Submission Link : ASA submission link
Submission Summary :
The ASX Corporate Governance Council has issued a consultation on the ASX Corporate Governance Council Principles and Recommendations – 5th edition update. The joint submission of Anti-Slavery Australia and 10 Australian civil society and academic organisations provides feedback on Principle 3 and select questions from the consultation paper.
The submission commends the Draft Principles as an improvement on the previous editions especially with its focus on Environmental, Social and Governance issues. The submission welcomes the proposed, important update to Principle 3, the improved gender-diversity considerations in Recommendation 2.3, and the increased reporting disclosure in Recommendation 4.2. But it highlights that effective corporate governance of human rights risk is not reflected.
The submission proposes that the Draft Principles be informed by authoritative international standards on responsible business conduct: the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (OECD Guidelines). With that, the submission recommends the following:
- Changing the Commentary to Recommendation 3.2 to define responsible business conduct as the standards outlined in the UNGPs, the OECD Guidelines and complementary guidance.
- Adding a new Recommendation is added to Principle 3 which outlines an expectation that entities have and disclose a human rights policy.
- Adding ‘meaningful’ to Recommendation 3.3 in accordance with UNGPs and OECD Guidelines to avoid engagement with stakeholders that is a superficial, ‘tick box’ exercise.
- Widening the definition of ‘stakeholders’ in Commentary to Recommendation 3.3 to include suppliers’ workers, human rights groups and modern slavery risk management in line with OECD Guidelines.
- Distinguishing human rights risk management from environmental risk management as a board skill in Commentary to Recommendation 2.2.
- Adding to Recommendation 2.2(b) that listed entities disclose the criteria ‘for how it assesses the relevant skills and experience are held by its directors’.
- Recommendation 7.4 should revert to the 4th Edition text as the Draft update de-emphasises environmental and social risks.
- Updating Principle 8 to link executive (including at least one Board member’s) remuneration to human rights performance to ensure human rights risks are effectively managed and short-termism is avoided.
In its conclusion, the submission recommends the Council commission an independent review of the Principles against the expectations of the UNGPs and the OECD Guidelines, publish the review findings, and update the Principles in line with the review’s findings before the 6th update to the Principles.