We’re seeing a lot of this corporate finger wagging and moralising lately with managing directors and upper management and boards using shareholders money and their corporate cache to push their own personnel agendas on everything from SSM to making judgement calls on investment not related to the core business, like for example refusing to finance a coal fired power station for reasons not related to return on investment.
“….No-one asked me, as the part owner of Westpac, if I wanted to give away so much of mine and my fellow shareholders’ money, worthy as the recipient cause may be. As for Alan Joyce, his moral authority starts and stops at the obligation not to lose Qantas’ passengers luggage.
Shayne Elliot, Chief Executive of ANZ, was reported to have said the Liddell coal power plant “would be very unlikely to meet our [environmental] standards so we wouldn’t finance it.” Mr Elliot said that the ANZ cares about these things. Bully for the ANZ, but who or, more appropriately, ‘what’ is the ANZ? Or, for that matter, the CBA, Westpac or NAB – all of which apparently declined to comment on their willingness to finance coal power.
Boards and managers work to further the financial interests of shareholders. They don’t have carte blanche to do whatever they fancy, in the company’s name, outside of running the business.
Alan Joyce, for example, has responsibility to run an airline. This primarily entails taking people from one point to another in a timely, comfortable and safe manner while, at the same time, maximizing shareholder returns. As applies to all companies, he also has to see to it that his airline operates within the law and, beyond that, ethically.
Go back to the ANZ. Suppose the Government was to put together a deal for a company to buy Liddell off AGL, and to run it under a contract with the Government. Assume the Turnbull Government made it clear that its objective was to keep the lights on and power prices down; and, incidentally, that it would underpin much need employment in the Hunter Valley.
Now take a leap into what can only be described as La-La land. A major Australian bank refuses to provide finance for the deal – not, for example, because it is too risky — but because the chief executive of the bank and the board claims that it offends their climate sensibilities. I do not believe for one second that all of ANZ’s shareholders are Al Gore supporters. Elliot and his board would be acting well outside of their legitimate reach…” Curse of a corporate conscience