At this year’s AGS in Sydney, the conversation hinged on four major themes — the macro environment, tech-aware governance, over-regulation and the continuing importance of a satisfactory corporate culture.
When should a CEO move on? Does the US see Russia as a great power or as a greater threat? Founders who serve as directors can both create and destroy value, but is a founder more hindrance than help? What responsibility do boards carry for Australia’s poor productivity performance?
These member questions set the tone at the recent AGS25 summit, where industry leaders gathered to address the evolving responsibilities of modern directors. Qantas chair John Mullen AM highlighted the shifting sands of corporate responsibility, questioning the authenticity of many companies’ commitments to ESG and DEI. Michèle Flournoy, former US Under Secretary of Defense for Policy, called attention to seismic shifts in global alliances, warning directors to proactively manage geopolitical risks. Embracing technology without sacrificing governance, ethics and culture was another central theme, with experts from Accenture and Microsoft urging directors to evolve their skillsets rapidly. Our recap breaks down the insights directors need to be across to stay at the forefront of contemporary governance.
1. Macro matters: Addressing the macro environment
In his 50-year career, Qantas chair John Mullen has never had to worry about geopolitical risk affecting business — until now.
“Today, for the first time, boards need to start to form a view of the risks to production facilities, supply chains and customer markets in the event of a serious escalation of global tensions,” he said in his keynote presentation.
Mullen added he was mystified to read some organisations are reversing their diversity, equity and inclusion (DEI) and environmental, social and governance (ESG) initiatives based on the way the wind is blowing in the US.
“Mainstream DEI and ESG initiatives have largely been shown to improve performance and add value to corporations. If organisations can suddenly drop the initiatives and run like lemmings in the opposite direction from the one that they ran in literally yesterday, then one would be forgiven for wondering whether they ever really believed in the programs. Or were they just virtue signalling — trying to look good and conform?” he questioned.
Mullen also queried the value of companies taking a public stance on divisive issues such as same sex marriage, the Voice to Parliament and climate change.
“While these efforts have been well-intentioned, the pendulum has maybe swung too far,” he said. “There’s no doubt that in the example of the Voice, corporate Australia did itself no favours by campaigning so actively in support of the ‘Yes’ vote. Many people from all walks of life saw corporate Australia’s position as lecturing and telling them what to do from a position of assumed moral superiority.”
He advised boards to be neither radically woke nor radically anti-woke. “Do what you think is right and stick to it. Always, as a director, be prepared to make a decision that differs from your personal conviction, if it’s the best thing for the company.”
The end of the post-WWII order: Michèle Flournoy
Michèle Flournoy, co-founder and managing partner of WestExec Advisors, and former Under Secretary of Defense for Policy in the Obama administration, believes we are witnessing the end of the post-WWII order and a fundamental redefinition of US leadership in the world.
“Those things together will create a much more volatile international security and economic environment,” she said. “We are witnessing a shift away from a unique set of alliances and partnerships traditionally seen as a tremendous source of strength.”
She mentioned Australia as one of the few US allies not in Trump’s crosshairs — at least for the moment. This was just before Trump announced a 25 per cent tariff on imports of Australian steel and aluminium, followed by a 10 per cent tariff on all Australian imports to the US in April.
In this “incredibly volatile” environment, Flournoy said boards should make assessing geopolitical risks a regular agenda item.
“If your company doesn’t have a really strong internal geopolitical risk team, you need to get outside advisory help.”
2. Tech-savvy governance: Regulating the technology of the future
Generative AI and AI agents are transforming ways of working so profoundly that some analysts have dubbed the current epoch the “Binary Big Bang”, said Stela Solar MAICD, MD for Data and AI at Accenture Australia and New Zealand.
“When Amazon updated one of its systems to the latest version of Java while using an AI agent coding assistant partnered with their developers, they saved 4500 years of developer time,” she said. “This is not a five or 10 per cent improvement in productivity we’re talking about. This kind of quantum leap is staggering.”
Solar believes boards should focus on creating an environment for executive teams to capitalise on the AI opportunities. This includes creating an AI strategy and being aligned with management in its execution.
“Quite often, I hear executives are characterising boards as being risk-averse,” she said. “In fact, one of the biggest risks is not embracing the technology. I think of it as responsible ambition — and having the board create this benchmark of responsible ambition will help its executives to rise to the challenge.”
Of the millions of use cases for AI, the most compelling is when it helps to better understand the customer, says Tim Trumper GAICD, former NRMA chair, shareholder and adviser to Quantium and author of AI: Game On. NRMA has leveraged AI to find new customers, predict their future needs and move capital into that future need.
While the opportunities for business are massive, AI also carries risks, noted Ng Kuo Pin, CEO of NCS, a subsidiary of Singtel Group. “Unfortunately, AI hallucinates. It’s not always 100 per cent accurate. AI cannot be accountable. It can be expensive. Today, it’s still evolving and can be uneven in its qualities depending on the AI model you choose.”
