Let firms get on with business

In fulfilling their primary purpose — to make profits for shareholders — ASX-listed corporations make an important contribution to our society: providing jobs, tax revenue, royalties and export income, and stimulating demand across the economy. Corporations need to act ethically and responsibly — the findings of the banking royal commission attest to that. Corporate regulators must ensure they do.

It is not the role of regulators to be social activists, however, by saddling corporations with contestable social agendas. Fortunately, the nebulous phrase “social licence to operate” has disappeared from the final version of an updated guide to company behaviour from the ASX Corporate Governance Council. Its proposed inclusion provoked a backlash, understandably, from companies concerned that it could have unintended consequences for businesses operating in sometimes controversial industries such as liquor, gambling, coal and coal-seam gas.

While also nebulous, the requirement that “listed entities align their culture and values with community expectations to help arrest the loss of trust in business” should do less harm. The 30 per cent gender diversity target, however, is both unnecessary and an insult to the talent of women making their way on merit. Political correctness has done enough damage in education and some bureaucracies. Smart companies understand that good corporate behaviour serves their interests.