come back to Andy though, please, Ali, and Australia's approach to modern slavery has been to try and force companies to make a disclosure about it. We haven't tried to say you can't engage in it, we've just tried to say you had to tell everyone about it.
Do you think that's enough? And is that the right of the approach you would advocate? - No, it's not enough. And I think it's a really dumb approach. Yeah, the kind of the logic high end it, right, is that if companies are transparent about what they've done in their supply chain, what kind of practises they have, then people will vote with their wallets and reward those that have done well. How many people here have read a modern slavery statement? Right? How many of you have acted upon it in terms of your purchasing behaviour? Right, three or four hands, you know? It's very hard to make those kind of choices to compare across statements, to do the kind of research that's necessary.
And okay, we could make that information more readily available through different kind of, you could use an app, these kind of things, right? So yeah, it can be valuable, but it's putting all the pressure then on the consumer to act. And survey after survey after survey has shown that consumers will say that they're willing to spend more money on ethical products, but when it comes down to it, for most product choices, they're simply not, right? That they're interested in other things. And okay, occasionally on the margins they will, and for certain products and perhaps for ethical makeup, they will, but not in general. - So Jim, would you like to see an enforcement process, not just a reporting process? - Yes, I think Andy's points about disclosure. Well, disclosure's been a small movement in the right direction, but we need to go further.
It is really hard to do, it's not easy, but the only way to eradicate it is to actually take it on and have sanctions. - I mean I know we're almost out of time, but I'm gonna try and squeeze one more question in. We've got a question from Morgan Gilia. - [Morgan] Under the backdrop of Victoria and the broader Australian community learning to live with COVID, I think it's fair to say we've understood the importance of vaccinations, specifically the COVID-19 vaccination, acting as our ticket to play to reenter and reengage with the physical professional workplace.
In light of this, is there an argument to be made to alter vaccination mandates to incorporate a wider range of different vaccinations, such as influenza or could you see such changes to mandates having an adverse effect on companies' social licence? - Jo, I know it's a hard one, but I'll put it to you. I'll put it to you in this context though, because I know it was mandated clearly in Victoria, but it fell to companies to deal with the fallout from that. - Yes, it did. (audience laughs) Look, and I'm going to, again, put a commercial hat on this.
Our stores, at least one of our stores, was closed for 173 days last year and all of our stores combined were closed for more than three months last year alone, and that was the second year of the epidemic. And that has a real impact on the business, obviously. And I'm not saying that COVID was all about us, I'm just saying from a commercial point of view, clearly that has an impact. And at the same time, our distribution centre was open all day, every day.
And so we had two competing hats to put on with that. And so we had spent an inordinate amount of time on this vaccine mandate and how we manage it and how we navigate it and do we follow some of the really large retailers and say, if you're not vaccinated, then we terminate your employment and where do we go with all of this? And ultimately we just said, okay, medical science shows that the vaccine is incredibly valuable in protecting yourself and protecting those around you. And that was then implemented or enforced by the public health order. And so we've actually followed the public health order at each step of the way, saying we are not actually the experts on this, the public health order takes all of the - The risk from you, yeah. - science. - But it takes the risk for us, but it takes the science and sort of applies it.
And it keeps on changing and it's just changed again very subtly in the last couple of weeks. And so to allow people who are not vaccinated, if they cannot work from home to come in and work in the office. And so we're like, okay, so that's the change. - So how would you feel allow the question if you found out tomorrow that in fact the Victorian government was mandating the influenza vaccine? - I think it would be a very brave government that would do that, so. (audience laughs) I'd watch on an interest to see what would happen.
Look, I think COVID was extraordinary times and I think extraordinary measures were taken in a pandemic. I think that there was, now we're going off in a complete different direction, I think there was a loss of civil liberty that was extraordinary. And I think that was for one event and one event only. I think if that approach was taken more broadly, I think that the community would not accept that. So it's not what I think, I think it's the community.
- No, sure, but however, and Ian, I'll ask you about this, but we framed the question and I frame the question to you, Jo, as an adult, if you think about it, we have a broad vaccine mandate for the no jab, no play for our school children. So do you think that society would accept good science for a broader vaccine mandate, maybe if it wasn't at an adult, it was for children? - I think I'd need to know a good deal more about the public health consequences of it. These are public health orders and they are the same genre as orders to do with public sanitation. At the end of the day, there's a very strong argument to be made that in the public interest, our liberties to, well, let's not go in
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