At the Australian Governance Summit in March, AICD Chair John Atkin FAICD and I spoke about the AICD’s forward governance agenda — the work we are undertaking in response to the banking Royal Commission and the community’s continuing concern with governance standards beyond financial services.
We outlined our approach in the previous issue of this magazine. The agenda centres on four key themes: standards and professionalism; duties and stakeholders; accountability; and culture and remuneration.
We will start by testing the issues with AICD members at a principles level as a guide to further work. A consultation paper is available online in which we set out the AICD’s proposed actions and seek your experience and feedback.
The questions draw not only on the findings of the banking Royal Commission, but also on other Royal Commissions and inquiries, including the APRA Prudential Review of the Commonwealth Bank with its call for boards to instil in their organisations the impulse to ask, “should we?” not simply “can we?”.
Of course, responding to these challenges does not mean accepting poor policy. The AICD will not advocate or support policies that place a disproportionate burden on directors or deter qualified people from taking on board roles. Commissioner Hayne has confirmed the fundamental principles of our governance model, including the “superintendence” role of the board distinct from day-to-day management and the framing of directors’ duties in the current law.
The AICD is and will remain a champion of these fundamental principles, strong governance frameworks and the rule of law. We will also continue to advocate for a reform program that promotes growth. Our communities are best served by a vibrant economy and financially strong organisations.
We must also focus on the changes we all need to support a respected, trusted and capable director community. Together with our members, we need to build the community’s trust in the ability of boards to provide stewardship and oversight of their organisations.
The AICD is and will remain a champion of these fundamental principles, strong governance frameworks and the rule of law.
The release of our consultation paper coincides with a national roadshow — The Royal Commission: What Next For Governance? — that the AICD is running throughout May across the country. These forums include a briefing on the governance implications from the banking Royal Commission and a director panel discussing these issues in practice. I am also providing an overview of the Forward Agenda and holding open Q&A sessions with members at these events.
The interest in the roadshow has been overwhelming and I welcome the frank comments from members at the events held to date. I have been asked tough but important questions. Has the AICD done enough? Are we taking the call for boards to do better on culture seriously enough? Should the AICD set higher standards for membership — on continuous development or qualifications? Many of these issues are included in our forward governance agenda consultation paper for your views.
Members also have asked about the AICD’s views on gender and broader diversity on boards, as well as on the AICD approach to the oversight of culture in organisations, and have suggested new ideas for services for us to consider. We will be taking all of this feedback into account as part of our consultation.
We need to hear from you. You can contribute to the AICD’s forward governance agenda either by completing the interactive version of the consultation paper available here or by emailing questions or comments to our policy team. As the peak body focused on building the capability of Australian directors — the people with ultimate responsibility for the conduct of these organisations — the AICD with its members must lead the changes we need to lift the practice of governance and bolster community trust in our system of governance. This consultation paper is the first step down that path.