Upfront - Governing for the future

Elizabeth Proust reflects on the key issues to emerge from last month’s Australian Governnace Summit and considers the future drivers of long-term growth.

Last month the Australian Institute of Company Directors’ (AICD) Australian Governance Summit highlighted the unique challenges we face in carrying out our roles as governors of many of the most important institutions in this country.

The theme – Directing in a Complex Environment – reflected on the key issues and trends that have added to the complexity of our role as governance leaders. It put at the centre of our thinking the questions – what makes good governance? What is the value of governance education? How can our combined voice as directors and governance leaders have an impact?

In my opening address at the Summit I noted that the model of how we govern is far more complex than it was in eras past. No longer is it enough to take a command and control approach, with a laser-like focus solely on delivering returns for shareholders or members.

Technologies, markets, customer and stakeholder expectations – even people’s sources of news – are changing rapidly. The “way we do business” can’t be the way we’ve always done business. As directors – who are charged with taking the long view, of bringing the interests of the company as a whole to our thinking – we must lead the thinking to help organisations adapt and respond to this rapidly changing environment.

The model of how the AICD advocates for its broad membership must also reflect the growing complexity of the environment in which we operate.

Traditional, insulated methods focusing purely on specific director issues – such as “the top end of town” issues – can no longer be the norm. We need to take a different approach to issues that affect our members. We need to listen more and consider interests wider than our own.

The AICD has not always done this; indeed we have been guilty in the past of acting like a directors’ union and not engaging on wider issues that impact our society and economy.

To be clear, we will still advocate strongly on any issues that hamper directors’ ability to achieve excellence in governance, including regulations which hurt good investment and business decisions. For example, we will continue to be active in calling for insolvency reform and fairer director liability laws. The current constrictive legal environment isn’t as effective as it could be and fails to achieve the best outcome for our economy. It actively works against directors taking calculated, responsible risks, and promotes short-term thinking over long-term priorities.

We will continue to be active in looking to have laws amended to assist directors in fulfilling their role, and because excellence in governance will make a positive contribution to our economy and society overall.

For our not-for-profit members, one of the ways we are doing this is through advocating for reform to the regulation of fundraising. Australia has seven different fundraising regimes; between them, they are burdensome, inconsistent and waste millions of dollars every year in compliance costs. Together with a coalition of leading sector bodies, we are advocating for state and territory governments to repeal their fundraising laws to create one nationally consistent regulatory regime for fundraising under the Australian Consumer Law.

The AICD has diverse members, collectively responsible for millions of jobs and billions of dollars of investment across the country. Our mission of excellence in governance requires a broad focus that includes issues of national importance. It is critical there is a governance perspective in the policy debate.

Directorship is a privilege that brings with it a great responsibility. If we as the country’s leading directors can tackle an increasingly complex world, and take advantage of the emerging challenges and opportunities it brings rather than let it overtake and overwhelm us, we will ensure the organisations we oversee not only succeed but contribute more broadly to our nation’s economic and social prosperity.

To that end, the AICD will soon launch our second Governance of the Nation: A Blueprint for Growth. Our updated Blueprint sets out solutions to support better economic and social outcomes for all Australians. These are achievable reforms worthy of wide support.