Speaking at the launch of the Governance Institute of Australia’s Improving engagement between ASX-listed companies and their institutional investors: Principles and Guidelines report in Sydney yesterday, Mr Gonski said the days of secretive corporate governance culture are over.
“I believe very, very strongly that the days of boards operating in sort of quiet corridors and closed off boardrooms have gone,” said Mr Gonski.
He explained that stakeholders have interests in the company in which they are involved, and it is important for directors to hold discussions with them about the governance process.
“The ability to talk to stakeholders opens up a new dimension because those stakeholders often are dealing with parts of the community that we really have nothing to do with in day-to-day life,” Mr Gonski added.
The report – launched by Mr Gonski and other business leaders, including Caltex chair Elizabeth Bryan and representatives of AustralianSuper and AMP Capital – aims to encourage better explanations and disclosure both by directors and shareholders about essential information and engagement with governance processes.
“It used to be that the chief executive and or chief financial officer briefings for analysts and investors was the accepted means of engagement between ASX-listed companies and their institutional investors, but that is no longer the case,” the report stated.
“There are no two streams of engagement. The traditional CEO/CFO and investment analyst engagement on results and prospects and, increasingly, engagement between the board of a company and asset managers and the ultimate owners about long-term matters,” it said.
The report outlined a series of key principles and guidelines for institutional investors and companies to follow in order to better keep the flow of information available to stakeholders.
Among a number of recommendations, the report urged better explanations and disclosure on issues such as voting policies, governance guidelines and processes and the use of technology to facilitate effective communication.
It also stressed the importance of establishing a regular, meaningful and well-timed engagement program, including on environmental, social and governance issues that affect longer-term performance.
With these guidelines, the Governance Institute believes that a greater dialogue between all participants and create greater transparency will open up.
“Both companies and institutional investors recognise the importance of improving transparency and regular dialogue, and that there is scope for both sides to strengthen the foundations for clear and productive communication,” said Governance institute chief executive Tim Sheehy.
