A company’s commitment to a Reconciliation Action Plan (RAP) is also a key indicator we assess in our Ethical Partner Opportunity and Risk Assessment (EPORA) Investment Screening Process.
A recent update of this screening process across 230 listed ASX companies found the following:
The good news: Out of the 230 ASX listed companies analysed, the amount of companies with Reconciliation Action Plans had tripled from only 10% in 2021 to 31% this year.
The bad news: This still only equates to 31% of the 230 ASX companies we analysed.
This analysis also shows that Ethical Partners currently has 14 portfolio companies that have Reconciliation Action Plans. A further 2 portfolio companies have communicated with us of their intent to undertake a RAP this year.
Ethical Partners portfolio companies also include three companies that have achieved Elevate Status for their RAP’s, meaning that they are actively championing initiatives to empower Aboriginal and Torres Strait islander people and create social change and are ready to provide leadership in advancing national reconciliation. For example, portfolio company NAB’s Elevate RAP has a clear articulation of how the company purpose embodies the themes of reconciliation, with key focus areas where their business will have the most impact targeted, namely their pillar of economic participation, with eight specific commitments, focusing on how to provide support, banking, and capability building across the financial spectrum. Another portfolio company, CBA’s Elevate RAP provides detailed and transparent disclosure around the key governance bodies and the specific staff within CBA that are accountable for their reconciliation journey. CBA also has a detailed how their RAP actions align with the United Nations Declaration on the Rights of Indigenous Peoples, and includes 8 different pillars with 35 specific commitments and over 100 associated actions with clear accountabilities and timelines.
We further note that portfolio companies ANZ, Medibank and Wesfarmers have Stretch RAP’s, Woolworths, Mirvac, Steadfast and Reece have Innovate RAP’s and Breville and NIB have Reflect RAP’s.
Ethical Partners congratulates these companies, and looks forward to continuing to engage with them on how their RAP’s are enabling them to "Be Brave, Make Change”, and to accelerate action to complete the unfinished business of reconciliation.
And while the large increase in RAP’s is pleasing, reflecting an increasing understanding of the importance of clear, accountable action towards reconciliation by ASX listed companies, it is clear that there is still a long way to go with two thirds of the market not yet participating in the RAP program.
23 companies written to this week
As such, this reconciliation Week, we wrote to 23 of our Portfolio companies to communicate our strong encouragement them to adopt a RAP to guide their policies, process and commitment to reconciliation.
We furthermore signalled to these companies our intent to escalate our engagements with the management all of our portfolio companies who have not yet developed a RAP over the coming few months.
As a result of this engagement, an additional three portfolio companies have signalled that they are currently within the RAP process, and a further two have signalled interest in understanding more about the process, and as such, we will continue to engage directly with these companies, including at board level over the next few months.
Ethical Partners believes that genuine and committed Reconciliation Action Plans which are based around the core pillars of relationships, respect and opportunities, are an important tool for ensuring that a company retains their social licence, addresses the impact of their operations on First Nations peoples, mitigates risk, seizes opportunities to address human rights and cultural diversity and safety, and provides their employees, customers and investors comfort that your company is cognisant of, and aiming to take meaningful action on these issues. Ethical Partners also believes that the transparency and accountability contained within Reconciliation Action Plans disclosures are of fundamental importance to how we assess company’s commitment and action towards First Nations people’s rights, and therefore, how we assess a company for investment.
Ethical Partners remains cognisant that a RAP must be embedded in culture, be seen as a genuine business plan, be overseen by an actively engaged board, and extend to board training, visibility of board oversight, cultural safety and diversity initiatives and include external advisory input and consultation with the indigenous community, and as such, we continue to engage with all participating companies to ensure that these RAP’s are meaningful exercises in reconciliation, and the first steps in addressing their impact on Indigenous peoples.
55 engagements in the last two years
This week’s engagement also builds on the 55 engagements on Indigenous rights, and cultural diversity and safety that Ethical Partners has undertaken over the past two years, more detail on which will be shared in our engagement report later this year.
Our engagements have all communicated our firm expectation that the company will adhere to the principles contained within the United Nations Declaration on the Rights of Indigenous Peoples, fundamentally embedding the principles of Free, Prior and Informed Consent, community consultation and co-design with Indigenous partners, and have taken place with all relevant mining, power and agricultural sectors. We also continue to actively maintain dialogue with ASX companies on relevant issues, such as their RAP’s, indigenous inclusion, training and employment programs, board and management leadership and governance of indigenous rights and reconciliation, their integration of indigenous voice into their governance and operational systems, their human rights policies and practices, grievance mechanisms, the intersection of vulnerabilities for indigenous stakeholders and the company (and their memberships) involvement in lobbying or advocacy on reconciliation and indigenous rights.
We also firmly believe investors have a key role to play in the collective call to action through our wider advocacy with government, legislators and other investors and civil society on indigenous rights. As such, we are proud supporters of, and encourage urgent action on, the Uluru Statement of the Heart, including holding a referendum to enshrine a Voice to Parliament. Ethical Partners have also actively engaged with parliamentary submissions such as the Indigenous co-design, have advocated to the Western Australian Government on our concerns regarding the Aboriginal Cultural Heritage Bill and to encourage them to partner with Indigenous Peoples to co-design a new version of the heritage protection laws. here. We look forward to undertaking further advocacy on accelerating these issues with the increased focus on the Uluru Statement with the change of government.
Finally, we also are conscious that Ethical Partners must be also focusing on reconciliation internally, and as such, we are actively working to strengthen our relationships with Indigenous peoples, continuously expanding our internal knowledge on Indigenous rights and ensuring it is embedded in our investment process through our Ethical Partners Opportunity and Risk Assessment (EPORA), and are excited to have recently joined the Human Rights Working Group at RIAA, and taking part in the important work they are undertaking in this space.
Ethical Partners are pleased to see Australia take the next steps to implement mandatory climate reporting with the release of draft climate standards, which we provided feedback on.
Ethical Partners have continuously called for the provision of high quality, comparable data on company’s climate governance and carbon metrics, which we believe is imperative for investors to fulfil the potential of responsible investment.
Ethical Partners have been proud to have been active supporters of the TNFD Forum over the past few years, and to provide regular feedback on the development of the official TNFD recommendations, which were launched in December, as well as to be active members of the RIAA Natural Capital Working Group.