DEI resistance: Big business revolts against ASX Corporate Governance Council’s diversity policies

Groups representing many of Australia’s biggest businesses defeated a plan that would have required all companies listed on the share market to guarantee women board seats and potentially promote employees based on their race, sexuality, disability, economic background or religious beliefs.

The proposals were contained in a new rulebook for public companies written by a quasi-official organisation known as the ASX Corporate Governance Council.

On Thursday, the council said the updated rules had failed to win unanimous approval from its 19 members and would not be introduced.

Business groups, led by the Business Council of Australia, a big-business lobby group, saw the new rules as an attempt to make companies introduce diversity, equity and inclusion policies, which use hiring and promotion practices to help re-balance societal inequities caused by sexual and racial prejudice.

“There has been no cost-benefit analysis undertaken on how compliance obligations from these changes may impact businesses,” said Business Council chief executive Bran Black.

Rare win for cutting red tape

The defeat, a rare victory by Australian business over increased regulation, is a sign the business community has become emboldened by the election of President Donald Trump, who banned DEI from the US government.

“We want to see a corporate Australia that throws off some of the shackles that have been imposed on it,” said John Wylie, a former investment banker who helped defeat the changes. “The stock market has got to be an engine of economic growth.”

The document advised companies to “express the organisation’s commitment to equity and inclusion at all levels of the organisation regardless of marital or relationship status family or caring responsibilities, sexual orientation, gender identity, inter-sex status, age, disabilities, race, religious beliefs, cultural background, socio-economic background, circumstances, perspective and experience.”

Instead of setting high enough pay to “attract and retain” top-quality managers, pay had to be “sufficient” to stop them quitting.

Superannuation funds’ influence

Among the driving forces behind the proposed rules were union-linked superannuation funds represented by the Australian Council of Superannuation Investors, which pressures companies to do more to help the environment, women and minority races. The group reportedly threatened to resign if the changes were not approved.

While 30 per cent of the $4 trillion in superannuation accounts is invested in Australian shares, many companies are being driven away from the share market by heavy regulation. Last year the number of companies traded on the stock exchange fell below 2000 for the first time in two decades.

Contacted by The Nightly, the ASX Corporate Governance Council’s chairman, corporate lawyer Elizabeth Johnstone, said she was in a meeting and hung up. In a written statement she said: “today’s decision upholds the purpose of a strong governance and consultation process”.

Even though the council shares a name with the Australian Securities Exchange, it is an independent organisation. Some business leaders would like the ASX to be given control of the council and introduce less restrictive rules. Mr Wylie has suggested introducing a seven-page rulebook for listed companies.

The share market’s chief executive, Helen Lofthouse, said it was a “sensible outcome”.

This week the Commonwealth Bank of Australia apologised to a construction company for sending it a list of 37 demands in order to receive a loan, including providing guarantees about biodiversity, pollution, workplace health and safety, labour rights, slavery, climate risk, energy, water, anti-corruption and governance.

The bank only apologised after its demands were made public.