Australian companies below par in environmental standards

Bluechip Australian companies lag behind Europe and Japan in environmental standards and only two in 10 firms have policies on overseas labour exploitation, according to a global ethical investment study done by London-based Ethical Investment Research Service (EIRIS).

But Australian and New Zealand firms in environmentally sensitive industries such as mining and agriculture are better than their counterparts in the United States and most of Asia.

Australia also scored well in the areas of corporate governance and equal opportunity for women.

The study of about 2000 major stock exchange-listed companies in Europe, North America and the Asia-Pacific region, found 75% of "˜high-impact' Australian and New Zealand companies had basic or advanced environmental policies.

By comparison, more than 90% of similar companies in Europe and Japan had environmental standards.

Australian companies were still ahead of the United States, on 67%.

In Asia, outside of Japan, only 15% of companies had environmental policies.

Alarmingly, 80% of Australian companies in the textiles and electronic industries did not demonstrate any evidence of labour standards for their supply chain, putting them on the same level as the United States and New Zealand.

Conversely, one in two European companies had policies on outsourced global labour.

Centre for Australian Ethical Research chief executive Duncan Paterson said he was concerned local companies had not performed better on a range of issues.

"This is a wake-up call for Australian companies," he said.

"We often congratulate ourselves on how well we're doing — and individual companies are doing very well — but with our performance on these issues, hopefully that will be addressed in the future."

The EIRIS report found more than 90% of Australian companies had boardrooms comprising one-third independent directors. This put them in the same league as North America, United Kingdom, Switzerland, Netherlands, Norway and Finland.

Fewer than 10% of firms in Germany, Austria and Japan had independent directors.

About 87% of Australian and New Zealand companies had basic or advanced equal opportunity policies, compared with 94% in North America, 88% in Europe, slightly more than 50% in Japan and less than 25% in non-Japanese Asia nations.

Eight out of 10 Australian companies had policies to promote women and ethnic minorities, and flexible working conditions.

"Performance (in this area) amongst Japanese companies is also strong at 60%, whereas it is weaker amongst US companies at 25%," the report said.

"In the US, companies are less inclined to disclose this information, possibly due to fear of litigation."

Worldwide, the report found only 8% of board members were female, with Norway having the highest proportion at 33%.