Unlock sustainable collaboration: 5 tips for compliance
Competition is a core part of good business practice, while collaboration is key to achieving sustainability and climate change goals. While it may appear the two can’t co-exist, they can, and do – but need to be done right.
Preventing anti-competitive behaviour – accidental or otherwise – prevents things like price fixing and can help improve environmental outcomes where businesses are competing on their sustainability advancements and credentials.
We believe there’s a case to be made for sustainability being seen as table stakes, not a competitive advantage. But we’re also realistic enough to know that in the absence of any regulated standards, there will be businesses competing on their sustainability credentials.
But when system level change is needed, particularly to grow our circular economy, a level of collaboration becomes necessary. In some cases, businesses are keen to collaborate so they can avoid regulatory pressure further down the track, and to protect their shareholders from the risks of poor environmental practices.
It’s encouraging to see the Commission recognises the importance of collaboration between businesses in the same industry to tackle issues like climate change. The Commission’s Statement of Intent 2023-2027, “notes the impact of climate change on key sectors of the economy and the need for a whole-of-system approach that delivers an appropriate level of resilience over the long-term.”
It has also recently released its draft Collaboration and Sustainability Guidelines to help businesses avoid anti-competitive behaviour, which should be read alongside their Product Stewardship Fact Sheet.
When looking at whether collaboration breaches the Commerce Act the Commission will look for things such as cartel activity, like price fixing and restricting outputs, as well as agreements which substantially diminish competition.
In our view, there are a few things you can do to reduce the risk of well-intentioned sustainability initiatives being anti-competitive in practice.
- Ensure all industry members have the opportunity to participate and benefit from any system change or investment in infrastructure or R&D
- Where data sharing is a necessity to co-design a solution or work out a financial model, use a third party, such as a project manager or contracted consultant, to aggregate data using a ‘black box’ approach
- Ensure any standards agreed to as part of an industry solution allow individual members to go above and beyond the agreed standards should they wish to
- Consider a project governance structure that includes industry bodies to safeguard the interests of smaller industry members and/or an independent chair rather than individual businesses only
- If in doubt about whether your collaboration could be seen as anti-competitive, there is an option to seek authorisation from the Commerce Commission to avoid any uncertainty
Commerce Commission Draft Collaboration and Sustainability Guidelines – we also recommend keeping an eye out for the guidelines in their final form, due to be published later this year.