The regulatory environment has never been more complex or demanding, says AICD CEO Mark Rigotti MAICD.
As the CEO of the AICD, I have the privilege of engaging with our members to hear your concerns and aspirations. Recently, we have received feedback from some members who feel our policy leadership agenda may not be sufficiently focused on “core” director issues. I would like to address these concerns and provide some background on how we form our policy agenda.
At the heart of our purpose and mission is the commitment to be the “independent and trusted voice of governance”. With a membership base more than 50,000 strong, the AICD represents a broad church of views. We understand that not everyone will agree on every issue, particularly when those positions are on contentious topics like proxy adviser regulation or the Voice to Parliament. But we are committed to listening to all members and ensuring that our policy initiatives are comprehensive, addressing both “core” director issues and emerging policy matters — and thoughtfully developed, not driven by polemic or ideological positions.
The core of the matter
It is crucial for the AICD to focus on “core” or “black letter” director issues, as these topics form the foundation of director responsibilities and effective corporate governance. By addressing “core” issues such as directors’ duties, liability, corporate reporting and executive remuneration, we help equip our members with the knowledge and tools necessary to navigate an increasingly complex regulatory environment. In doing so, we support our members in fulfilling their roles, fostering organisational success and providing jobs and services in the community by strengthening society through effective governance.
However, we must recognise that good corporate governance today involves more than just these “core” issues. In an ever-evolving business landscape, directors must also be equipped to manage emerging challenges and opportunities. Arguably, the distinction between “core” and “non-core” director issues has become somewhat artificial in the current business environment, where non-financial risks have become fundamental to an organisation’s ability to achieve its goals and mission. Recent high-profile governance failures highlight that understanding and addressing non-financial risks are integral to an organisation’s long-term success and resilience.
It is also important to note that to be an effective advocate for our members, the AICD must contribute on a broad range of policies that affect the economy and stakeholders. Governments are more likely to engage and listen when an organisation is not seen as a narrow interest group. This approach helps us maintain our position as an independent and trusted voice, shaping policy in a manner that benefits both our members and broader society.
Our policy process has key components:
- Twice-yearly Director Sentiment Index survey: This allows members to tell us their policy priorities, ensuring we are addressing the issues that matter most to them.
- Regular consultation with policy and sector committees: This gives valuable insights from experts in various sectors and help us stay informed about emerging trends and challenges.
- Engagement with Division Councils: This ensures we are aware of regional perspectives and concerns, enabling us to tailor our policy agenda to the needs of our diverse membership.
- Specific feedback from experts in the director community: This helps us to refine our policy positions and submissions, ensuring that they are well-informed and effective.
- Open dialogue with members across our channels: This allows us to remain responsive to the evolving needs of our members and the broader director community.
- An annual process with the AICD board to review and set out policy priorities for the year ahead: Currently, they cover: cyber, continuous disclosure reform, NFP regulation and sustainability reporting.
A balanced approach
Our members consistently indicate their desire for a balanced approach to policy, embracing both “core” director issues and contemporary policy discussions. We are committed to delivering on this expectation. The AICD has developed more than 100 policy papers and submissions in the past two years across a range of topics that our members tell us directors have an interest in.
Of course, there are different views, arguing for a narrower approach to policy. While we acknowledge that view from some members, we have arrived at this position as the product of a thoughtful and considered process.
Just in the past month, our Policy Leadership team, led by General Manager Education and Policy Leadership Louise Petschler GAICD and Head of Policy Christian Gergis GAICD, made submissions on the federal government’s mandatory climate reporting proposal, the capacity and capability of ASIC, the influence of international digital platforms, public sector appointments, the development of simplified accounting requirements and the Privacy Act Review. I encourage you to visit our policy submissions page (aicd.com.au/submissions) to see the breadth and depth of their work advocating for good governance and the director community.
In light of the feedback we have received, we will make concerted efforts, in addition to the regular updates that Louise Petschler provides in her excellent column in this magazine, to ensure our communication reflects the full scope of our policy activities.
The AICD’s policy work not only influences the broader regulatory and business landscape, but also significantly shapes our educational offerings and practice guidance for directors. Our educational programs, webinars and events are designed to cover a broad range of topics, from “core” director responsibilities to contemporary challenges. By staying at the forefront of emerging trends across “core” and broader issues, we ensure that our members have access to the latest insights and guidance, enabling them to excel in their roles.
This article first appeared under the headline 'Getting The Balance Right' in the May 2023 issue of Company Director magazine.
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