Companies (Directors’ Duties) Amendment Bill

Mōrena. The House is resumed for the extended sitting.

I move, That the Companies (Directors’ Duties) Amendment Bill be now read a third time.

It is a pleasure to take a call on this bill. This bill has had an unusual journey to this, its third reading. It started with a common misconception articulated in this House that directors have a duty at all costs to return a profit. These narrow views about the role of business in our society serve no one. Just like it is often said that no person is an island, it is also true that no company operates entirely on its own, without effect or regard to the environment or the community around them. Many businesses recognise this and act responsibly with consideration not just to the profitability of their company but also to the environmental impact, the true nature of their supply chain, and the people who live and work nearby or who are impacted by the business that they carry out. This is along the same lines of a lot of other work that has been done in this space. For example, the modern slavery announcement that was made by the Minister Carmel Sepuloni last week, looking at the integrity of our supply chains and how as businesses within New Zealand or operating in New Zealand they have the responsibility to do better and to make sure that there is no exploitation in the work that they do. This bill is along similar lines and looks to the future of conducting business responsibly. I commend the businesses who are already undertaking these kinds of assessments and conduct in their work.

What is achieved, then, by this bill, is to provide clarity and security to those directors who were, until the passage of this bill, unsure or unclear about the scope of their duties. It doesn’t require directors to consider environmental, social, and governance matters. It doesn’t increase compliance costs. It doesn’t create new duties, and I want to be clear about that. This simple but important bill clarifies a small but significant point that profit is not the only factor important to responsible businesses. This bill is so straightforward that I can outline again, for the benefit of the House, exactly what it does. It adds a new subsection into clause 131 of the Companies Act. After the passage of this bill, 131(5) will state “To avoid doubt, in considering the best interests of a company or holding company for the purposes of this section, a director may consider matters other than the maximisation of profit (for example, environmental, social, and governance matters).” That is the entirety of the change that this bill introduces. It clarifies the best interests of a company could or may be to consider other matters other than the maximisation of profit.

This bill was further strengthened by the Supplementary Order Paper (SOP) I introduced at the committee stage outlining that environmental, social, and governance—or ESG—matters could be considered. I felt that this clarification was needed in order to provide context for the type of considerations directors may take into account. ESG matters are mentioned in section 129 of the KiwiSaver Act 2006 when dealing with responsible investor statements. So this concept has precedence already in New Zealand law and it is my view that it will continue to be used by the business sector when looking at factors other than the maximisation of profit. Members will also be aware that the United Kingdom has also introduced a similar change to their Companies Act in section 172, all the way back in 2006.

Now, members opposite will no doubt say that this law isn’t needed, that companies can already act responsibly taking wider ESG factors into account. And while companies could do that, the law in this area was not as clear as it could be on this point. This law provides the clarity needed. Members opposite have also accused us of virtue signalling, and I want to unpack that a little bit. “Virtue signalling” is a derogatory phase that implies that the only reason one is undertaking an activity is to be seen to be good. This bill actually clarifies and affirms the right of directors to actually do good. It gives confidence to action, not just signals of good intentions, as alleged. It is good for companies to feel they can consider more than their financial bottom line if they want to. It is necessary to have clear law for it to be accessible and useful to the general population. This bill enables both these things to the benefit of our legislative regime.

On the other hand, some members and submitters to the select committee wish we had gone further and made these considerations mandatory. Although I have sympathy for this view, I think that because of the substantive policy work involved with this type of change it is best suited to a Government bill—if there was will to go ahead with this type of change—rather than a member’s bill. But I want to recognise those submitters who raised those concerns in the select committee process, and those across the House who engaged in this matter, especially my colleague Ricardo Menéndez March, who put an SOP up on that matter in the committee stage. So I thank them for their interest in the bill and their engagement with it, but I think that this bill, as it is written, strikes the most appropriate balance.

I want to thank Duncan Webb—who first put this bill in the biscuit tin—for this idea, for his support, and for his courage to improve and clarify the law in this area. I also want to thank Rachel Brooking for her leadership of this bill throughout the select committee stage. I also want to thank the Economic Development, Science and Innovation Committee; you may have crossed half this bill out, but I think the bill we have before us today, that is about to become part of our law, is better and stronger for your attention. I also want to thank the chair of the Economic Development, Science and Innovation Committee, Naisi Chen.

To the submitters on this bill: you may not have supported this bill—some of you may have wanted it to go further—but I hope you know that we listened to your concerns and considered the feedback, and your submissions had an impact on the final bill that will be passed in the House today. I also want to thank Alana Belin from the Parliamentary Counsel Office for her assistance with the drafting of this bill.

