APRA's Urgent Plea To Banks, Modern Slavery Crackdown and Achieving Results That Matter

This Week In ESG

APRA’s Urgent to Plea To Banks after it releases findings of inaugural Climate Vulnerability Assessment.

The Australian Prudential Regulation Authority revealed last month that nearly a quarter of banks, insurers, and super funds lacked proper metrics for measuring and monitoring climate risk. The purpose of the exercise was to 'assess the potential future financial impacts of climate change, and to help banks, insurers, and superannuation trustees better understand and manage these risks'.

“Empirical measurement, rather than a subjective judgment, is going to be needed fairly urgently,” Wayne Byres, (Chairman, APRA)

APRA is interested in seeing banks create better data sets to assess exposures because it believes climate risk could have a compounding effect on credit, market liquidity, and operational risk.

Key findings from the survey include:

?- climate risk impacts are likely to be concentrated in specific regions and industries. For example, mortgage lending losses are expected to be higher in northern Australia, and bank losses from lending to business sectors more vulnerable to transition risks, such as mining, manufacturing, and transportation.?

- Banks have indicated that this will have an impact on their risk appetites and lending practises. Banks, for example, are likely to reduce their exposure to higher risk regions and industries?

• from a modelling standpoint, there are 'opportunities to further improve climate-related data quality and accessibility' and to strengthen banks' internal climate risk management capabilities (eg, opportunities to 'upskill to address potential knowledge and data challenges’).

Modern Slavery Crackdown

A report completed by the Australian Human Rights Legal Centre?has found that that compliance with existing reporting requirements under the Modern Slavery Act 2018(MSA) is generally poor, and that the MSA has not been effective in motivating (the vast majority of) companies to take action to combat modern slavery.

Implementation of the MSA was intended to act as a motivator for companies to ‘race to the top’ on the issue of action against modern slavery and quality of reporting but it based on the report it seems as though this has not happened.?

The report found the following:

Reporting continues to be poor, with many companies appearing to treat it as a 'tick the box' exercise:

• 66% of companies did not meet all of the MSA's mandatory reporting requirements (down from 77% last year).?
• Despite extensive public reporting on the issues, 43% of companies do not identify "obvious" modern slavery risks in their supply chains. Only half of food companies, for example, identified sourcing horticultural produce in Australia as a high risk for modern slavery practises.?
• The majority of companies are not following through on their promises/commitments made in the first round of modern slavery statements reviewed, with 56% failing to follow through on their commitments/promises in the second round of statements.?
• Only a small number of businesses are taking effective action:?33% of businesses could demonstrate effective action to address modern slavery risks, improve working conditions in their supply chains, or address root causes.?Only 17% of companies have committed to providing restitution if they cause or contribute to modern slavery, and only 7% have disclosed commitments to compensate victims.

Australian Human Rights Legal Centre (AHRLC) has put forward five recommendations to the Review into the MSA:

1. The AHRLC suggests amending the MSA to include a "duty to prevent" modern slavery. This would necessitate reporting entities performing human rights due diligence in order to identify, prevent, and address modern slavery risks in their operations and supply chains.
2. The AHRLC suggests introducing financial penalties and other administrative penalties for non-compliance with reporting requirements.
3. The AHRLC recommends the appointment of an appropriately resourced, independent Anti-Slavery Commissioner to ensure oversight and enforcement of the MSA.
4. The AHRLC suggests conducting a three-year statutory review of the MSA's effectiveness.
5. The AHRLC recommends amending the Customs Act 1901 (Cth) to include a ban on goods produced through modern slavery.

This Week In Leadership

Achieving Results That Matter

Attention to results that matter is a byproduct of a number of different factors that all contribute to overall team effectiveness.?

The book, 5 Dysfunctions of a Team, by Patrick Lencioni - he identifies 5 things that create Dysfunctions in a team. Inattention to results is actually at the top of the pyramid and is underpinned by 4 other dysfunctions.?

1. Inattention to results?

2. Avoidance of accountability

3. Lack of commitment

4. Fear of conflict

5. Absence of trust

In order to see our teams flourish and focus on results, we need to take these 5 dysfunctions and turn them on their heads!

Firstly, the foundation of any teams ability to have a positive and healthy drive for results all comes down to trust.?

To be results oriented in a team environment your team must have full confidence that you as the leader are here for them. In turn they will be here for you.?

Secondly, your ability to be achieve results that matter will only be as effective as you are able to motivate and inspire yourself and your team. Empower people to make a positive impact and to see greater purpose in the achievement of the goal.?

Thirdly, being results driven leader requires that we set the tone. Being results driven means that WE set the standard first. Model the culture you want to see in your team. Hold yourself accountable FIRST. And communicate when you make mistakes. Own them. Creates permission for others to do the same.?

Fourthly, being results driven means we need to be committed to personal growth and to helping others grow. As soon as you get better, we get better. My growth impacts OUR success. Results driven leaders are committed to drawing out the potential in those around them.?

Focusing on results that matter means:

? Communicating direction and strategy. Get everyone on the same page going in the same direction. Set and communicate clear goals and expectations?

? Holding yourself and your team accountable to these goals?

? Committing to personal growth and developing others?

? Celebrating those who model the attitudes, behaviours and results you’re looking for?

? Identifying and removing or mitigating any roadblocks to people achieving the goal

? Creating positive feedback loops so people can work out how they can improve?

? Reward people appropriately for the things you see them do privately that are aligned to your culture and goals.?

Quote of The Week

If you are going to achieve excellence in big things, you develop the habit in little matters. Excellence is not an exception, it is a prevailing attitude. - Colin Powell

Enjoying our newsletter? Get it delivered straight to your inbox by subscribing?here.?

Apricot is a global consultancy that help's the world's most ambitious leaders and change makers define and build a more sustainable and inclusive future.

We implement leadership, organisational change and ESG solutions to create growth that matters. Have a question or interested in one of our services? We'd love to hear from you! Please click?here.