Calls to make “corporate social responsibility” easier

Advocates for corporate social responsibility claim the law is making it hard for company leaders to balance broader social issues against shareholders’ financial interests. A former director of ASIC, the corporate regulator, Tony D’Alosio, told the Australian Financial Review, “There is a point at which directors could actually breach their duties if they flip over and take a social position on an issue.” Under the Corporations Act 2001 (Cth), it is an offence for a director to recklessly “fail to exercise their powers and discharge their duties … in good faith in the best interests of the corporation”, with a penalty of up to 5 years imprisonment. Leeora Black of the Australian Centre for Corporate Social Responsibility suggests this emphasis on the interests of the corporation makes it hard for directors to consider broader issues: “One of the directors I spoke to said, ‘I couldn’t possibly be socially responsible, I could go to jail if I’m socially responsible’.”