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AUSTRALIAN GOVERNANCE SUMMIT 2020 READER the Australian Institute of Company Directors Is Committed to Strengthening Society Through World-Class Governance

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A NEW LINE OF SIGHT AUSTRALIAN GOVERNANCE SUMMIT 2020 READER The Australian Institute of Company Directors is committed to strengthening society through world-class governance. We aim to be the independent and trusted voice of governance, building the capability of a community of leaders for the benefit of society. Our membership includes directors and senior leaders from business, government and the not-for-profit sectors. Disclaimer The material in this publication does not constitute legal, accounting or other professional advice. While reasonable care has been taken in its preparation, the Australian Institute of Company Directors does not make any express or implied representations or warranties as to the completeness, reliability or accuracy of the material in this publication. This publication should not be used or relied upon as a substitute for professional advice or as a basis for formulating business decisions. To the extent permitted by law, the Australian Institute of Company Directors excludes all liability for any loss or damage arising out of the use of the material in the publication. Any links to third party websites are provided for convenience only and do not represent endorsement, sponsorship or approval of those third parties, any products and services offered by third parties, or as to the accuracy or currency of the information included in third party websites. The opinions of those quoted do not necessarily represent the view of the Australian Institute of Company Directors. Printed March 2020 Copyright Copyright strictly reserved. The text, graphics and layout of this guide are protected by Australian copyright law and the comparable law of other countries. No part of this material can be reproduced or transmitted in any form, or by any means electronic or mechanical, including photocopying, recording or by any information storage and retrieval systems without the written permission of the copyright owner. Australian Institute of Company Directors 18 Jamison Street Sydney NSW 2000 T: 61 2 8248 6600 F: 61 2 8248 8444 E: [email protected] W: www.acid.com.au Contents Introduction ......................................................................1 1. What will the board of 2030 look like? ...............................2 The board of 2030 .................................................................2 UK governance developments seek to increase accountability ..4 ACSI issues new governance guidelines ....................................8 Taking companies in new directions ........................................10 2. The shifting governance landscape ..................................15 Responsible stakeholders ........................................................15 3. Future-ready economies and the reform required in Australia ...................................................................18 Water, energy, infrastructure: top 3 issues for 2020 ..................18 How your board can innovate for the future ............................19 A wake-up call on innovation ..................................................25 8 trends reshaping the global business landscape ....................26 4. Customer-centricity through digital transformation ..........31 6 tips for becoming a customer-centric organisation ................31 5. Digital transformation in the not-for-profit sector .............37 Digital transformation in the not-for-profit sector ....................37 Innovation a priority for leading consumer advocacy group .....39 6. Planning for the future workforce ....................................43 Culture beyond a cliché ..........................................................43 How hiring for EQ could help change your organisational culture ...........................................................45 Making the most of Australia’s ageing workforce .....................47 Support for Australian businesses affected by AI ahead ............51 III 7. Does the right boardroom mix now include STEM? ..............53 Continuous education will help your board innovate for the future ........................................................................53 Clever Country Redux ............................................................54 Is your board prepared for the risks in the Internet of Things? ....56 8. Diversity .......................................................................59 Significant milestone .............................................................59 Unions put the case for employee-elected directors .................60 Will fewer ex-CEOs consider future directorships? .....................63 9. Boardroom moral and ethical decision making ...................67 ABC chair Ita Buttrose on governing the national broadcaster ..67 Four expert views on the future of governance and ethics ........71 Setting a company’s ethical compass .....................................76 10. Lifting the bar: learnings from recent royal commissions .....79 Picking up the pieces .............................................................79 Groundhog Day? ...................................................................81 11. Governing in slow economic times ....................................85 How low can we go? ..............................................................85 12. An update on the regulatory environment .........................87 Fundamental attribution error?...............................................87 Your regulatory radar for 2020 ................................................89 Getting the priorities right ......................................................92 13. Shifting culture in an established organisation ...................95 6 questions to ask your chief human resources officer ..............95 14. Setting culture in a growing business ................................99 Buckle up for a bumpy board ride on innovation ......................99 15. Is it possible to get remuneration right? ............................103 The rise of executive kings ......................................................103 Growing divide over boardroom fees .......................................105 Case study: One board’s approach to the remuneration of front-line employees ..............................................................109 Board oversight of front-line remuneration ..............................110 IV 16. Not-for-profit governance priorities in the spotlight ...........114 Not-for-profits matter............................................................114 Disability Royal Commission to report in 2020 ..........................117 Understanding the impact of royal commissions on not-for-profit resources ..........................................................119 Key regulatory updates for not-for-profits and charities ...........121 17. Future trends ................................................................124 Managing the growth in workforce diversity through inclusive leadership ...............................................................124 5 emerging technologies to watch in 2020 ...............................126 How Industry 4.0 will transform Australian business in 2020 ......132 18. The growing benefits of having a social purpose .................134 More than money ..................................................................134 A purposeful future: what is profit in 2050? .............................138 What is the purpose of the corporation?..................................141 19. Dealing with climate risk ................................................146 Why directors can’t ignore climate risk ....................................146 20. How do we stay close to our customers today? ...................148 This organisation put their future in the hands of its customers 148 Australia’s public sector is missing this one vital area for digital transformation ......................................................................152 21. Sports governance .........................................................154 Governing the Sydney Hobart Yacht Race................................154 Will Cricket Australia ever regain the public’s trust? ..................157 22. On boardroom leadership ...............................................162 Issues facing directors today as they prepare for the future ......162 V Introduction This year, the Australian Governance Summit board and executive remuneration and delivers an event program based around the regulatory change. Attendees will also theme “A new line of sight”. As we begin not explore the shifting technological and only a new year but also a new decade, we geo-political landscapes and the reform consider the fundamental role of the director, needed in Australia. how its application is both accelerating and As in past years, this Australian Governance widening, and what are the biggest issues Summit 2020 Reader follows the summit facing boards in 2020. These considerations program and provides a selection of expert will shape the governance conversation presenter submissions and recently published for the coming twelve months and set the articles and extracts from the Australian agenda for the coming years. Institute of Company Directors. The purpose The Australian Governance Summit provides of this collection is to enhance attendee’s a critical opportunity to network with participation by providing contextual leading governance minds and reflect on background to the current director and the leadership our organisations require as governance landscape as
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