Having good law, especially in relation to the conduct of business, will help New Zealand businesses to grow and will assist individual company directors to have the confidence to have a more holistic view of the impact of their activities in the world around them. I therefore commend this bill to the House.

Meitaki maata. The question is that the motion be agreed to.

Thank you, Madam Speaker. It’s a pleasure to be talking on the third reading of the Companies (Directors’ Duties) Amendment Bill. That speech reminded me almost of the valedictory speech—there were so many people thanked by the member. That’s what came to mind as she was speaking. I’m concerned that she feels that way, but none the less I feel that this bill should be consigned to the dustbin. This bill is a waste of Parliament’s time. This is a vainglorious bill, originally proposed by the Hon Dr Duncan Webb, and what on earth was he doing? I think it was an absolute mistake for the current member Camilla Belich to take this bill over from Dr Webb. It is a shocker. It is a waste of Parliament’s time, and I will explain why. We have repeatedly pointed out why people think it is a waste of time.

I want to take members back to why this bill original arose. It actually arose as a result of Mr Robertson writing a totally inappropriate letter to the directors of Air New Zealand, as a major shareholder in terms of representing the Government’s shareholding in Air New Zealand, and setting out in a page and a half a letter specifying and imposing his views—his personal views, although framed as the Government’s view—of how the Air New Zealand board should operate should it take the additional money that was provided by the Government during the COVID crisis. And it was wrong. That intervention by a shareholder on the board, an independent board—and it should have been an independent board. All boards should be independent and should operate in the best interests of all their shareholders, not just one and certainly not the dominant shareholder—Mr Robertson inappropriately did.

I think that out of that, Dr Webb suddenly had this brainwave that he had to therefore make sure that every board in New Zealand operated according to the same framework that Mr Robertson set out in his letter. It is wrong. It is actually wrong. And the reason why is the bill replaces a definition. Clause 4 inserts subsection (5) into section 131, and it states, “(5) To avoid doubt, in considering the best interests of a company or holding company for the purposes of this section, a director may consider matters other than the maximisation of profit”, and it goes on to talk about environmental, social, and governance matters.

The thing is—and this is what I find staggering listening to members from the Government, and I include members from the Greens, although they seem to pop in and out from Opposition to being part of the Government—that absolute lack of commercial nous about how boards operate and how companies operate. I would suggest to the members that boards always do take into account a range of factors. The first and primary factor is, of course, maximisation of profits, because unless companies survive and continue to operate, then they go bust and then people lose their jobs and a lot of money is lost. That is always the primary objective and that is always an important consideration. But it is wrong to conclude or suggest, which I seem to repeatedly hear from the Government members, that that is the only thing that boards take into account. It is not. And the reason is that they can take into account much wider aspects and certainly environmental, social, and governance aspects because it’s the right thing to do. It’s the right thing to do for their companies.

The second thing, the reason why they do it, is that often their customers demand it. And so there’s already an influence on those companies because to be successful, you have to deliver products and goods and services to your customers at the right price and the right time, all those sort of things. Of course, the strong push from consumers now is a very important driver of business activity. And no director is stupid enough not to have regard to customer expectations or demands.

The third thing is that many of their staff advocate for those types of considerations, and we’ve seen that increasingly over recent years. Those are the issues and the drivers that all directors take into account when managing their businesses. [Interruption] Here we go. I see the Labour members—of course, they’ve all sat on many boards!—saying, “Oh, that’s wrong. He doesn’t know what he’s talking about.” Well, actually, I think they’re wrong, and I’ll tell you who else thinks they’re wrong.

Hon Damien O’Connor: Go and read about your mates at Pike River.

ANDREW BAYLY: The Legislation Design and Advisory Committee thought you were wrong, members over there. It thought you were wrong, Mr O’Connor, and what it said was it recommends that this bill was not necessary and that the bill as introduced could have unintended consequences, and we strongly agree.

I’ll go on a little bit further for the benefit of Mr O’Connor, who seems very active in this conversation. Because the bill does not—[Interruption] This is what they wrote, Mr O’Connor, and this is what the office of the select committee wrote—because the bill does not does not permit or prohibit any activity, it will not have any legal effect. The lack of a legal effect brings into question whether this bill or legislation is necessary.

That is why it’s a waste of time—that’s the first point. It goes on to say, Mr O’Connor, that the committee could consider whether there are more appropriate mechanisms for giving effect to a particular policy goal. And the Legislation Design and Advisory Committee—not one of those shonky little committees that you normally don’t have regard for—considers that there is at least a possibility that the addition of specific environment, social, and governance factors—which, of course, is in the Supplementary Order Paper the member put forward—as considerations of directors could encourage the evolution of judicial review into the realm of individual director decision-making, a suggestion the courts have always been clear to avoid or at least to attempt to.

