ASX wants cultural lift
The ASX has proposed new principles to help Australia's biggest companies dramatically improve their culture.
The ASX Corporate Governance Council has re-drafted its core principles to recognise “emerging domestic and global issues” in corporate governance.
“The council's proposed changes anticipated and respond to some of the governance issues identified in recent enquiries, including the Hayne royal commission,” the council said in a statement.
The major change is for companies to “instil and continually reinforce a culture of acting lawfully, ethically and in a socially responsible manner”.
A consultation paper has been distributed to all listed companies covered by the guidelines.
ASX head of compliance Kevin Lewis said revelations from the royal commission have put the purpose of the reforms in stark relief, the ASX has been looking at ways to improve corporate culture for much longer.
“We are recognising in very explicit terms that a listed entity social license to operate is one of its most valuable assets and that that license can be lost or seriously damaged if the entity or its officers or employees are perceived to have acted unlawfully or unethically or in a socially irresponsible manner,” Mr Lewis told the ABC.
“We have shone a light on the issues around values and codes of conduct, things like whistleblowers and the need for boards to be notified of material events.”
While the recommendations are not enforceable, Mr Lewis says all 2,200 ASX-listed companies should comply.
“Listed companies have an obligation under our listing rules to disclose the extent to which they follow the council's recommendations and if they don't follow a recommendation they have to explain why not,” Mr Lewis said.
“They're not mandatory, but most of the companies in the ASX 200 would pretty much treat them as mandatory.
“They don't want to say, for example, that they don't comply with best practice and the principles and recommendations reflect best practice.”