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Chapter One - Introduction
Background
1.1
On 23 June
2005 the committee resolved to conduct an inquiry into corporate
responsibility and triple-bottom-line reporting, for incorporated entities in Australia,
with the following terms of reference:
- The
extent to which organisational decision-makers have an existing regard for the
interests of stakeholders other than shareholders, and the broader community.
- The
extent to which organisational decision-makers should have regard for the
interests of stakeholders other than shareholders, and the broader community.
- The
extent to which the current legal framework governing directors' duties
encourages or discourages them from having regard for the interests
stakeholders other than shareholders, and the broader community.
- Whether
revisions to the legal framework, particularly to the Corporations Act, are
required to enable or encourage incorporated entities or directors to have
regard for the interests of stakeholders other than shareholders, and the
broader community. In considering this matter, the Committee will also have
regard to obligations that exist in laws other than the Corporations Act.
- Any
alternative mechanisms, including voluntary measures that may enhance
consideration of stakeholder interests by incorporated entities and/or their
directors.
- The
appropriateness of reporting requirements associated with these issues.
- Whether
regulatory, legislative or other policy approaches in other countries could be
adopted or adapted for Australia.
1.2
In inquiring into these matters, the committee was
tasked with considering both profit and not-for-profit incorporated entities
under the Corporations Act.
Conduct of the inquiry
1.3
The inquiry was advertised in The Australian newspaper and on the Internet. Written submissions
were invited from interested parties. The committee contacted a wide range of
corporations, peak bodies, industry groups, non-government organisations, and
academics, inviting them to participate in the inquiry. Details of the inquiry
were placed on the committee’s website.
1.4
The inquiry generated considerable interest. The committee
received over 140 submissions from various individuals and organisations, the
most number of submissions to an inquiry of the committee in the last decade.
Submitters are listed at Appendix 1.
1.5
The committee held nine public hearings: in Sydney
on 23 November 2005, 9 and
10 March 2006: in Perth on 20 February 2006: in Melbourne
on 23 and 24 February and on 5
April 2006: and in Canberra
on 27 and 29 March 2006. A list of witnesses who appeared at the hearings is at
Appendix 2, and copies of the Hansard transcripts are available through the
Internet at http://www.aph.gov.au/hansard
Inquiry by the Corporations and Markets Advisory Committee
1.6
In March 2005, the Parliamentary Secretary to the
Treasurer, the Hon Chris Pearce MP asked the Corporations and Markets Advisory
Committee (CAMAC), a body which advises the government on corporations and
financial markets matters, to investigate corporate social responsibility. The
parliamentary secretary in particular sought advice on whether there should be
any change to the directors' duties provisions of the Corporations Act, and
whether the Corporations Act should require certain types of companies to
report on the social and environmental impact of their activities.
1.7
The scope of the CAMAC inquiry is comprehensive, and
there are many issues common to both the CAMAC inquiry and the inquiry of the
Joint Parliamentary Committee. In November 2005, CAMAC produced a valuable
discussion paper, intended to provide information, draw out issues, and
stimulate discussion. The Joint Parliamentary Committee has found this discussion
paper very useful, and draws on its content in parts of this report.
Structure of the report
1.8
The inquiry report is presented in eight chapters. Chapter
2 provides a background to the debate on corporate responsibility, giving
definitions, and outlining the historical context of corporate responsibility,
the role of corporations in society, and the current state of play in Australia.
1.9
Chapter 3 discusses the drivers and principles of
corporate responsibility, and chapter 4 addresses duties of directors under the
Corporations Act 2001. Chapter 5
discusses the role of institutional investors in the corporate responsibility
debate. Chapters 6 and 7 discuss sustainability reporting, and chapter 8 looks
at ways to encourage corporate responsibility in Australia.
Acknowledgements
1.10
The committee thanks those organisations and
individuals who made submissions and gave evidence at public hearings. The committee
also thanks Ms Susan
Dudley and Mr
Jerome Davidson
from the Parliamentary Library for their assistance in drafting parts of chapter
2.
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