Businesses have to ensure they are doing more than just the bare minimum in order to meet public expectations moving forward, according to a new white paper from governance business Diligent.
In a recently published white paper, musing about the year ahead for corporate governance, Diligent reflected that the new decade brings with it new challenges for directors and company secretaries.
“Despite greater complexity, rising regulatory and public expectations [mean] that getting the basics right is non-negotiable,” the white paper read.
“Boards are accountable for the culture and conduct that underpin ongoing compliance. Those who fall short can expect more severe consequences and the risk of becoming front-page news.”
One such area where in-house lawyers will have to help the business move forward is in CSR, Diligent espoused.
“A new wave of investor activism, calls for a broader corporate purpose, and legislation focusing on ethical supply chains are all driving an increased emphasis on organisations’ social behaviour,” it said.
“Regulatory compliance is increasingly seen as a minimum standard, putting pressure on boards to meet rising public expectations.”
There is much more to social responsibility, the white paper continued, than simply hosting community events or publishing a “glossy” report.
“Fair, ethical and respectful interaction with customers, workers and suppliers is at the heart of responsible behaviour. It comes down to an organisation doing the right thing by people. While that sounds simple, success is a matter of sustained, consistent action at every level,” it wrote.
“When something goes wrong – and it’s inevitable that it will – an organisation’s response is critical. Denial, defensiveness and delay rarely produce a positive outcome.”
The recent royal commissions into banking and aged care have, for example, exposed significant wrongdoing, Diligent mused.
“Failures that have been attributed to a handful of bad apples or a one-off system malfunction have all too often been indicative of systemic issues beneath the surface,” it concluded.
“The dialogue between directors and management is changing, with executives facing more challenges by boards and no longer being relied on as the sole source of information. At the same time, boards are grappling with the boundaries of their non-executive roles.”
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