Calls for ASX-listed companies to report on board diversity

Leadership & Management: The ASX Corporate Governance Council released the a consultation for a proposed fifth edition of the Corporate Governance Council Principles and Recommendations. Diversity Council Australia (DCA) has contributed to a joint submission calling for the ASX to incorporate objectives for greater cultural and racial diversity in its corporate governance principles. Other appropriate representative organisations have called for LGBTIQA+ and disability representation, which DCA also endorses.

Together, with the University of Sydney Business School and the University of Technology Sydney Business School/Jumbunna Institute for Indigenous Education and Research, DCA has recommended the ASX require listed companies to report on the diversity of their board membership beyond existing gender-based requirements.

Specifically, the submission recommends that listed companies also disclose the cultural, ethnic, and racial diversity of their board members to ensure accountability and transparency.

The joint submission also voiced support for recommendations to set an objective for S&P/ASX300 companies to achieve gender-balanced boards, rather than at least 30% of each gender, and for listed companies to disclose the effectiveness of their diversity and inclusion practices.

The submission was made as part of consultation on the Fifth Edition of the ASX Corporate Governance Council Principles and Recommendations. The Fifth Edition consultation draft emphasises the enhancement of board diversity initiatives as one of the key areas being considered to adapt to changing investor and community expectations, fortify corporate governance practices, and enhance transparency for investors.

“When the ASX first introduced gender targets and reporting in 2010, we saw women’s representation in ASX leadership increase significantly,” said DCA CEO, Lisa Annese. “However, when it comes to considering leadership diversity beyond gender, Australia is lagging, with only a small percentage of entities including First Nations peoples, people who are culturally, ethnically, or racially diverse, LGBTQI+ employees and people with disabilities in their diversity reporting.”

She further added “Given the current backlash and increasing hostility towards diversity and inclusion practices in Australia and globally, encouraging companies to set and publicly report on diversity targets is critical.

“ASX companies have a key role to play in championing diversity and inclusion in today’s complex environment by ensuring their leadership reflects the diversity of the communities they serve.”

Professor Nareen Young, Associate Dean (Indigenous Leadership and Engagement) at UTS Business School said “It is high time we move beyond the understanding that diversity means a limited cohort of white women, and towards ensuring that boards represent the communities they serve. It is not complex or complicated – it’s straightforward.

“It’s also high time we move beyond the biases about First Nations people, people of colour and culturally and racially marginalised (CARM) people about what our capabilities and knowledge are and what we can and can’t do in relation to Australian boards. Governance skills are not the preserve of one section of the community. We also need to start discussing social class and background as a diversity dimension and will be exploring this aspect more going forward.”

Dr Dimitria Groutsis, Associate Professor at the University of Sydney Business School, added “The continued homogeneity of directors is concerning for a number of reasons. Boards represent a powerful and influential voice in the decisions made at the highest levels in corporate Australia, NGOs, and sports boards. Beyond the vast pool of diverse talent that remains undervalued and underutilised, why particular groups are restricted from having a seat at the table is curious.

“It’s time to change this through meaningful measures, reporting and target setting while demystifying the pathway to boards for a diverse group of directors.”

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