That is why this is a dangerous piece of legislation. It is not necessary. Company directors already have regard for it. It’s a waste of Parliament’s time. Worse than that, it potentially could have legal ramifications, which are an even worse prospect. I know this bill is going to pass because we’ve got a Government that is blinded by this, but I hope it doesn’t lead to adverse impacts for companies, because although Labour members have this view around directors, those companies employ lots of people, and when companies fail, they lose their jobs, and that is the type of adverse outcome that we may see out of this bill.

Everyone seems opposed to it other than Labour members who think it’s a good thing because they’re slavishly following some bill that should have been thrown out years ago and should never have been allowed to go through their Labour caucus. It just shows how lacking in commercial nous the Labour members are.

Thank you. Good morning, Madam Speaker. It is a pleasure to rise and take a call on the Companies (Directors’ Duties) Amendment Bill. We’ve already heard in previous sessions about Gordon Gekko and his call that greed is good, and that is around about the time I started studying business. I’m very, very aware of the capitalist model that I was taught about in the 80s, and the wonderful thing about this bill is that it actually is a liberating bill. It is an enabling bill for those of us who appreciate that business has a part to play in the way that we deploy our resources in our economy. This bill liberates us.

You know, many of us know that directors have—one of their core jobs is to be compliant, make sure their companies are compliant; more than 10 Acts that they have to be responsive to. To codify the idea that profit maximisation doesn’t have to be the only thing that drives you as a company director is a fabulous thing. It is appropriate to consider issues other than profit maximisation. It’s really disappointing to hear the other side of the House look at business in such a blunt and simplistic way that the only way that a company can succeed is by maximising profit, and if they’re not maximising profit, then they’re going to completely collapse and there will be hundreds of people made unemployed. That is such a lazy way to look at companies. Absolutely it is a lazy way to look at companies. We’re hearing those words from the other side of the House. Companies are able to pat their heads and rub their tummies at the same time. They can be successful and profitable, and they can look at the greater good.

The young people that we represent here, because they cannot be here for themselves, will be pleased to know that we are enabling companies to better consider intergenerational impacts. For those of us who live in Taranaki who are dealing with legacy pollution issues every day, we know that when a company can actually say, “You know, there’s a piece of legislation that says it’s all right for us to not have to maximise our profits today, because we want to make sure that our whenua, that our water, that our oceans are clean for the future generations.”, this is an enabling piece of legislation.

We know that modern corporate governance theory has moved beyond profit maximisation, when I studied it at university, those of us who are supporting not just companies but we’re on boards of directors all over the place where we are considering the greater good. As company directors, they have to make sure that they determine purpose, that the culture of a company is one that helps them to make a profit. That’s fine, but to able to say, “Look, it says in the law it’s OK to do that.” I think is a really great way to support a cultural shift that we need to happen. If we’re going to rely on capitalism to save the planet, best we help give them the tools to make that shift.

This is a simple little bill. It is a small but mighty little bill. It is really important that we aren’t just seen to be doing better but that we are enabled to do better. We have to ensure that our corporate partners are able to join us in making a great future for this country, and because of that, I commend this bill to the House.

A small and mighty bill—well, what a way to start the morning, under urgency, than going through the Companies (Directors’ Duties) Amendment Bill, which is a complete waste of time. Ten days of Parliament left and the member of Parliament gave to me the most unnecessary bill that I ever did see, and that is what we’ve got on the table.

The member referred to Gordon Gekko. Now, has anyone ever heard of Gordon Gekko? That is as good as it gets. Well, I tell you what, Gordon Gekko was a fictional villain. And I tell you what, there are a few fictional villains that are standing up here today, talking a big talk about this bill, and if Gordon Gekko—as I understand from my deep research I undertook from listening to the prior member’s speech—had a saying, “Greed is good.” Well, I tell you what, these Labour members are saying—their fictional villain status is around “waste is great.” That, I think, personifies what is a bill coming up under the auspicious idea of Dr Duncan Webb; an epiphany that he had at one point in time. I do feel sorry for the good member, Camilla Belich, in regards to taking on this bill because what a hospital pass; what a hospital pass to take this bill.

No one believes that this is going to add any value. For the prior member to say this bill is going to help young people, it’s going to help the environment—where in the bill? The only thing that this bill—this bill is a solution looking for a problem. It is well meaning but it is misguided and that is the great shame around the opportunity cost. Where this Government, this morning, could be passing legislation that could truly deal with some of the most significant issues our country faces today, they have decided to use this Parliament’s time to pass this bill, which is unnecessary, misguided, and not supported by many, many stakeholders across this country.

This bill will result in unintended consequences and implications on directors and probably end up—the only ones who will benefit are lawyers with more legal fees and more court action around the indecisive aspect that this bill will bring.

