Australian Corporate Lawyers Association Corporate

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Keynote Address - Australian Corporate Lawyers Association Corporate

Good morning and thank you for your warm introduction.

I would like to acknowledge the traditional owners of the land on which we meet – the Gadigal people of the Eora nation and their elders past and present.

Introduction

I was pleased to receive your invitation to join you at today’s  conference to speak about the role of corporate counsel in achieving human rights in Australia, - if only to give me some respite from a spot of bother in which I currently find myself!

This conference on Divergent Thinking is timely because, as you will all know, the Legal Profession Uniform Law Act 2014 will come into effect on 1 July 2015 and will be applicable in the two participating jurisdictions – New South Wales and Victoria.
The Act is a first step towards what is hoped to be the creation of a national legal profession harmonizing legal professional rules.

A new inter-jurisdictional body, the National Legal Services Council, has been established with the responsibility of developing uniform Draft Rules to apply to all lawyers within participating jurisdictions.

A package of draft uniform rules was released for consultation in November 2014, including: Legal professional conduct rules. These rules have been dramatically expanded since I was admitted to practice in 1968.  Of particular relevance today is the requirement that solicitors, including corporate counsel, meet what I would describe as some core human rights.

Draft Rule 42 provides that a solicitor must not in the course of practice engage in conduct that constitutes discrimination, sexual harassment or workplace bullying.

This rule for the legal profession reflects the growing commitment of the corporate and business world to a wider view of their role in their respective communities.

As authors Sisodia, Sheth, and Wolfe explain in their book Firms of Endearment, a commitment to the well-being of all stakeholders separates firms from their competition. Companies recognize the business case that to achieve sustained and better performance, now and in years to come, they need to meet high standards of good governance, transparency and ethical practices within the communities in which they operate.

This, of course, is where corporate counsel come in, because they have become the moral conscience of the company in promoting good governance, beyond the black letter of the law. There has been a steady increase in the number of Corporate Counsel in Australia and an evolution of their role. Today, in-house counsel often sit on the Board of Directors- in a sense, sitting at the “right hand” of their CEOs and play a strong and necessarily independent role-like a moral compass- guiding the company towards ethical behavior along with wealth creation for shareholders. In-house counsel are asked questions that are not usually asked of management:

• Just because an act is legal, should it be allowed in this company?
• How is the public interest best served by this company’s behavior?
• What are the reputational risks to the company if it insists on its technical legal rights
• Or the rather more cynical question: How will this behavior look on the front page of the SMH or Age or Australian?

The corporate scandals of the Australian Wheat Board in Australia or the financial collapses of Enron, World Com and Tyco in the US, indicate many errors of judgment by in-house counsel and it is now clear that in–house counsel are expected to place their duty to the law above their duty to their client.  I was pleased to learn that practice guidelines have been drafted by the Australian Corp Lawyers Association for in-house counsel to meet their primary duty to the rule of law.

In-house counsel then have ethical as well as strictly legal roles. As a part of the legal profession they are of course, expected to meet high moral and social obligations. In-house counsel have a duty to their client, their company or organization. It is a duty that is, nonetheless, trumped by a higher duty to the rule of law, and to the administration of justice through the courts to act morally and ethically.

It is in this evolving environment, that I suggest that human rights fall squarely within the responsibility of contemporary legal advisors.

Today, I would like to consider how human rights are protected both by law and ethics in the workplace, and how the protection of human rights contributes to enhanced innovation and productivity. But in particular, I would like to stress that a diverse, inclusive culture is both best practice and advantageous in a global competitive market. Corporate counsel have a vital leadership role in evolving that human rights culture. As the NSW Legal Services Commissioner Steve Mark has argued, the role of legal counsel in a company is ‘anchored in the public interest and is thus very much in tune with the overriding purpose of the legal profession- to protect the individual from the injustices of the state.'

Australian companies and businesses are beginning to recognise that to respect human rights is not only the right thing to do, it is good for business. Whether a company operates domestically or internationally, human rights compliance raises a significant issue for risk management. More positively, human rights compliance brings greater creativity and wider thinking and can improve the bottom line.

