Let’s have a little introspection in governance reporting

Here’s a novel thought…

Wouldn’t it be a breath of fresh air if, when attending to the regulatory requirement of reporting on governance, boards of listed companies reported on their governance performance to the external market.

Forgive me if I have missed something but in all my years in this profession, my take is that there has been very little – if any – reporting on the actual governance of the board itself. Rather, what we tend to get is listed companies adhering to ASX requirements and carrying a corporate governance statement either within the annual report or making reference to it in the report.

The corporate governance statement has to show how the listed company complies with the ASX’s eight governance principles introduced about a decade ago. Should it fall short in a particular area, it needs to explain why and what steps will be taken to remedy the situation.

It’s true that we’re largely a society of best practice corporate governance and in the vast majority of cases, our listed companies provide the information that comfortably ticks all the necessary boxes year after year.

But let’s tell it like it is – again in the overwhelming number of cases, these companies do so in a manner that’s as boring as the proverbial bat droppings. Worse still, they tend to trot out the same numbingly dreary humdrum year after painful year.

It leaves one seriously doubting whether there’s actually a pulse and a semblance of human life in the entity.

I often ask listed companies I work with – and usually after they’ve been through a board performance evaluation that shows they have a governance action plan to implement certain changes over the next 12 months and enhance the way the board functions – why they don’t share this information in their governance statements.

I query them on why they don’t get on the front foot and announce that they regularly evaluate themselves and their performance, arguing that it will give them a significant point of difference over all the others if they told all interested parties that, say, in the year under review, they found their strengths to be A, B and C while identifying areas of weakness across D, E and F and agreeing to actions G, H and I to further improve things.

And the answer is invariably “oh, we didn’t think of that…”

If they initially feel uncomfortable about doing it alongside the regulatory requirements in the annual report, there are other ways to ease into it, other channels such as newsletters and announcement updates to call on.

Another good starting point is to update the website with informative, personable and engaging director CVs. Then again, if a board member happens to be up for re-election, why not talk about that person’s individual director evaluation and share how he or she performed?

I suspect there are a good few boards that will hate me for saying this but it’s increasingly important to give personality to companies and to position the board as real and alive, open to self-examination and self-improvement.

So here’s my challenge…and confident prediction: give it a go…and I can guarantee you that your readers will absolutely adore it!

Until next time,

Kate.

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