I’m not going to waste any more time in regards to this bill. It is a bill that is destined to the waste bin, as Andrew Bayly has noted. We strongly oppose this bill and it is the last thing that I think is necessary at this point.

Kia orana, Madam Speaker. It’s a pleasure to stand and speak to this bill in the name of my colleague Camilla Belich, and I thank her for her work in shepherding this through its final stages. This debate has been interesting; I’ve enjoyed the contributions of the members opposite, as well as my colleagues on this side. I’m going to be a lot more boring and give us all a bit of a lecture on how companies work and why they’re important, because that’s something that we haven’t actually talked about this morning.

Andrew Bayly: Oh, that’s a good start!

ARENA WILLIAMS: So, Mr Bayly, you will be aware that there is no magic to the duties of directors. They’re all written out in the Companies Act, and companies are special because they’re simple to set up, they’re easy to understand, and there is a long history of using what is essentially the Companies Act over many common law jurisdictions, and a standard form constitution of companies. That’s why they’re useful.

They’re also useful because they have limited liability attached for the directors, and that’s what makes them special in character. The legal nature of them is that we design a special set of rules that the public can accept, that directors might have the benefit of, so that they can make business decisions which effect their company in a way which grants them social licence, so that they are not personally responsible for the debts that their company incurs if something goes wrong.

So it’s really important for Parliament and for parliamentarians, who are elected democratically, to every now and then look at those companies directors duties and the rules which create them, and say, “Is there social licence here for these directors to operate in this way? Is it fair for the directors to sit around the table and have this special power that we don’t afford anyone else in any other situation of commercial dealings, or of contract making, or of agreement making of any kind?”

I would say, yes, it’s appropriate for Parliament to say that these directors may—“may”, not “must”—be able to consider things like environmental concerns, things like social concerns. That has the effect of having around the boardroom table an opportunity for directors who want to advance those things within their companies. They might be companies that are set up for a specific social purpose, a specific environmental purpose that we’re seeing a rise of around the world, which are called B companies. They are not charities. They do not operate in a way which is within the very strict definition of what a charity is based on a definition from the 1200s about what is charitable work and what is poverty. These are companies which want to have a wider social focus, and it’s right for Parliament to be able to enable now what social expectations are out there in the big wide world in our Companies Act. That’s why this is useful. It’s a small change, but it goes a step towards doing that.

I think one more point I’d like to bring to this debate is that it’s useful for companies to need to actively tell their shareholders what to expect from them. So when we find a document like a constitution, or like a shareholders agreement, which is usually not made public, that’s the place for the company’s directors to be very clear with their shareholders what they will deliver, what things they will take into account. This companies law is different from that. It’s about creating a baseline for what those directors may do, and what they may be held accountable for.

So when we have a baseline which is permissive, as my colleague Angela Roberts said—which is empowering, you can then have these further agreements where you’re very specific about those things that you take into account. That’s why the committee heard that this will not have a widereaching legal effect, because usually those agreements between shareholders, or that constitution which is mandated and required, will deal with those things that the directors will take into account. So they will not be bound to take into account things that they don’t expect to, and we don’t expect them to.

So it’s a good bill. I’m proud of my colleague, Camilla Belich. She was very nice in her opening speech, and we’ve all been a bit mean to her. So well done, chick.

Ah, we heard the magic words, today, of Baycorp—Baycorp. Let me tell you what Baycorp did to our great hero of the United Kingdom Nigel Farage. The last CEO on the board signed off on, “Some people won’t fit our environmental, social, and corporate governance (ESG) principles.”—and this is the UK NatWest via Coutts bank—and they closed down Nigel’s private business account and his personal accounts and then went through all their customer base saying, “Do you have political views? Are you green enough? Listen to Baycorp.” Anyway, three days later, the new CEO of NatWest and Coutts bank apologised for the application of these bad ESG principles to one of the greatest democratic heroes in the United Kingdom. This is what happens when woke stakeholder capitalism is allowed to penetrate the use of companies and business accounts.

If you look at Rabobank and its partnership with Silver Fern Farms, well, sustainability loans, ESG, the road to Paris—there’s not actually anything in here about banking any more; it’s just about, “Have we got our green agenda sorted out so we can send this to Government and maybe extract more money for boilers or for other activities like electric arc furnaces, which we’ll give to Australian shareholders?” And you can see the Government’s getting suckered in that area by companies coming in who have this money in their CAPEX and say, “Oh, if you want us to move faster on the ESG principles, we need $750 million; we need $150 million.”, and the Government just rocks up and gives it to them. And that is taxpayer money.