Indeed, one of the Australian Human Rights Commission’s priorities for the next couple of years is to build a better understanding of the role of companies in protecting human rights.

I would like to explain what the AHRC does and how Australian laws apply to prohibit discrimination and to protect basic freedoms in the work force. Legislation is an important foundation for the protection of human rights, but I have learned, in my role as President of the Commission, that black letter law is nowhere near enough to change behavior. Cultural change and leadership are vital elements. For this reason, I will also look at the role of the United Nations in evolving the Guiding principles for business that, while not legally binding, can provide a highly effective means of changing practice and meeting human rights standards.

So why has the Commission identified business and human rights as a priority area?

We are in a unique position in Australia to know from our complaint handling processes of investigation and conciliation that the overwhelming number of human rights and discrimination concerns of the public arise in the area of employment and to a lesser extent, the delivery of goods and services in the private sector.

For example, employment was the context in 80% of complaints under the SDA, employment was the context in 62% of complaints under the Age Discrimination Act and 37% under the Race DA. Nearly, 40% of complaints under the Disability Discrimination Act arose in respect of the provision of goods and services.

In short, overwhelmingly, the Commission works with complainants and respondents in the corporate and business world. It is thus clear that we need to work collaboratively with the corporate sector if we want to build diversity in the workforce to meet human rights objectives.

So what is it that the Commission is bound by statute to do?

A primary function is to investigate and conciliate complaints of breaches of human rights, and of the legislation that prohibits discrimination on the grounds of race, sex, disability and age.

Each year we receive about 20,000 enquiries and around 2,300 formal complaints providing national evidence that companies and businesses are pivotal to achieving practical human rights in Australia. The Commission deals with each Inquiry and investigates the facts, determines if we have jurisdiction under our Act and, if admissible, we attempt to conciliate a formal complaint. We succeed conciliating around 70% of the formal complaints. The service is free to both complainant and respondent and is confidential. Importantly, no complainant can go to the Federal Courts without first coming to the Commission. We are thus the necessary first port of call for any human right or discrimination claim. If the matter is not settled, a party can appeal to the Federal Court under the laws that prohibit discrimination on the grounds of race, sex, disability or age. About 2-3% of matters go to court and in the last 15 years or, the Commission has never been overruled on a substantive question of law.

Similarly, if the Commission finds that the Commonwealth Government has not met  human rights obligations under treaties to which Australia is a party and that matter is not resolved through conciliation, it will be subject to a formal Report to Parliament. The Government is then free to appeal against our findings and recommendations to the Federal Court. The Government has never appealed against our findings and recommendations.

In these ways the Commission provides a valuable form of access to justice to all Australians that effectively diverts most matters from the Courts. There are two key points I would like to draw from this process:

1. First, the Commission works closely with corporate counsel. In about 53% of complaints, the respondents and complainants, seek representation by and advice from their in-house counsel or law firm. From our point of view this ensures that the legal standards are understood and that if the matter is settled, it is possible to achieve systemic change, working with corporate counsel to bring internal corporate practices into line with the law and ethics.
2. Secondly, while under international law, the primary treaty-based obligations to protect human rights lie with national governments, it is now widely acknowledged that companies can do a great deal to respect and promote human rights.
In 2013, the new Federal amendments- the Sex Discrimination Amendment (Sexual Orientation, Gender Identity and Intersex Status) Act 2013 (Cth) provides that discrimination on the basis of sexual orientation, gender identity and intersex status is not acceptable in the workplace.

Since the SDA protections commenced in August 2013, the Commission has received a growing number of complaints on these grounds during this time.

Complaint of gender identity discrimination in employment

The complainant claimed that the Director of the company for which she worked sent a letter to the company's creditors explaining the negative financial situation of the company. In the letter, he indicated that the complainant's transition from male to female gender identity was a cause of the company’s financial decline. The complainant claimed the letter 'outed' her as transgender to many in the industry so she resigned from the company.

