ACSI submission to the Assistant Treasurer, Minister for Financial Services, in response to the Review of tax and corporate whistleblowing in Australia.
Summary position
Thank you for the opportunity to respond to the Review of tax and corporate whistleblowing in Australia. Recent events have highlighted the importance of a review into whistleblowing policies and practices. ACSI supports the intent and architecture of the whistleblowing framework, but has concerns about whether the protections operate effectively in practice. The Terms of Reference of the Parliamentary Joint Committee on Corporations and Financial Services Inquiry highlight that ongoing consideration should be given to improvements in whistleblower protection requirements and detrimental action and reprisal.
Long-term investors have an interest in ensuring that the companies they invest in have a healthy corporate culture that contributes to brand value, attracts talent and promotes performance and productivity to support long-term returns. Corporate culture is intangible, but there are some tangible foundations that are likely to assist in driving a good culture. ACSI views effective whistleblowing approaches as an important indicator of the health of a company’s culture, its governance approach and the robustness of its internal controls. An entity’s employees are often the best source of information on a company’s culture and approach. Where employees feel safe to raise concerns, and where those concerns are taken seriously and acted upon, companies are better placed to identify and address problems before they become material. Where that culture is absent, risks can accumulate unseen.
ACSI supports the current combination of legislation and principles-based recommendations that provide a framework for whistleblowing. For example, the ASX Corporate Governance Principles have encouraged listed entities subject to develop transparent whistleblowing procedures, while the legislative framework has extended similar expectations to a broader range of organisations. However, it appears that whistleblowing practices and procedures do not, by themselves, entirely eliminate wrongdoing or encourage the making of disclosures about potential wrongdoing.
Whistleblowing frameworks should not be viewed merely as a compliance formality. They reflect the seriousness with which a board approaches its responsibility for ethical practice and organisational culture. Unfortunately, it is insufficient for a company to rely on having policies in place. Their effectiveness depends on whether employees trust the process and whether boards ensure concerns are acted on without retaliation. ACSI expects boards to assess the effectiveness of whistleblowing procedures as part of its oversight of organisational culture. These policies should be regularly reviewed and adjusted as needed. Regardless of the existence of a whistleblowing policy, actions in practice can appear to override principles of anonymity, confidentiality and no retaliation. This undermines confidence in reporting channels and reduces the flow of information that boards, regulators and investors rely upon.
Well-functioning whistleblowing frameworks are a prerequisite for good corporate governance and support the long-term interests of investors and the broader community. There are opportunities to strengthen Australia’s whistleblowing regime through better disclosure of the approach companies take. Transparency and disclosure can work to further embed good practice and confidence that policies are effective in action. Expectations around the minimum disclosure in whistleblowing policies would support education for potential whistleblowers as to their rights and obligations, and that the policies are effective in practice. In particular, ACSI supports the disclosure of how culture is assessed, actions taken to promote compliance with corporate values and policies, including reporting on whistleblowing and grievance cases by type and number resolved.
Greater alignment of the requirements for tax and other whistleblowers would also be welcome, to reduce complexity in the whistleblowing regime.