How dare you people insult the directors and businesses of this country. They pay your wages, they pay taxes, they take risks every day to go and make a profit, which is not a bad word, to go and help run this country. And while they’re out there worrying about their bills every night and paying GST and meeting and paying bills on a Thursday, you’re all sitting having chardonnay across the road. So chardonnay socialism, stakeholder socialism, this is going to stop. I’m telling you right now; we’re going to stop it, and we’re going to make sure that every law firm in the country understands what you’ve done today, because this bill has been rejected by every law firm and by the Economic Development, Science and Innovation Committee. It’s a rubbish bill, and Duncan Webb should be ashamed of himself, and I don’t know why Camilla Belich took this on.

Now, I’m a bit concerned about the ex-Minister of Revenue the Hon David Parker today. He’s got his mask on. Maybe he’s worried about being infected with these ESG principles, because it is a virus that’s taken hold around the world, and it shouldn’t be allowed. Directors are not stupid. They’re already doing this in their boardrooms. They’re already allowing their customers to experience green benefits. And if a customer doesn’t like it, they can just go and not buy the product. If you want to buy a share in a company—and being a capitalist, you can go and buy a share in a company and you accept the responsibilities. Read the prospectus. If somebody’s promoting environmental policy and you’re happy with it, good stuff. Let the free market take its place in these principles and not shoehorn them into some sort of stupid bill that actually doesn’t make any sense, isn’t mandatory, and will lead to big corporations in this country dictating how business runs their day-to-day life. And it’s not fair and it’s not proper.

This bill was supposed to give more weight to environmental, social, and governance factors around directors’ duties, and it failed to achieve select committee endorsement at its first run. Now, what does that say about this bill? What does it say about this bill?

Dr James McDowall: It’s a shocker.

DAMIEN SMITH: It’s a shocker, and it’s unnecessary, and it’s a shame on the Labour Party for bringing this in. It’s just purely ideological, and we need to recognise that fact in the House today. You can’t run a country based on your political ideology and your whims of social environmental standards, which are already set out there. The road to Paris is a long road, but it’s actually distorting and making New Zealand uncompetitive. It’s not going to work, and we need to line up with our trading nations and be competitive on a like-for-like basis, and none of these other countries are adopting these principles. In fact, they’re going backwards, so why should we take on this leadership position where we will actually now not reap the benefits of this type of legislation?

Whether it’s Rabobank or whether it’s the New Zealand Bankers’ Association telling me, “Oh, there’s no ESG loans, but we have sustainability loans.” Well, it’s the same bloody thing.

Hon Member: Yeah, I know.

DAMIEN SMITH: Yeah, same thing. This actually says if you want to be a farmer, you get differential rates, so you take on our Paris Accord principles. Well, what that means is that a mid-range farmer is disadvantaged because they have to pay higher interest rates. If you’re a corporation, you get cheaper money. Now, that’s a distortion in the market, and that’s behaviourally driven by something which is intangible and doesn’t make sense for the New Zealand economy.

Now, I’m not an anti-environmentalist. I actually am a pretty sensible person when it comes to those principles. But I don’t want people being cancelled who don’t have the same political views in business and getting their accounts closed like Nigel Farage. I don’t want corporations and banks dictating to me when I run my business, “What is the interest rate?” That’s the free market that sets that.

To finally conclude, I remember the first time I started my first company. It was a joyous moment. I had my accountant explain to me what my directors’ duties were. I suppose nobody over there has ever started a company. Maybe they have; I don’t know. But you’re actually trained in what you have to do and be responsible for, and that includes environmental factors as well. When you meet payroll on a Thursday, you pay your GST, you pay your taxes, you deserve some respect from this Government, you deserve to get legislation which makes sense, and this should never have come to Parliament and it should never be passed into law. We at the ACT Party believe that woke capitalism—or whatever you want to call it on your side of the fence—or business that is driven by ideological agendas are not going to work longer term, and you need to take that under consideration when you’re promoting this to directors and when you’re promoting this to shareholders.

I don’t care about the big corporation and its agenda. What I do care about is the sustainability of New Zealand and making sure as a nation we stay productive, we stay in the world’s intelligent economies and we have a network of laws that actually make sense—it facilitates business and people coming here to invest in this country. This is another example of legislation which continues to position us as the Shaky Isles in terms of investing. What are you going to get when you get to New Zealand? Are they going to close you down, in oil and gas? Are they going to let you operate a steel furnace? Are you going to have to get your boilers replaced 20 years in advance and come to the Government to get the money? We’re just a soft touch now for getting these things through, and it has to stop, we have to reduce debt, we have to reduce the size of the Government, and we have to be efficient with taxpayers’ money. Thank you very much.

Kia orana, Madam Speaker. I rise in support of the Companies (Directors’ Duties) Amendment Bill.