Data is integral to the operations of almost every Australian business, regardless of size or sector. It can provide crucial insights into customers, clients and staff, although it also gives rise to a range of risks and governance issues, said AICD senior policy adviser Simon Mitchell.
Elena Wise GAICD, Microsoft Australia general manager of AI, Cloud and Specialist Sales, agreed. “Data is the backbone of any company,” she said. “Without it, you’re in trouble. But it’s also something that has to be leveraged. From a purely financial point of view, it’s a fixed asset, an intangible asset. It drives revenue, it drives expenses and costs, and it’s potentially a liability.”
Many businesses are drowning in data. Earmarking critical information is essential, as it requires extra levels of diligence around protecting it. This process can be a complex undertaking and is a responsibility a board should carry out in collaboration with management.
“Begin by thinking about what your business strategy is and what the business is trying to achieve,” suggested Coles director Wendy Stops GAICD. “Based on that business strategy, what are the key issues we are trying to solve? If those things are fundamental to your strategy, then it’s the data attached to them that becomes the most critical data in your organisation.”
A data governance framework that sets out the responsibilities of the board is essential, says Wise. And there must be someone who “owns” the data — a “throat to choke” in the event of something going wrong.
“At Microsoft, our CTO is the person who owns the data governance strategy for the company,” said Wise. “We’ve tried different ways of managing it — we’ve had a centralised and a decentralised model. We’ve now got a hybrid model, whereby the CTO sends the governance framework to the board. We now have a decentralised approach with each area looking after its data, but using the common framework and principles to govern it.”
Valeska Bloch, partner and head of cyber at Allens, sees a resurgence in the levels of focus on data governance, which she attributes in large part to data being the lifeblood of AI.
“The quality of the outputs or the decisions it makes will be complete rubbish if the quality of data is less than optimal,” she said.
She urges boards to ensure their organisations are correctly labelling data and that it is up to date and stored securely.
“If you tamper with the integrity of that data, it will impact the outcome of its uses.”
Upskilling director tech awareness
The skillsets required by boards have changed considerably in recent years, and the pace of change is only set to increase, says Brad Welsh GAICD, CEO and MD of Energy Resources Australia, and a non-executive director of nib holdings.
“What a board is expected to know now is fundamentally different from what it was charged with 20 years ago,” he said. “It’s very difficult to sustain the proposition that everything is changing, but the board composition doesn’t need to.”
Ensuring that a board’s skills matrix is up to date is critical. Learning agility and the ability to transcend their own technical background is an imperative to supporting the future of a company.
One of the most critical skills a director requires is cognitive adaptability, according to Melanie Willis FAICD, chair of QBE Australia Pacific. “If you think about all the changes that are happening right now for boards, how do they synthesise those changes and consider them in the context of strategy, operational excellence, their customers and the transformational journey they need to go on?” she asked.
It could be helpful to establish a subcommittee on AI and transformation and technology, or to bring in advisers in a particular area to plug any knowledge gaps, advised Destination NSW chair Sally Loane MAICD. Other than financial literacy, she does not advocate certain skillsets being mandatory. Nonetheless, upskilling in technology is essential.
“With AI, it’s absolutely imperative that as directors, we inform ourselves as deeply as we possibly can,” she said.
"Expectations of the board are fundamentally different from 20 years ago.”
3. Culture at the core: Transforming an organisation’s “why”
John M Green FAICD is a leading company director and the first independent chair of PwC, an appointment that followed recommendations made by Dr Ziggy Switkowski AO in his 2023 Independent Review of Governance, Culture and Accountability.
“Ziggy identified a range of significant shortcomings in PwC around independence and challenge — and one of his 23 recommendations was to bring outside voices into the boardroom,” said Green, in a wide ranging conversation with AICD CEO and managing director Mark Rigotti.
Lisa Chung AM FAICD and Carmel Mulhern GAICD have also been appointed as independent non-executive directors and, according to Green, the concept of independence was well received.
“Equally, we had to understand that the culture of a partnership is different from a corporate,” he said. “Shareholders are on the inside, not the outside, and the transparency we need as a board is much higher.”
Another of Switkowski’s recommendations was that all directors should become members of the AICD and complete the Company Directors Course (CDC). “Some things will take much longer to implement,” said Green. “But the key point for me is, once we’ve completed the commitments to change, it’s really only the beginning of our next — and, I think, exciting — chapter.”
Culture is set at the top, says Karl Treacher, CEO of the Culture Institute of Australia and the founder of CultureCon. He used his session to challenge directors to refresh their thinking about culture and its role in wellbeing, performance and AI adoption.
“To encourage healthy, high-performing culture in the true digital age, boards must recognise engagement alone is not culture,” said Treacher. “Shaping, detecting and addressing cultural challenges requires more than engagement surveys and HR metrics to get the full picture.”
Before major cultural failures, there is often a subtle warning sign known as a “shadow”, said Qudos Bank chair Jennifer Dalitz GAICD. Critical indicators include a spike in turnover rates, diminishing trust in the leadership team and even whistleblower reports.
