ACSI boss Louise Davidson says sexual harassment scrutiny may be next big concern for companies

Cultural issues including sexual harassment may be the next big area of scrutiny for companies, according to Australian Council of Superannuation Investors.

Cultural issues within companies could be the next big area of scrutiny for companies, warns Australian Council of Superannuation Investors boss Louise Davidson. Picture: iStock

Cultural issues such as sexual harassment in the workplace could become one of the next big things for corporations to have to worry about, Louise Davidson, the chief executive of industry fund-supported proxy adviser, the Australian Council of Superannuation Investors, has warned.

Speaking at a business conference in Sydney on Wednesday, Ms Davidson, whose organisation is owned by some of the country’s largest superannuation funds, said that cultural issues within companies could be the next big area of scrutiny for companies.

“There has been a prominence of reporting in recent times on things like sexual harassment,” she said. “We saw the report commissioned (from former Sex Discrimination Commissioner Elizabeth Broderick) by Rio which was released recently,” she said.

She said the report showed some “atrocious cultural problems within the organisation, going to sexual harassment, going to sexism to racism”.

“It was commendable that they put that out there into the public, because it raises the bar in terms of discourse and causes everybody in the mining industry particularly, and more broadly, to question their own environment and what is going on there.”

She said she felt the revelations in the report were a reflection on the culture of the organisation.

She said a lot of the problems within companies around issues of environmental, social and governance issues were related to the culture of the company.

“That issue sits squarely with boards in terms of boards giving themselves comfort that what is going on within their organisation is appropriate.”

Louise Davidson is the CEO of the Australian Council of Superannuation Investors. Picture: Aaron Francis

She said that companies could find themselves facing “material financial impacts” as a result of poor culture and mishandling of ESG-related issues.

Ms Davidson said the big super funds who were shareholders in ACSI were putting companies under increasing pressure on their commitment to the environment.

She said it was clear that the world was now seeing the greater impacts of climate change.

She said the Intergovernmental Panel on Climate Change’s latest report had made some alarming predictions of what it expected to see over coming decades in Australian and around the world.

She said she expected that ACSI member funds, which are investors in major companies, would be assessing companies on their commitments to meeting the goals of the Paris agreement on reducing carbon emissions.

She said this would include making an assessment on the feasibility of whether they could achieve their stated goals on climate change.

“We want to see credible models,” he said. “We don’t want to see scenario modelling that paints too rosy a picture.”

She warned that there would be increasing scrutiny by investors of how much companies were relying on carbon offsets to achieve their goals for reducing their carbon footprint.

Julie Shuttleworth, the chief executive of Fortescue Future Industries, said Fortescue was transforming from a pure-play iron ore mining company to a renewables and resources company.

She said FFI, the “green arm” of Fortescue, was kickstarting the development of green energy technologies with projects such as green hydrogen and green ammonia to decarbonise Fortescue’s operations in the Pilbara and provide “green hydrogen” for the world.

She said the strategy was the “right thing to do” from a business point of view as it would drive operational costs down. “But also, the planet is cooking, and industry needs to lead by example to decarbonise.”

She said shareholders were very interested in what companies were doing about climate change.

She said the number of shareholders in the ASX-listed Fortescue Metals Group had doubled in the past 12 months, since it had announced its plans to develop a green business arm through its Fortescue Future Industries subsidiary.

She said FFI did not see gas as a new source of clean energy.

“When you’re producing gas, it releases methane into the environment.

“When you’re using gas to produce hydrogen, you’re releasing carbon dioxide into the environment and even if that is captured, which it hasn’t actually proven to be successful, in most cases, globally, we’re still releasing greenhouse gases into the atmosphere.

“It is very important that we are very clear we are talking about blue hydrogen or grey hydrogen that the consumer is aware how many carbon emissions are going into the atmosphere through that production.”

She said that was why FFI was completely focused on green hydrogen, zero emissions, renewable electricity, and electrolysis of water to make green hydrogen for the future.