The complaint was resolved with an agreement that the company write to the complainant apologising for any hurt she experienced, write to its creditors emphasising there was no connection between the complainant's transgender identity and the company's financial situation and write to staff saying it is an equal opportunity employer.

There have been some interesting new cases. The High Court has recently refused leave to appeal in the Christian Youth Camps Ltd v Cowbaw Community Health Service [2014] VCSA 75 (16 April 2014) where a Christian camp refused to give a booking to a gay group, thereby upholding the SDA and equality of access.

While obviously the black letter law must be complied with, I suggest that a more productive and effective approach is to adopt a cultural standard that promotes diversity. Businesses now understand that there is a financial advantage to going beyond compliance with domestic law and taking a more proactive approach to human rights.

What is the business case for human rights?

There are both economic and social opportunities for a company that embeds human rights considerations into its core business practices. There are significant costs for a company that does not take human rights into account. Whether a company operates domestically or internationally, we’re increasingly seeing that it is good business practice to identify and understand the human rights impacts and risks of the operations and activities of your business.

Business activities that negatively impact human rights may limit growth, lead to litigation, reputational damage, or damage to stakeholder relationships. However, respecting human rights goes much further than risk management, and can strengthen operations that may potentially generate new business opportunities and create value for broader society. In today’s world part of this means maintaining the advantage by responding to the diversity in talent. Adopting a human rights based approach offers an effective strategy through which to achieve this advantage.

Global and Australian research indicates that there is a strong business case that GDP will increase significantly in economies that achieve diversity in employment, equality of opportunity and recognition of merit.

Age and the business case

The Australian Human Rights Commission appointed Deloitte Access Economics to conduct primary research to measure the economic impact of employment participation rates of people over 55 years of age1.   The study found that in 2012 an increase of 5% in paid employment for Australians in this age group would have had a $48 billion impact on the national economy.

Recognising that workplaces are some of the biggest offenders when it comes to age discrimination, older workers and employment has been identified as a priority area for the Commission’s Age Discrimination Commissioner Susan Ryan. Susan and her team have developed the Power of Oldness campaign that highlights the discrimination mature workers face when trying to gain or maintain jobs.

Women and the business case

There is similar research across other areas. Increased women’s participation in the workforce can also make a significant difference to economic growth. Goldman Sachs reported in 2009 that if the gaps between male and female employment and productivity could be closed, it would boost Australia’s gross domestic product (GDP) by 11%2.  The Grattan Institute has also concluded that a 6% increase of women in the paid workforce will expand the Australian economy by about $25 billion a year3. 

Disability and the business case

Similarly, if persons with disabilities were to be better integrated into the work force, national productivity would correspondingly rise. In 2011, the Australian Network on Disability commissioned Deloitte Access Economics to examine the economic benefits of increasing employment for people with disability. The economic modelling in the report suggests that closing the gap between labour market participation rates and unemployment rates for people with and without disabilities by one-third would result in a cumulative $43 billion increase in Australia’s GDP over the next decade in real dollar terms4.

Diversity and the business case

A study conducted by the European Commission found that diversity initiatives benefit businesses by improving reputation, resulting in better ability to attract and retain top talent, and potentially improve their creativity, productivity and competitive edge.5  83% of the 495 businesses surveyed agreed that diversity initiatives have a positive impact on their business. The main reasons for this include the ability to:

• Resolve labour shortages, improve staff loyalty and retain high quality staff
• Enhance business reputation and image
• Improve innovation leading to new products and services, and also access to new markets.

LGBTI inclusiveness in business

There is also a strong business case for LGBTI workplace inclusion.

The Williams Institute of the UCLA with Credit Suisse and IBM have recently completed a review of 36 research reports that loo at the impact of LGBT support policies on business outcomes. It concludes that LGBTI supportive policies are positively linked to greater job commitment, improved workplace relations, increased job satisfaction, and improved health outcomes for employees. Less discrimination and more openness are also linked to increased productivity

The successful recruiting, retaining, developing, and advancing of LGBTI employees has been shown to increase effective competition for talent, minimise attrition costs, and facilitate wider access to allied consumer markets6.  Inclusive policies in the workplace can also reduce the adverse impact of stigma and discrimination on your employees, minimize labor costs associated with litigation, complaint resolution, absenteeism and staff turnover.

