While Australian businesses, not-for-profits and government agencies generally continue to serve their customers and communities well, the outcomes and testimony of the Royal Commissions into Institutional Responses to Child Sexual Abuse and into the Banking, Superannuation and Financial Services Industry have shone a spotlight on appalling and unethical behaviour. Recent shake-ups at the ABC and Cricket Australia have also focused public attention.
This year’s events have posed fundamental questions around the role of the board, remuneration policies, the approach of regulators and the organisation’s relationships with key stakeholders. As we look to 2019, we can expect the debate and discussion around governance issues to continue and broaden. Commissioner Kenneth Hayne AC QC will deliver his final report in February (click here for more on the AICD submission to the Royal Commissioner’s interim report ). This is soon to be followed by a federal election. Both will fuel the conversation around obligations to the community and general governance standards.
It is important directors do not sit back and take a reactive approach when positions or proposals are put forward on these issues. It would be naive to think Australia is immune to the type of populist wave we have seen across the world over the past few years. Directors must engage early on questions of fairness and accountability, which speak to the community’s concerns. If we do not, the discussion on these issues will quickly move away from us.
Some proposals that emerge will achieve broad consensus quickly. For instance, stronger penalties for corporate and financial sector misconduct have already been announced and the AICD has supported these moves. Some ideas will require more careful consideration. We may see calls for reform of the Corporations Act 2001 (Cth) around directors’ duties along the lines of section 172 of the UK Companies Act, which sets out a number of stakeholder groups whose interests directors must have regard to when acting to promote the success of a company. Or there may be a push to professionalise directorship, at least for the largest companies, requiring directors to meet certain training requirements. These policies and others like them are being evaluated by the AICD, working closely with our members.
It will also be important for the AICD to continue to advocate in an election year for policies that promote growth, including comprehensive tax reform and infrastructure spending. Our vision commits us to strengthening society through world-class governance — and that vision extends to national governance.
At an organisational level, directors are aware they need to future-proof their organisations to prepare for technological and social change. The governance framework (legislation, principles and policy settings) also must be in place to help them in building strong organisations that serve their stakeholders.
The AICD will set about this work in 2019 without the formidable Elizabeth Proust AO FAICD, chair for the past three years, who retired from the board at the annual general meeting in November. Elizabeth has been a tireless advocate for good governance in this time and her two years on the AICD board before that. She has moved the needle on a range of issues, including diversity on boards and national policy reform, as shown in our 2017–18 Annual Review, which is extracted as a lift-out in this issue. Her contribution has been immense and she will be missed.
Her successor, John Atkin FAICD, has been a passionate member of the AICD for nearly 30 years. His extensive and varied experience as an executive and director across a range of sectors will be an enormous asset to the AICD.
I look forward to working with him, the rest of the board and you, the members of the AICD, on the challenges ahead. In the meantime, I wish you all a happy and safe holiday season and the very best for 2019.