Written by: Sarah Clarke, Heidi Roberts, Corrs Chambers Westgarth

How do organisations in Australia address environmental, social and governance issues in their policies?

Most public organisations in Australia will have in place a code of conduct, a diversity policy, anti-bribery and corruption policy and a whistleblower policy, in accordance with the recommendations set out in the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (4th Edition) (ASX Principles & Recommendations).

ESG developments have influenced the content and scope of these policies. For example, the ASX Principles & Recommendations provide suggestions for the content of a diversity policy, which includes articulating the corporate benefits of diversity in a competitive labour market and the importance of being able to attract, retain and motivate employees from the widest possible pool of available talent.

Listed and unlisted organisations alike are increasingly focused on ensuring that their policies reflect the evolving expectations of investors and regulators, and are increasingly likely to amend existing policies, or introduce new policies, to address ESG issues.

Ethical sourcing policies and human rights policies

Organisations are likely to introduce or amend ethical sourcing policies and human rights policies. This is a result of Australian modern slavery reporting requirements and a growing international movement towards mandatory supply chain and human rights due diligence. These policies will reflect an organisation’s commitment to meeting their legal obligations and ethical responsibilities and are likely to include, or be accompanied by, supplier minimum standards with which suppliers will be required to comply.

Although organisations may initially direct their ethical sourcing policies to compliance with Australian modern slavery legislation, we expect that organisations will increasingly expand upon policies to introduce supplier standards in relation to other human rights issues such as gender equality, the environment, Indigenous reconciliation and engagement with local communities.

Environmental policies

Organisations are likely to introduce or amend environmental policies to incorporate requirements for sustainable behaviour across their business. For many organisations, this will be in pursuit of a voluntary commitment to achieve net zero by 2050. Organisations may introduce policy requirements for employees to take account of environmental impacts in the implementation of new procedures, processes or systems, the evaluation of goods or services provided by suppliers, or when acquiring an asset. Employees may be required to weigh reduced environmental impacts against cost boundaries and, where reasonable, reduce any emissions, pollution, waste or contamination caused by the organisation’s actions.

Respect in the workplace and gender equity policies

Organisations are likely to introduce or amend existing respect in the workplace and gender equality policies to more comprehensively set out standards and processes for preventing and responding to discrimination, sexual harassment and bullying.

This is a result of increased public awareness of systemic sexual harassment and gender inequality in Australian workplaces, driven in part by the Australian Sex Discrimination Commissioner’s 2020 report into sexual harassment in the workplace, along with the broader #metoo campaign. Employers required to submit a report to the Workplace Gender Equality Agency (WEGA) containing data in respect of gender equality indicators or requiring a letter of compliance with that legislation in order to enter into procurement contracts with the Commonwealth Government are likely to implement gender equality policies.

Diversity and inclusion policies

Organisations are also likely to introduce or amend existing diversity and inclusion policies to expressly address accessibility, disability inclusion and First Nations representation. This is driven by a global trend of investors and other stakeholders calling on organisations to ensure their organisation accommodates and empowers employees from underrepresented groups (including, among others, persons with disabilities and First Nations persons), recognising that a diverse workforce will not only enhance the organisation’s social impact, but will contribute to long-term value creation by providing access to larger talent pools.