Woolworths, Qantas changes a signal that business has learnt it must stick to core values

The decision by Woolworths chief executive Brad Banducci to retire is further evidence of bigger changes being brought about by more straitened economic times. Retail finds itself at the sharp end of political and public debate about the high cost of living. Successful firms will return to their core values and stick to their knitting.

Changing management is one way of signalling that a company has got the message and wants to reset the narrative. Alan Joyce was a superstar chief executive at Qantas until he wasn’t and became the focus of community and political anger at higher travel costs and declining levels of service.

Mr Banducci is recognised for his community focus during the pandemic but his departure will be remembered for what was a bad call on publicly disowning Australia Day merchandise and leaving the company exposed to a raft of government inquiries into price setting and lack of competition in the retail sector.

A big lesson from Qantas and Woolworths is that pandering to social media through fringe issues on the environmental, social and governance agenda will not buy lasting goodwill from government or customers when sentiment changes. Companies that were eager to join the Albanese government on the voice to parliament referendum have found themselves not to be immune from government intrusion when it suits politicians to interfere.

Shareholders are wise to ask whether corporate attention could have been better spent arguing the case for workplace flexibility and against the federal government’s industrial relations reforms that will be felt by companies, their workers and the economy for years into the future. A reappraisal of what should be core business values is taking place internationally. It is being led by the US, where major investment funds are pulling out of global sustainability initiatives that once were put at the centre of their forward-facing brand campaigns.

Legal jeopardy through charges of collusion partly explains the drift away from ESG in the boardroom of investment companies such as JPMorgan Chase and institutional investors BlackRock and State Street Global Advisors, which all have pulled out of the UN alliance Climate Action 100+. But so does the fact frowned-upon businesses such as fossil fuels have been responsible for some of the best financial returns as markets for renewable energy stocks have plunged. After championing climate investing, BlackRock said last year that all issues related to climate risk and the green energy transition would be based on its role as a fiduciary to its clients. It also acknowledged the tough choices facing fossil fuel companies that must balance energy security with green investments.

In Australia, higher borrowing costs, greater government regulation, changing workplace rules, rising unemployment and consumer fatigue are all factors that will force companies to return their focus to core business activities. The biggest companies are already looking over the horizon to what the outlook will be in the years ahead.

BHP chief executive Mike Henry did not sugar-coat the message for government when he said the biggest thing it must do was ensure that policy settings enabled high levels of competitiveness globally. The experience with nickel, where BHP is considering shutting its West Australian operations because it can’t compete with Indonesia, provides a salutary lesson that governments must heed. The message from Mr Henry is that it is not possible for a nation to subsidise its way to prosperity. Whether it is iron ore, fruit and vegetables or an economy-class flight, Australian businesses must compete in a global marketplace to benefit consumers or we will all be left behind.