The cost of corporate misconduct
17 February 2025
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In 2024, allegations of governance failures, misconduct by senior executives, and toxic workplace cultures dominated headlines. At the same time, regulators launched investigations into large-scale price gouging, consumer exploitation, market manipulation, and breaches of Anti-Money Laundering and Counter-Terrorism Financing legislation. The damage from these scandals was far-reaching, with board and executive exits, volatile share prices and eroded public trust. Media coverage exposed systemic flaws in corporate governance structures and the challenge of balancing profit-driven goals with ethical obligations.
Looking ahead, we expect that tough economic conditions will prevail. History has shown, this often correlates with risk-taking and questionable decision-making, putting leaders in the spotlight for all the wrong reasons.
A review of the whistleblower provisions of the Corporations Act will likely enhance protections afforded to whistleblowers and we expect more social justice-driven individuals will come forward.
Mandatory climate related financial disclosures commenced on 1 January 2025. Shareholders, consumers and advocacy groups will continue to demand greater accountability, while any misstep or violation is likely to invite significant regulatory and public scrutiny.
A High Court ruling in late 20241 may influence how corporate misconduct matters are pursued. The landmark ruling regarding “systemic unconscionable conduct” found that corporations think and behave through their systems, policies and practices. If those systems are found to disadvantage consumers, the corporation (and its executives) may be presumed to have acted knowingly and with intent and can be held directly responsible for such misconduct. This represents a departure in how these matters were dealt with previously.
2025 is poised to be a critical year for corporate accountability and legislative reforms. For corporate leaders, the balance between ethical obligations and business goals will remain both a challenge and imperative.
Source: 1Productivity Partners Pty Ltd v Australian Competition and Consumer Commission Wills v Australian Competition and Consumer Commission [2024] HCA 2
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