The trusted voice of governance, from the CEO.
For more than a decade, the AICD has asked members why they joined or stayed. Unlike other professional organisations, being a member is not a requirement to enter or stay in the field. Members are intrinsically motivated to join the AICD.
Why do members join, then? Members have consistently told us they want to become better directors, they want to advance their careers and they want to stay up to date on their duties and responsibilities. They also tell us they join because they want to be part of an organisation that provides leadership on public policy and issues of governance. Members expect us to be an advocate for good governance. We take this responsibility seriously. We aim to advance good governance, both in policy and practice.
The experience and insights of members are core to our advocacy agenda. It is a strength of the organisation that we have a diverse group of 45,000 members from a range of backgrounds, sectors and industries, united in their pursuit of better governance. We consult regularly with members through our state Division Councils and our policy committees, which comprise experienced directors and experts on specific areas of governance. We tap into the views of the wider membership through the twice-annual Director Sentiment Index, the annual Not-for- Profit Governance and Performance Study, as well as an ad hoc survey program focused on emerging areas of governance practice.
Our most significant and ambitious piece of advocacy work in my tenure, the Forward Governance Agenda, was born of these consultations. It was launched two years ago, drawing on the findings of the financial services Royal Commission and other inquiries. Members told us they expected the AICD to promote high standards of governance in our membership and to take a proactive leadership role in contemporary governance debates.
The program of work set out in the Forward Governance Agenda continues today. Members told us that as part of our Director Professional Development program, there should be a mandatory ethics component, which we will introduce later this year. On the best interests duty, members told us that they considered stakeholder interests as part of their boardroom deliberations, but wanted more guidance on engaging stakeholders. In response in April, we released a guide, Elevating stakeholder voices to the board, so far downloaded more than 2000 times, which sets out core principles for stakeholder consultation and consideration. We will be releasing further insights on the legal interpretation of the best interests duty, and related practice and policy themes, over the year ahead.
Given the breadth of AICD membership, I would not expect our advocacy work to be supported by every individual member. We cannot be all things to all people. Like the demanding position of being a director, we need to work through complex issues and take a long- term view.
One such example is the position we have taken on the need for proxy adviser regulation, which has faced criticism over recent weeks. Proxy advisers provide a valuable service for investors but it is vital to market integrity that the information they release to the market is fair and accurate. It is not unreasonable for minimum standards of conduct and performance to be required.
Similarly, the AICD’s calls for a rebalance of director liability settings is not a view shared by everyone. Our call for reform is not aimed at helping members escape accountability.
A clear message from the Forward Governance Agenda Consultation was that the AICD needs to encourage accountability for directors given recent high-profile governance failures at some of Australia’s most recognisable organisations. But there is no doubt the Australian director liability regime is among the harshest in the world, and it is no coincidence that we lag our peers on innovation metrics. An overly harsh liability regime creates a risk-averse culture that is ultimately detrimental to the nation and our growth prospects.
We are encouraged that government and regulators have recently heeded calls for flexibility and reform to support good governance, particularly to support Australia’s post-COVID-19 recovery. The last year has seen policy experiments and cooperation across sectors that have placed Australia in the enviable position it is today. Relief on insolvency liability, continuous disclosure, financial reporting, the holding of virtual AGMs and fundraising for NFPs — all were important steps advocated by the AICD so as to support directors and their organisations to get to the other side of the crisis. The government’s commitment to reform the continuous disclosure regime permanently will also shift the dial. Removing liability for civil penalties except in cases of recklessness or negligence will discourage opportunistic class actions.
The AICD will continue to adapt and progress our advocacy agenda as issues emerge. As I wrote in this column last month, the start of this year has seen a necessary and overdue national conversation about sexual harassment, sexual assault and women’s safety. Boards have a crucial role to play in preventing workplace sexual harassment, and the AICD has been developing resources to help members with this task. We are also currently consulting with members on the governance of climate change with a view to releasing a guide for directors in coming months — a resource which members tell us there is strong demand for.
Our mission is to be “the independent and trusted voice of governance, building the capability of a community of leaders for the benefit of society”. It is a major reason many members join and we continue to be a voice for you so that Australian governance is world-class.