The previous speaker, Damien Smith, has been talking a lot about capitalism and been claiming that probably they are the ones, the only people who understand capitalism. Well, there are good aspects of capitalism, but blindly being dependent on capitalism got us in the mess that we are in today—it created classes, created inequalities, made very few rich people richer and hard-working people poorer. Just to put it out there.

This bill is all about striking the balance between maintaining the ease of doing business and protecting New Zealanders from illegal activities, something that the speakers on the other side of this House are missing. We know it’s quick and simple to establish a company or limited partnership in New Zealand, which is great for business, for doing business, but also opens doors for criminals to take advantage. For example, the Pandora and the Panama Papers highlighted some key vulnerabilities which need to be addressed, and New Zealanders deserve to know who they are doing business with.

While the bill that’s going to crack down on global and domestic criminals who use business to hide money laundering, tax evasion, and the financing of terrorism will be introduced later in the year, these changes we are making sit in line with the Government’s national security priorities to help identify threats, risks, and challenges to New Zealand security and wellbeing. It will also help bring us in line with other jurisdictions. It will include changes to rules around the financial beneficial owners to make it easier to see who owns and controls a company. When searching for the company on the register, it can be difficult to see the complete picture of the company’s ownership structure. The new measures would make it a requirement to provide secure, accurate information about who the beneficial owner is.

As the previous speaker indicated, there are a lot of entities who spoke against this bill, opposed this bill, but also a lot of others who support it as well. The Council of Trade Unions, for example, said that “The nature of work is changing, which means that the way businesses operate are also going to have to change. This Bill helps to ensure that New Zealand heads in the right direction on these counts.” It’s a good bill. I commend it to the House.

I’m going to play the smallest violin ever to the poor company directors who the ACT Party thinks are being victimised by a bill that simply clarifies that they may consider—may, not even must; but that they may consider—things other than maximising profit. I mean, this is like not even a socialist bill, honestly; it simply clarifies what company directors may do. So I really, really enjoyed listening to the theatrics of National and the ACT Party, who were talking about how this bill would victimise those hard-working company directors. And to put it on the record, despite what the ACT Party member may have said, actually it is the workers who create the profits for those company directors. The company directors depend on those workers, and actually, yes, this bill will enable the few company directors who do want to actually consider things other than maximising profits to do so without having to worry about whether the law is clear enough.

Submitters and some of those who supported this bill did say that we should have gone further and that we should have made it mandatory for company directors to consider other things other than maximising profit. I do want to commend the different members who have shepherded this bill, and particularly Camilla Belich who brought forward a Supplementary Order Paper to add further clarification about what it is that company directors may consider. But the Green Party once again reiterates our call that for this bill to actually have teeth, the language should have been “must”, and unless we actually start twisting capitalism’s arm, we’re never going to actually unshackle ourselves from what has been a broken system that has done nothing but increase wealth inequality and the concentration of power in the hands of a few. The Green Party supports this bill, but calls on the Government to have more ambition and for their backbenchers to be more ambitious in the bills that they put forward. Kia ora.

Thank you, Madam Speaker. It’s a great pleasure to have had this bill in the Economic Development, Science and Innovation Committee during the select committee stage, and for me, it was really interesting hearing the different stakeholders that came in and submitted on the bill. Some of the people who were, I think, obviously, the natural supporters of the bill, as we would anticipate, would be the environmental groups and some of the different legal entities, but then some of the companies as well who themselves have gone on a journey of really following their environmental, social, and governance (ESG) commitments and making sure that their directors are no longer faced with a potential risk of being caught out under this phrase.

As I read the bill for the first time—and, obviously, it was in quite a different form than it is now presented to the House today—I was reminded of my colleague Rachel Boyack. I remembered when Rachel first came into caucus one day, holding her soy-printed collateral and showing that off and saying, “Yes, it does cost a little bit more, but I think it shows our campaign’s commitment to the environment.”, and I think of that and I think it’s similar. When we look at companies and they choose to spend a little bit more on something that is much more environmentally friendly, will they be caught out under this Act—have they acted in the best interests of their company? Those are the moments that I think about in terms of being out there in the real world, where we actually want company directors to have that faith and to have that reassurance that we want to encourage them to do something that is not only profitable and good for their bottom line but also takes all other matters into consideration.

I do disagree with the ACT member who said that this bill puts New Zealand up as an anomaly. The United Kingdom has its Companies Act 2006, which also kind of gives the same provisions in terms of allowing company directors to consider ESG matters. I think about the social enterprises. That is now—in a woke term—trending at the moment and is making sure that companies are set up, not even for the purpose of profit, but the profit-making is for another, bigger purpose in our society and community. I want to make sure that this bill enables more and more social enterprises, so that our charity sector can really look after themselves and be self-sustainable as well. So that’s why I commend this bill to the House.

The next call is a split call. I call Nicola Grigg—five minutes.

