AICD Essential Director Update 2023

AICD Essential Director Update 2023 event at ICC

An interesting morning at the Australian Institute of Company Directors (AICD) Essential Director Update at the ICC. Opening remarks from Jacqueline Chow and Bruce Cowley who then joined a panel with Christine Holman hosted by Louise Petschler. I enjoyed hearing the contrasting perspectives on the degree that some of these topics matter and the approach to take.

I found myself very aligned with the way Christine talked about taking these changes and compliance requirements as an opportunity to think differently rather than as a burden. “Compliance with ambition”, meaning we make these requirements core to how we make decisions and do business… not something off to the side.

I strongly believe that rather than spending energy resisting and fighting these changes, it’s an opportunity to improve the way business is done. These macrotrends have been in progress for a while and are largely driven by market dynamics – the expectations of customers, talent, investors… and the community more broadly.

Company Climate Policy & Reporting

With mandatory climate-related financial reporting starting in 2024 and a crackdown on making claims that may be greenwashing, I’m optimistic we’re headed into a time of more meaningful climate action.

Psychosocial Risks

Improving psychosocial safety by identifying and managing these risks is now part of the Work Health and Safety Regulations. There are a lot of challenges with good governance for this but ultimately it comes down to culture with active engagement and open communication with our teams and organisations.

Christine pointed out that companies not meaningfully investing in the learning and development of their people will lose people to companies who are.

Stakeholder Engagement

As directors, we have a legal (and ethical) duty to act “in good faith in the best interests of the corporation”. The reality that shareholders are just one group and the best interests of the corporation includes the interests of all stakeholders is becoming more accepted again.

Something that came from the Banking Royal Commission was the view that directors need to include broader stakeholder interests in decisions because “over the longer term, the interests of shareholders and stakeholders tend to converge“.

I wholeheartedly reject Milton Friedman’s toxic position that “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits”. I see this thinking as key to the perversion of what good business means and has been a key ingredient in some companies operating unethically and the short-termism – which ultimately isn’t in the interest of the company, stakeholders (including shareholders), or our planet.

There was a lot of talk about stakeholder engagement strategy at a board level. Again Christine put forward the recommendation which I agree with – that a well thought through engagement plan that considers all of our stakeholders is required… and that it’s embedded in all decision-making – at the board and management levels and in operations.

Of course the topics of data security, cybersecurity, and gen-AI were also discussed.

It was also great to randomly bump into Robert Crowe, James Stewart, and Raja Venkateswar.

Where’s This Heading?

I think it’s important framing that AICD’s purpose is “to strengthen society through world-class governance” and its mission is “to be the independent and trusted voice of governance, building the capability of a community of leaders for the benefit of society”.

Everything I do is focussed on helping transform the way business is done – to accelerate and embed the transition toward regenerative business models. Businesses, products, and services that create great outcomes for people and our planet while also being profitable.

For many years I’ve been saying that good business means designing our business models, products, and services to be regenerative… because:

  • Customers want to buy from companies doing good things
  • Talented people want to do meaningful work
  • Investors know it’s lower risk with better returns
  • We have a great opportunity to use the power of business to help create positive impacts

The fact these conversations are mainstream now – even if there’s healthy debate about how we do it and the role of innovation – is great progress and we’re moving beyond shareholder primacy to take a more strategic view that values all stakeholders and is backed by accountability.

Let’s collaborate to solve problems that matter – problems that matter for our teams, customers, and life on our planet. Let’s rapidly transition to regenerative ways of doing business and living.