David Murray lacks 2020 board vision

This essay by ACCR Executive Director, Brynn O'Brien, was first published in the Australian Financial Review, 27th August 2020.

In 2011, David Murray, the now former chairman of AMP, sat down with Colleen Ryan for an interview for this paper’s “Lunch with the AFR” series. It was revealing, to say the least.

“Well, carbon dioxide is not a pollutant, it is colourless and odourless. It is not a pollutant," he said. “There is no correlation between warming and carbon dioxide.” And more: “The amount of ice in the world is slightly increasing. It is not decreasing. It is just staggering, staggering."

He was the inaugural chairman of the Future Fund at the time. Fast forward to 2020 and those remarks seem staggering indeed. A new study, published two weeks ago in the journal Nature Climate Change, supports predictions that sea ice may be entirely absent from the Arctic by 2035.

Murray reiterated his climate-sceptic views in an interview on ABC's Lateline in 2013. He said that the “climate problem is severely overstated” and that “there needs to be some consensus” about the science. When asked what it would take to convince him, he replied: "When I see some evidence of integrity amongst the scientists themselves.”

In 2018, along with Graham Bradley and Maurice Newman, Murray succeeded in a campaign opposing the inclusion of the widely accepted concept of social licence to operate in an update to the Australian Security Exchange's corporate governance principles.

When he took the helm of AMP, he reminisced to Chanticleer about a system at AMP similar to what was in place at the Commonwealth Bank of Australia when he was CEO between 1992 and 2005. Following revelations at the financial services royal commission, we have the benefit of hindsight in understanding just how horrendous the vertically integrated financial advice system truly was. And something Murray was still praising in August 2018.

Murray was voted in as chairman of beleaguered financial sector company AMP by shareholders accounting for more than 86 per cent of the company’s stock in 2019 (his election was notably opposed by super funds Cbus and HESTA). Some investors complained at the time about a “lack of clear alternatives”.

What is most concerning about this is that his views on climate change and social licence generally were on the record – as clear as day. And offered the opportunity by a shareholder at AMP’s 2019 annual general meeting to distance himself from his previous statements on climate change, Murray simply asserted that his opinions about climate change were “irrelevant.”

Many agree that a respect for scientific evidence is relevant to the task of modern company stewardship, as is an understanding of the community expectations that underpin social licence.

The personal views and past records of company directors can reveal a lot about their governance competencies, and in the case of Murray, incompetencies. One important aspect of his job was to lead AMP out of the ruinous collapse of its social licence following the royal commission. As a social licence unbeliever, it is perhaps unsurprising that he wasn’t up to the job; he was unqualified for it.

Finally, in 2020 we may be seeing a real shift in terms of what investors will and won’t tolerate. ESG risk – how a company manages its approach to environmental, social and governance issues in its operations – is now more than analyst jargon. We have seen a maturing of institutional investors’ understanding of social licence as a concept with tangible meaning and an acceptance that it is vital to the creation and protection of shareholder value.

On allegations of sexual harassment at AMP, investors have stepped up and demanded action following this paper’s relentless reporting. We may see something similar play out at Rio Tinto if investors hold fast to their call for “true accountability” in the wake of the disastrous detonation of significant heritage sites at Juukan Gorge.

It’s abundantly clear to me that, in 2020, Murray and those who share his views have no place as directors, much less chairs, of modern listed companies. His views on risk and governance frameworks seem to be stuck in the 1980s and accordingly do not meet shareholder expectations of modern boards.

But what to do about the shallow pool of ASX 200 directors? The boardrooms of corporate Australia urgently need to be refreshed with emerging talent, representing modern values – and a sensitivity to the nuances of governance and risk that will guide companies through the complexities of the 21st century.

It is quite ironic that AMP’s catastrophic social licence issues ultimately brought Murray’s chairmanship to an end.