Key Takeouts

• A key finding in the report - Equality across the board: Investing in workplaces that work for everyone -  is that it is not always clear in ASX 200 companies that the board bears primary responsibility (and accountability) for overseeing and monitoring the effectiveness of their organisation's approach to dealing with workplace sexual harassment. 
• This lack of clarity is evident in the information flows around the issue and the way in which the data collected is being used (not used). 
• Further, many boards continue to take a reactive (as opposed to proactive) approach. 
• The report includes six recommendations for boards and two directed toward investors to support improvement.  

Overview

An Australian Human Rights Commission (AHRC) report, commissioned by the Australian council of Superannuation Investors analyses how ASX 200 companies are currently tackling the issue of workplace sexual harassment and puts forward eight recommendations (six aimed at boards, and two aimed at investors) for improvement.

The report builds on the recommendations in the landmark Respect@work report and is based on a survey and interviews conducted with ASX 200 companies.   A high level overview of some key findings and the accompanying recommendations is below. 

Key Findings

An accountability gap?

The report takes as its starting point the view that 'the board has primary responsibility and accountability for ensuring that the entity has in place a governance framework for the prevention of and response to sexual harassment, and for monitoring performance across the entity'.

Against this background, the report identified that it is not universally clear within ASX 200 companies where responsibility rests and more particularly, that it is not clear in most cases that it is a board responsibility.  

A survey (of ASX company secretaries or investor relations leads in ASX 200 companies) found that: 

• 50% of those surveyed consider responsibility rests with either the Head of Human Resources or the CEO
• Less than 20% (19%) consider primarily responsibility rests with the board 
• Other respondents nominated the Head of Legal (14%), or another part of the organisation (17%)

The survey found that this lack of clarity is reflected in the internal information flows within organisations.  

Boards may not be getting the information they need?

The survey found that a range of information relevant to the issue of sexual harassment tends not to be reported directly (or possibly even indirectly) to the board, but rather is more usually shared with the executive management team.

For example most survey respondents indicated that workplace sexual harassment incidents and separately, reports of worker misconduct are usually reported to executive management (63% and 68% respectively).  In both examples, less than half of respondents indicated that the information would be reported to the board or to a board sub-committee.  

Using, reporting and acting on the data being collected

The report found that though the majority of companies are collecting data around corporate culture, and in most cases (78%) are collecting information specifically about the prevalence (or not) of workplace sexual harassment complaints, the approach to using, analysing and acting on this (and related information) varies considerably.  

The need for improvement in the way in which data is used and reported (both internally and externally) is emphasised in the report as an area for improvement.  

Boards continue to take a reactive approach

The report highlights as well, that some boards continue to take a reactive approach to the issue, with board discussion of workplace sexual harassment often prompted by concerns about an issue within the organisation (31.4%) or by media reports  (29%).  Despite 41% of respondents indicating that their boards expected to discuss the issue of sexual harassment on a regular basis,  43% indicated that sexual harassment is not a regular board agenda item.

Most (but not all) companies have some measures in place to identify, prevent and address workplace sexual harassment

The survey found that the majority of ASX 200 companies employ a risk-based approach to addressing sexual harassment and that most have taken some steps to identify and mitigate the risk.  For example:

• 64% of respondents reported that they have developed some form of 'mechanism' to identify high risk factors for sexual harassment (eg male dominated workplaces, workplaces with overnight shift work) and adopted measures to mitigate these risks.  Interestingly, of the 36% of respondents that did not already have a mechanism in place, only half (18%) reported they were willing to establish such a mechanism.  5% reported they were unwilling to do so.  
• 79% of companies have tied the executive management team's remuneration and performance incentives to culture and conduct standards.  Over a quarter of companies (27%) reported that they have nonfinancial performance metrics relating specifically to sexual harassment for their executive management team.  
• Training on sexual harassment was also fairly widespread, but the survey indicated that it tends to be focused on staff and the executive leadership team, rather than also focused on boards.  
  • 60% of respondents indicated that the executive management team was required to undergo training on good governance and sexual harassment.
  • 69% indicated that staff were required to undertake training.
  • In contrast, only 19% of respondents indicated that directors were required to undergo education on good governance and sexual harassment

Most companies have multiple avenues available to report complaints

• The survey found that the majority of companies have in place a range of avenues to enable reporting of sexual harassment eg anonymous reporting mechanisms (78%) and whistleblower reporting options (85%) (among other options)
• However the report identified monitoring of outcomes and evaluation of the effectiveness of the complaints process as areas for improvement: 
  • only 31% of respondents indicated that their company monitors the outcome of sexual harassment complaints by following up with the complainant six months after the conclusion of the matter.  Only 16% typically follow up with the (alleged) perpetrator)
  • 31% of survey respondents indicated that there is no formal evaluation system in place within their company to facilitate continuous improvement of complaints handling policies/procedures 

Eight recommendations for improvement 

Recommended actions for boards

Recommendation 1: Demonstrate 'visible leadership and appropriate oversight and governance over culture, sexual harassment and gender equality'.  

