Boards accountable for sexual harassment

ACCORDING TO THE AUSTRALIAN HUMAN RIGHTS COMMISSION ASX200 Boards should be accountable for workplace sexual harassment

The Australian Human Rights Commission (Commission) recently published the research report ‘Equality across the board: Investing in workplaces that work for everyone’ (Report), analysing the way ASX200 companies are dealing with workplace sexual harassment (WSH) including how it is prevented, managed and reported.

The Report contains recommendations on the way companies should be preventing and responding to WSH and significantly, recommends that Boards should take primary responsibility and accountability in implementing and monitoring sexual harassment governance frameworks.

The Report flows from the ‘Respect@Work: Sexual Harassment National Inquiry Report’ which revealed the widespread and pervasive nature of WSH in Australian workplaces and which contained 55 recommendations to address systemic WSH issues. Last month, the Sex Discrimination and Fair Work (Respect at Work) Amendment Bill 2021 was introduced into Federal Parliament, proposing changes adopted by the Federal Government in its response to the recommendations, including amending unfair dismissal laws and anti-bullying laws in the Fair Work Act 2009 (Cth) such that sexual harassment can be a valid reason for dismissal and enabling the Fair Work Commission to make an order to stop WSH, among other proposed legislative changes.

The key findings in the Report include the following:

• there is widespread confusion and inconsistency regarding who is primarily responsible and accountable for the prevention and response to WSH;

• Boards are likely to be more reactive than proactive in respect of WSH issues, with external events prompting Board discussion regarding WSH;

• while majority of the surveyed companies had mechanisms to identify and mitigate risk factors for WSH, had avenues for complaints and collected data regarding WSH, there is an opportunity to strengthen systems and to improve the way data collected is used and reported, noting that companies’ approaches in respect of following up and monitoring varied;

• Boards and Executive Management Teams would benefit from skills and expertise on good governance regarding WSH;

• there is a correlation between gender diverse boards with access to relevant expertise and stronger governance and oversight of WSH matters; and

• there is inconsistency with internal information sharing, and despite being recommended by the ASX Corporate Governance Principles, only less than one-third of the surveyed companies publicly reported information relevant to WSH as recommended.

The Report provides 8 recommendations for improvement for companies and investors:

1. Demonstrating visible leadership and appropriate oversight and governance over culture, sexual harassment and gender equality. 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.

2. Ensuring the entity has the skills and experience to effectively prevent and respond to workplace sexual harassment.

3. Making gender equality a priority and set gender diversity targets.

4. Ensuring systems and frameworks are in place to collect, analyse and use data to effectively manage the risks related to sexual harassment.

5. Executive alignment - aligning appointment, expertise and performance management of the CEO and Executive Management Team with the entity’s values to ensure they demonstrate and display visible leadership on culture, sexual harassment and gender equality.

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

7. Investors should seek information on investee entities systems and processes to prevent and address sexual harassment.

8. Investors should advocate for improved transparency and public disclosure on sexual harassment and encourage their investee entities to disclose their approach to prevent and respond to sexual harassment.

The Report provides an opportunity for companies to shift their approaches to WSH from reactive to proactive. Given the recent spotlight on WSH issues, we encourage companies ensure policies, practices and procedures are in place to ensure appropriate measures are in place to deal with WSH.

Please contact us if you require assistance navigating these issues, or if you have any queries on how it may affect your business.