Thank you, Madam Speaker. Look, like my colleagues and other parties on this side of the House, I’m opposing this bill, obviously. It is a pointless bill. Look, I have to say I feel for Camilla Belich; this really is a hospital pass that has been given to her. But if we look at the purpose of the bill, it allegedly makes clear that a company director, in acting as the mind and will of the company, can take actions that consider wider matters other than the financial bottom line. Can someone explain to me what is wrong with a company making a profit? What is wrong with considering the financial bottom line? That is the question that the Government members have failed to answer.

This Government seems to purport that making a profit in New Zealand is suddenly a cardinal sin. And yet, if you ask any person on the streets of New Zealand, most of them hold business in high regard, because it is business that employs people. It is business that allows people to earn money, to feed their kids, to pay their mortgages, to send their kids to school, to live a purposeful life. There is nothing wrong with business. It defies logic that the new section being added to the current legislation is “To avoid doubt, in considering the best interests of a company or holding company for the purposes of this section, a director may consider matters other than the maximisation of profit”.

Again, what is wrong with considering the maximization of profit? This is a typical daily occurrence within a business operation. Of course they account for profit. Of course they account for the wellbeing and safety of their staff. Of course they account for environmental implications and impact. This is a typical “we know best” piece of legislation from Labour. It is a typical command, control, centralise piece of legislation from this Labour Government. It is typical arrogance displayed towards business owners who go out on a limb, who take a risk, who want to employ other New Zealanders to ensure their wellbeing, to ensure their financial gain, to ensure their children are fed and housed and clothed.

This is a piece of legislation that is once again coming down hard unnecessarily on the businesses of New Zealand. It is totally pointless. It is a solution looking for a problem. It is well meaning, but it is totally misguided. It has not identified a problem to solve. In fact, if one were to actually look at the Companies Act 1993, it already states this bill’s intention. The Companies Act 1993 states that a director of a company “must act in good faith and in what the director believes [is] the best interest of the company.”

So, again, I put to the House: this is a pointless bill. It is yet more regulation on businesses that are already struggling enough after six years under a Labour Government. We oppose this bill.

I call on Jamie Strange for five minutes.

Thank you, Madam Speaker. I think we need to bring a little bit of clarity to this debate in the House here. The bill makes clear that a company director, in acting as the mind and will of the company, may take actions that take into account wider matters other than the financial bottom line. This is not command and control. This is not disregarding the bottom line. This is saying, “May also take into account other matters.”

Now, in terms of clarity, I thought I’d have a look at the Oxford Dictionary to see what the word “may” means and actually compare the word “may” with the word “must”, because it sounds like the Opposition are a bit confused; I think the Opposition are believing this is “must”. This is “may” take into account. So “may” means “expressing possibility”.

So, if the House will indulge me, let me give a little anecdote. Somebody visits someone’s house. They knock on the door: “May I come in?” “You may, if you wish.”

“May I have a cup of tea?” “You may, if you desire.”

“May I have a scone?” “You may, if you are hungry.”

And, finally: “May I depart?” “You may, but please return again.”

The word “may” is very different to the word “must”. The word “must”, in the Oxford Dictionary, is defined as “something is necessary, often involving a rule or a law”. This piece of legislation does not use the word “must”; it uses the word “may”. So hopefully that brings some clarity to this debate, because I sensed there was a little bit of confusion there. Hopefully that anecdote was helpful. I commend this bill to the House.

Thank you, Madam Speaker. Well, that last contribution was about as useful as the bill itself. We’ve got a piece of legislation here before the House that, quite frankly, sums up the Government’s approach recently: it’s a total waste of time. It’s a real—well, it’s a solution looking for a problem, quite frankly. We have, now, another example of dilly-dallying around when there are really critical issues that should be getting addressed by the Government at the moment, and frankly, the country is suffering because of it. We have already a set of rules in place that enable our directors to act appropriately in regard to carrying out their duties on behalf of the companies they’re involved with. There’s nothing that, at the moment, requires this change to occur, and, quite frankly, we’ve seen many businesses already looking at a range of aspects that are in the best interests of their business, and that is as it should be. It is not necessary to put in this extra caveat that requires them—or gives them, to the previous speaker Jamie Strange’s point—that they may consider other aspects outside of profit.

Businesses operate in this fashion already, and I think this really highlights one of the key aspects from the Government, where they clearly lack a good understanding of what it means to operate around a board table and of how businesses operate, because these sorts of considerations are absolutely critical sitting around the board table. Of course the numbers are considered, but a whole range of factors are considered from a director’s perspective in their role on a board, determining the future or decisions for a particular entity that they may be involved with.