International aspects

Beyond the workplace there are other ways that human rights are relevant to businesses. For example, Australian companies have a responsibility to ensure that they are not sourcing goods or services from companies that might be breaching human rights.

Similarly, they have a responsibility to engage positively with the communities in which they operate.  Phosphate mining in Western Sahara, extractive industries in Africa.

Cambodia: Asian Development Bank For companies that are developing or using land, the rights of Indigenous people and local communities will be an important consideration.

International Development of UN Guiding Principles

Over the last decade there has been growing momentum at the international level around the issue of business and human right. After years of debate and consultation led by Professor John Ruggie, the United Nations Special Representative for Business and Human Rights (an appointment which no longer exists)  we now have further clarification at the international level about the responsibility of business through the UN Guiding Principles on Business and Human Rights (the Guiding Principles).

The Guiding Principles were endorsed unanimously by the Human Rights Council in 2011. The Principle have a three-pillar framework, - Protect, Respect, Remedy-. Under the second pillar, the corporate responsibility to respect human rights, companies are expected not only to avoid causing or contributing to adverse human rights impacts, but also to address ‘human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.’ The Guiding Principles also provide that a business must provide access to a remedy when a breach of human rights occurs.

No legal obligations for companies have been created by the Guiding Principles, however since they have been unanimously endorsed by the United Nations inter-governmental human rights body, the Guiding Principles are the authoritative global standard which comes with a significant degree of moral force.

Conclusions

There has been a strong focus on the obligation of big multinational corporations to implement human rights standards. While we cannot deny that the impact of their leadership is profound, we should also look at small to medium business enterprises.
The Australian Human Rights Commission has recognised this gap and is currently looking at how we might assist small and medium business to meet their legal obligations. We also aim to ensure there are no detrimental impacts on human rights when undertaking their business activities.

We are currently looking at ways larger corporations can use their power and influence to positively engage with smaller to medium sized businesses to make a positive contribution to human rights. One way you could engage with business, particularly smaller to medium sized business, is through your supply chains. To ensure that your suppliers meet adequate human rights standards, but also implement policies and practices to move beyond compliance.
Tonight, we will launch a new initiative with our partner Telstra to promote this priority not only in respect to large companies but also to integrate human rights along their extensive supply chains to small to medium businesses.

These resources, Good practice good business, will be made available free online via the Commission’s employer hub from Wednesday next week. There are a range of fact sheets that cover state and federal anti-discrimination issues, recruitment and selection, vicarious liability and complaint mechanisms to name a few.

In addition to the resources we will be launching an online hub for employers. This web portal has been designed as a one-stop-shop for Australian business to understand their legal obligations but also implement strategies to create a fair and productive workplace.
Australia has come a long way over the last few years in changing corporate culture to ensure protection of human rights and ethical practices. In house counsel can be leaders in steering their companies along this path.

Thank you.

1 Report available at http://www.humanrights.gov.au/publications/increasing-participation-amo….

2 Goldman Sachs JB Were Investment Research, Australia’s Hidden Resource: The Economic Case for Increasing Female Participation (2009). Available at: www.womenonboards.org.au/pubs/reports/091130gsjbw.pdf.  More recently, Goldman Sachs calculated this figure to be 13% http://www.smh.com.au/national/gender-gap-costs-country-195b-says-econo….

3 J Daley, Game-changers: Economic reform priorities for Australia, Grattan Institute (2012). Available at: http://grattan.edu.au/publications/reports/post/game-changers-economic-…;

4 Deloitte Access Economics. The economic benefits of increasing employment of people with disability (2011). Available at: http://www.and.org.au/pages/deloittes-report-the-economic-benefits-of-i…. 

5 Ibid, p.15

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