Culture can be nebulous and it cannot be measured in conventional ways. It requires investing time into site visits, having regular conversations of a formal and informal nature, and making direct observations. From safety to risk to performance cultures, the board’s role is to ensure alignment with the organisation’s strategic values, said Tracey Horton AO FAICDLife, who is a non-executive director of the GPT Group and IDP Education.
Ignoring cultural red flags, failing to act on concerns or allowing inconsistent consequences leads to deeper problems. Transparency builds trust, so when addressing culture issues, communicating to staff in a timely and open way is an imperative.
Directors must be futurists
AICD chair Naomi Edwards FAICD urged summit attendees to look beyond the horizon to the new challenges they are bound to face.
“As directors, it’s vital we become futurists,” she said. “The systems and ways we do things today in our companies are extremely unlikely to be fit for purpose in the next five or 10 years. You cannot be a competent director today if you are not AI-fluent, in the same way we upskilled ourselves around cyber 10 years ago. You also cannot be a competent director if you put board collegiality or ease ahead of asking the extremely tough questions.”
Boards need to employ oversight and foresight — and to consider what new thinking is needed to thrive. “If your board is in a knowledge or belief set bubble [where new opinions are excluded] you must pull yourself out of it,” she warned.
4. Red tape reckoning: Does over-regulation impede progress?
For decades, Australia has grappled with regulatory complexity that is intrinsically difficult to comply with and enforce, according to ASIC chair Joe Longo. “We have high expectations of directors — and so we should,” he said. “But it’s harder for them to meet those expectations effectively in an environment of complex, overlapping, changing and increasing legal obligations. The mosaic of complexity also impacts what matters to consumers, including how we combat scams, predatory lending and unfair contracts.”
Acknowledging prevalent opinion, including the AICD’s recent Directors’ Sentiment Index — which found legal and regulatory compliance is keeping directors awake at night — ASIC is looking to simplify the regulatory environment. It has convened a Simplification Consultative Group, which includes 10 highly respected consumer, business and industry leaders such as the AICD, the Consumer Action Law Centre and Super Consumers Australia. The group aims to simplify and consolidate ASIC’s work, including its regulatory guidance and legislative instruments. A discussion paper will be released later this year.
Longo also noted that greater diversity of expertise and training is needed in the boardroom. He cited ASIC data that found the average number of board members with an accounting, banking, or finance background rose to 40 per cent last year, while the combined total of those with a legal background, finance background and general management was 70 per cent. By contrast, those with a background in technology was just seven per cent.
A recent KPMG report found that 69 per cent of board members only had moderate access to the required skills to effectively navigate technological and regulatory disruption, and future trends.
“There isn’t a single material issue currently facing business — and our institutions more generally — that doesn’t require data, systems, technology and processes to effectively address,” said Longo. “There is a real opportunity to broaden the skillsets and perspectives of company boards, both by strategic hiring and by upskilling current board members in such areas as science and technology. This is especially where it pertains to the core business or how it’s run.”
Core governance principles
On the advocacy front, AICD CEO and MD Mark Rigotti MAICD told the summit the ASX Corporate Governance Principles have morphed into “quasi-regulation”. He believes any new version should contain three things:
The scope of the code must be up for debate and focus on core governance issues; shareholders must be central to board considerations; and the value of independent directors must be reinforced as a key governance measure to ensure management teams do not operate unfettered and minority shareholder rights are protected.
With organisations creaking under the weight of red tape, the AICD is calling for the next federal government to commit to a 12-month freeze on new regulations. “We also think it’s time for a review of the Corporations Act,” said Rigotti.
Regulatory review
Dr Pamela Hanrahan MAICD, who writes the Directors’ Counsel column for Company Director magazine, suggested that boards across all industries and sectors should read the APRA Governance Review.
“Even if you’re not in the financial sector, it is a really interesting conversation about where board members should be drawn from, who they should be accountable to and who should get the final say over how boards are formed. That’s going to be an interesting debate.”
Hanrahan, an Emerita Professor of the University of NSW and a consultant at law firm Johnson Winter Slattery, noted there should be “a sophisticated conversation about how we regulate”.
“Governments will make decisions about wanting to prohibit or require things,” she said. “But the way in which they implement that policy in Australia is in quite a poor state.”
Hanrahan said some laws are never enforced, some are too granular. There are also law-making processes that are not properly followed and rules that each department or agency thinks are accretive, but are actually not.
“It’s not just adding one rule to the next, it’s like multiplying those rules in terms of trying to implement them,” said Hanrahan. “That burden of complexity is going to become very important."
Other jurisdictions around the world were addressing poorly targeted regulation, including in sustainability disclosure and AI regulation. Australia should not allow itself to be left behind.
“We need to have an honest discussion about the negative impact of performative or defensive compliance,” said Hanrahan. “It’s costing us in terms of competitive edge, in terms of innovation and in terms of productivity.”
This article first appeared under the headline 'Australian Governance Summit 25’ in the May 2025 issue of Company Director magazine.
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