What we’ve seen—and, actually, one of the previous speakers said this as well—is that companies are already going on this journey. And that’s exactly right; they don’t need this legislation to be able to make the right decisions for their business, for their communities, and for the environments that they are operating in. I think that’s the fundamental flaw from this Government: that they think they need to control the narrative, they need to tell businesses how to operate for businesses to succeed. We have a fundamentally different view. We absolutely disagree with that position. We have confidence in the business sector in New Zealand. We back them to go out every day and perform, and they do that day after day. Despite the increasing burden of regulation, the additional red tape, and the additional costs of compliance being imposed on them day after day by this Government, the business community continues to perform.

Now, profit, as we’ve heard, seems to be a dirty word on that side of the House, and it’s certainly not, because you can’t be green if you’re in the red. That’s the saying that we use in the food and fibre sector a lot because everyone that I’ve come across cares about the environment. They want to do the right thing for their communities, for the environment, and for their employees, and that’s how it should be. But to do that, you have to be a successful company, you have to be generating profits, and you have to be succeeding in your industry. We seem to have a Government intent on putting burdens and controls in place to dictate how that should or should not occur. Ultimately, what that’s doing is it’s undermining the ability of those businesses to perform and to succeed for them and therefore for their communities, their employees, and the environment around them. And that’s the sort of mind-set that simply is not working, and it’s been borne out over the last six years under this Government—this lack of trust that the Government has in the business community in New Zealand, and in the people of New Zealand, it seems, such that they feel the need to impose an onerous level of control across all manner of areas. It is simply unacceptable and, frankly, disrespectful to that community as well. We are a great country, we can continue to be better, we need to up the game, but at the moment we’ve got a Government intent on pulling our business sector down.

We fundamentally disagree with that approach. Pieces of legislation like this epitomise the Government’s approach to a lack of trust in the business sector and the need to control and influence everything, and, frankly, we disagree with it. It’s another socialist approach that, quite frankly, doesn’t fit, and the problem with socialism is that eventually you run out of other people’s money to spend. This is the problem that we’re seeing here when our business community is struggling time and time again, getting more and more impositions put on them by a Government that simply doesn’t seem to understand. [Interruption] They’ve woken up over the other side of the House now. We, quite frankly, do not accept that this is an appropriate piece of legislation. We do not support it. We are committed to backing our business sector, backing this country to get back on track and succeed like we know that it can. Thank you.

It’s a real privilege to get the final word on this small, mighty, and, I believe, really important bill because it is not a brainwave from Dr Duncan Webb, as has been described; it’s actually something that the business sector and social enterprise sector have called for for years. What it does is it bridges the gap between the current business models of profit and not-for-profit, because the world as we understand it now is quite different from when the Companies Act was introduced in 1993. To suggest that there is no problem is to suggest that we have infinite resources and that we have no issues around inequality.

Social enterprise is a word that I would use instead of “B companies”. It is companies that look at social profit as one of their considerations. There’s a whole spectrum from socially motivated companies through to those that simply take that into account. What this legislation does mean is that instead of those companies then being forced to be a not-for-profit, they can continue to operate with the savvy and the fiscal discipline of a profit-making company but taking into account things that exist in the circular economy, taking into account environmental, social, and governance considerations.

I think we have a duty as a Government in this environment of climate change and of inequality to provide incentives and nudges and certainly this bill does this but not in a way that requires companies to take these matters into account. It certainly isn’t mandatory, and I would never go so far as to suggest that. I think the Greens are dreaming if they think that is able to be achieved because that really does open a Pandora’s box; the not-for-profit sector is better for that. What it does, as many of my colleagues have said, is it means that company directors are no longer in the straitjacket of having to put profit maximisation first. We can see that regardless of what the Opposition say, that does come into account sometimes in the risk mitigations that companies take where they take shortcuts—we’ve seen that with oil spills, with all sorts of issues where the profit has come at the cost of the environment—but also there’s an assumption from Andrew Bayly that consumers always do the right thing. They may want to but many of our people are struggling with the cost of living and they will go for the cheapest option regardless of what they think is the right thing to do, so I think it’s inaccurate to say that consumers are always motivated and act on those motivations.

There are also assumptions from people around the role of the law in this, that the law is somehow devoid of politics—that’s a different jurisprudence than I follow; that’s why I left the law. Everything is political, and to suggest that there are unintended consequences that haven’t been thought through by the law firms, I have to look at who their clients are and who pays their bills. What this law does, as Angela Roberts said, is it’s an enabler. Currently, companies are in a straitjacket and, where there is profit and social profit—these are no mutually exclusive so, yes, companies can take that into account. But where they are mutually exclusive, what this does is it enables company directors to actually have regard for these other very important factors that were not appreciated as being so important back in 1993.

It is a great bill; it is a game-changer. I commend it to the House.