The pretend morality of our supermarket giants
If galling corporate virtue signalling doesn’t wake us up, the hypocrisy of some of biggest Australian companies sure will.
This week the Australian Competition & Consumer Commission announced it was taking legal action against Coles and Woolworths for claiming they were selling hundreds of items at a discount to customers when, in fact, they had increased prices by at least 15 per cent before offering a “discount”.
The misconduct makes a mockery of Woolworths’ “Prices Dropped” promotion and the Coles “Down Down” campaign. During a cost-of-living crisis, the behaviour, if proven, is abhorrent.
While the two supermarket titans allegedly were ripping off customers, they also were parading their social conscience to the country over the voice. Big W, owned by Woolworths, treated customers to supportive pronouncements about the voice over a loudspeaker, stopping only after customers took their frustrations out on staff.
The supermarket titans’ antipathy to mainstream values doesn’t end with the voice. In January, Australia Day merch was banished from Woolworths stores.
The ACCC allegations against Coles and Woolworths landed at a great time for the Albanese government. Even a government that supported the voice knows Australians are getting increasingly antsy about big corporations wading neck-deep into faux morality while facing allegations of price gouging and unfair practices with suppliers. Smelling blood elsewhere must have been a relief after the latest poll numbers showing support for the Albanese government in decline. So, Anthony Albanese pounced on a new villain to blame for inflation and high interest rates.
Whatever the truth to that claim, the supermarket titans now face serious allegations of misconduct. And there is another issue screaming out for more scrutiny. If these allegations against Coles and Woolworths are true, we need to ask some serious questions about the alleged merits of progressive sacred cows such as diversity, equity and inclusion agendas.
When companies such as Coles and Woolies crow about diversity on their boards and in their management teams being good for business, is this what they had in mind? Boards so exquisitely diverse and non-executive directors so engaged in showcasing their niche skill sets that they have taken their eye off the main – and simple – game of ensuring that management doesn’t rip off customers?
Australians are entitled to ask whether the supermarket titans are examples of go woke, go wrong. Or, more pointedly, when a company goes woke, does this mean they are hiding something? At the very least, their lack of rigour is apparent. Like other big companies Coles and Woolworths signed up to the voice before a solid proposal was even on the table. Some would call that reckless. Now it turns out they may have been hiding something worse if the ACCC’s allegations of serious corporate misconduct are proven to be correct.
How could this have happened? Was there a lack of board oversight of management? If so, why?
Before taking the top job at Coles, Leah Weckert was crowned CFO of the year in 2019. CEO Magazine wrote: “When Leah Weckert begins discussing her plans for Coles Group in the coming year, it’s a far cry from the typical numbers-focused response you’d expect from a highly successful CFO. In fact, the word ‘finance’ doesn’t come up once.”
The thing that came up, according to CEO Magazine, was diversity. “I’m proud to say that the Coles board is very diverse. Of our seven non-executive directors, three are women and we also have a growing number of women in our executive team,” Weckert said.
The boards of Coles and Woolworths are, to paraphrase a line from Gilbert and Sullivan’s The Pirates of Penzance, the very model of a modern company board. Like the comic opera’s Major-General, a polymath who suffered from a lack of military knowledge, could it be that too many of our exquisitely diverse boards lack the core skills to keep management accountable?
In his latest paper for the Centre for Independent Studies, The Rise of Activist Corporations: How Activism Agendas Subsumed Shareholder Primacy, Peter Swan writes about the modern cocktail of regulation that has led to corporate wokery. Regulatory changes, especially emanating from the ASX Corporate Governance Council, have led to so-called independent directors dominating company boards. Swan says “the main consideration mandating these appointments is ignorance” – by that he means a lack of any real inside knowledge about the company. Coupled with the diversity agenda, where the focus on merit drops away, boards are becoming pushovers for management, says Swan, adding that because independent directors own negligible shares in the company, their alignment with shareholders is low.
In response to a piece I wrote this week about the flawed focus of modern company boards, a managing director of a large company wrote this: “Many (non-executive directors) now are focused on their own area of expertise rather than the whole organisation that they are a director of. It results in many perverse activities being generated by them for executives to perform. Some NEDs seem to enjoy creating work for work’s sake; their lack of self-awareness and inflated sense of self-importance is breathtaking, as is their hubris.” For obvious reasons, the managing director remained nameless. Critiquing DEI is not good for your career if you sit on a board with activist industry funds on your share register.
There is enormous demand among many women in their 40s and 50s for what has become known as a “portfolio career” – meaning they want to join a few boards. Then, once they’ve been on a couple of boards, their website board blurb brags about them having loads of “board experience” – setting them up for more boards. Some are well qualified, others less so, but the new “diversity” imperatives can too easily nudge out merit.
Woke is a lazy phrase. But still, it captures what has gone wrong over many years. When you’re not skilled at running a company, you must point to something else to make you relevant. Propagating woke causes as corporate morality is child’s play for non-executive directors on a modern diversity board. The anti-intellectual underpinning of the rise of the corporate woke class is hard to miss. A company isn’t a person. Morality is a uniquely human trait. When directors speak about corporate morality, they are indulging their own egos, imposing their own chosen morality about everything from climate change catastrophism to Indigenous sovereignty on a company owned by others.
Milton Friedman said it best in Capitalism and Freedom in 1962: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception and fraud.”
If Coles and Woolworths can’t get this core responsibility right, they have no business parading their virtue on other fronts.
Mind you, the promotion of one’s virtue is not limited to listed companies. Indeed, it’s often surpassed by service providers who push these agendas. On this front PricewaterhouseCoopers and KPMG are among the worst kind of champions. There was no woke agenda PwC did not force-feed to its clients and employees as it was busily breaking its confidentiality obligations to help paying customers avoid taxes it was supposed to be helping the government design.
When the PwC scandal broke, KPMG chief executive Andrew Yates and chairman Alison Kitchen said they were compelled to send an email to staff reminding them to act ethically because they could “no longer sit by and watch our profession be tarnished by the unethical actions of a few”.
That took some chutzpah given KPMG’s own track record involves a prominent cheating scandal, severe criticism over its management of conflicts of interest and contradictory advice in relation to NSW’s multi-billion-dollar transport agency and allegations of billing the Department of Defence for hours that were never worked.
There is a symbiotic relationship between groups pushing these agendas. Start with KPMG’s 2022 report for the ASX Corporate Governance Council on Diversity.
If you’re looking for a sound basis for claims by KPMG that diversity is good for business, don’t look here. For those content with fluff, KPMG’s report says “over one-third of entities reported benefits to having a diversity policy”. In other words, KPMG and the ASX Corporate Governance Council are reporting on companies that have drunk the diversity Kool-Aid peddled by KPMG and the council.
And this wonky agenda is cemented further on to boards by people who have built careers from being a diversity pick – and those seeking to do the same. It’s a racket.
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If galling corporate virtue signalling doesn’t wake us up, the hypocrisy of some of biggest Australian companies sure will.