The council has released updated governance guidelines outlining investor expectations of company directors around issues such as succession planning and AI governance.The Australian Council of Superannuation Investors (ACSI) has released its two-yearly update of its Governance Guidelines, setting out long-term investor expectations on material governance and sustainability issues at listed companies.
While public attention on governance and company performance peaks around reporting and annual meeting seasons, ACSI said the guidelines underpin good corporate governance year-round and will inform voting recommendations in coming years.
The 12th edition has been revised to address contemporary market issues, incorporating feedback from market participants and insights from hundreds of company engagements conducted annually.
The format has also been streamlined to clarify board expectations around activities and disclosures.
“Efficient and vibrant markets are essential to Australia’s economic success, and good governance, transparency and investor protections are the foundations of confidence in listed markets,” ACSI chief executive Louise Davidson said.
“Good governance is a competitive advantage underpinning investor confidence and most companies in Australia understand that.
“The guidelines provide a clear articulation of investor expectations. ACSI builds on this foundation through regular, constructive engagement with companies to understand their specific approach and circumstances.”
Rather than introducing new standards, the updated guidelines refine existing principles to emphasise succession planning, artificial intelligence governance, culture, workforce and diversity, and stronger alignment between board skills, experience, succession and election.
“AI is expected to be a huge boost to the global economy, but it needs to be managed properly within good governance guardrails, because it also carries significant risks.
“Investors want to know that company boards have governance structures in place reflecting the scale of the risks and opportunities associated with AI and other forms of digitalisation,” Davidson said.
“While AI is a newer area of focus and interest, ACSI’s guidelines in this area are consistent with our principles-based approach centred on governance standards as enablers of growth, not obstacles to it.”
ACSI said it avoids a prescriptive “check-the-box” approach, instead focusing on financially material issues that vary by company and sector.
“Managing these material risks well leads to long-term value creation for investors, including millions of superannuation fund members. Company boards must assess which issues are material for their company and then monitor, report on and incentivise effective management of those issues,” Davidson said.
The principles-based, non-binding guidelines are intended as a reference point for companies and ACSI members, supported by separate research on materiality factors relevant to different businesses.