• The report emphasises the importance of boards making clear that responsibility rests with them. That is, that boards need to ensure there is understanding within their organisation that they have responsibility for ensuring the necessary governance framework is in place within the organisation to prevent and respond to workplace sexual harassment as well as responsibility for actively monitoring performance against this framework to ensure its effectiveness.  
• The report suggests that boards can demonstrate and 'display leadership and commitment' on the issue through (for example): 'prioritising corporate culture in the context of board discussions, setting gender equality related targets in strategic plans and demonstrating zero tolerance to workplace sexual harassment'.
• The report suggests board subcommittees can be helpful in managing the board's responsibilities in this context, but cautions that where this approach is adopted, the Terms of Reference (or equivalent) for the subcommittee should be formally documented.   

Recommendation 2: Boards should ensure that the organisation has the 'skills and experience to effectively prevent and respond to workplace sexual harassment'

• The report calls on boards to 'deeply consider whether their skills and experience matrices appropriately address gender or workplace culture expertise'.  
• The report emphasises that every director should take active steps to ensure that they have an understanding/are educated on the prevention/management of workplace sexual harassment including knowledge of issues related to 'gender, safety and trauma', noting that boards reported that having a member with a 'sophisticated and specialist expertise' on the issue is of benefit. 
• The report also recommends that to ensure all executive management team members have a baseline understanding of the issue, completion of training on understanding sexual harassment, gender safety and trauma should be requirement.  It's further suggested that some executive management team members eg HR executives, should receive additional targeted training.to support them in carrying out their roles effectively.

Recommendation 3: Boards should make 'gender equality a priority and set gender diversity targets' as part of promoting and building strong culture

The report recommends boards consider:

• Setting a timebound board gender diversity target: The report recommends that boards set 40:40: 20 diversity targets ie 40% men, 40% women and 20% open, and a timeframe for achieving this goal
• Setting organisational gender diversity targets:  The report further recommends that achieving 'gender equality' across the organisation eg through setting diversity targets for every level of the organisation, should be a strategic goal.  

Recommendation 4:  Boards should ensure 'systems and frameworks are in place to collect, analyse and use data to effectively manage the risks related to sexual harassment'.

• The report underlines the importance of clearly allocating responsibility/accountability for data collection
• Further it's emphasised that any data collected should be used to 'identify, measure and monitor systemic trends and patterns with respect to corporate culture, including sexual harassment'.  
• The report makes clear that boards have responsibility for making clear what data it expects to be collected, what information the board requires, and how and when it should be reported (in order to discharge their oversight/monitoring responsibilities) 

Recommendation 5: 'Align appointment, expertise and performance management of the CEO and EMT with the entity's values to ensure that EMT demonstrates and displays visible leadership on culture, sexual harassment and gender equality'

• The report recommends that gender equality and the promotion of 'positive corporate culture' should be treated as a strategic priority and reflected in the board's approach to oversight of the CEO and executive management team.   
• In practical terms, the report suggests that this could include for example: 
  • including demonstrated experience of inclusive leadership/gender equality as a selection criterion for new appointments
  • tying incentives to culture/conduct and the ability to 'prevent and respond to sexual harassment and advance gender equality' in the workplace.

Recommendation 6:  Report internally and externally to 'measure and track the effectiveness of systems and frameworks to prevent and manage sexual harassment'

• The report recommends organisations report information through existing public disclosure mechanisms eg reporting against the ASX Corporate Governance Principles.
• The report also recommends that organisations 'engage in industry led initiatives and industry-based reporting on corporate culture and sexual harassment'.

Recommended actions for investors

In addition to the six recommendations outlined above, the report includes two additional recommendations aimed specifically at investors given this group also 'have an ongoing responsibility to protect and enhance investment value'.   In light of this responsibility the report makes the following two recommendations: 

Recommendation 7 recommends that investors 'seek information on investee entities systems and process to prevent and address sexual harassment'.  

• The report suggests that investors draw on publicly available information eg information on companies' websites, WGEA reporting, industry reporting, annual reports and Corporate Governance Statements etc for this purpose.

Recommendation 8 recommends that investors 'advocate for improved transparency and public disclosure on sexual harassment'.  

• The report recommends for example, that investors advocate for 'stronger and more specific metrics on sexual harassment in existing mechanisms' eg annual reporting and WGEA reporting.  

[Sources: ACSI media release 16/06/2021; Full text report: Equality across the board: Investing in workplaces that work for everyone]