Australian Securities and Investments Commission (ASIC) chair Joe Longo addressed a gathering of industry leaders at the Australian Institute of Company Directors (AICD) Australian Governance Summit, and offered insights into the complexities directors face in today’s fast-paced business world.
Longo’s speech, delivered on March 21, 2024, centred on the critical need for directors to navigate responsibilities amid advancements in artificial intelligence (AI), cyber threats, and the growing focus on environmental, social, and governance (ESG) criteria alongside sustainable finance.
Emphasising the importance of compliance with directorial duties, Longo presented an argument that, despite the challenges, adherence to these obligations is not only feasible but beneficial.
“I ask everyone – do you know how your company makes money?” he asked. “What are the key drivers of your profitability and who are your customers, where’s your data? These may seem like basic matters. They are. That’s why they matter.
“And when you’ve demonstrated to yourself that you know how your company makes money and you’re acting with honesty and integrity, then hopefully you’ll be able to have a sensible conversation with yourself, and with your fellow directors, about the risks and what can go wrong.”
The keynote delved into the historical context of director duties, highlighting a significant evolution from the less demanding expectations of the past to the current era’s heightened standards. This shift, according to Longo, has been influenced by global economic changes, technological advancements, and a heightened awareness of corporate responsibility.
Longo also underscored the importance of cybersecurity awareness, acknowledging it as an unavoidable challenge in the digital age. He highlighted the critical role directors play in fulfilling investor demands for transparency in ESG practices, advocating for clear communication and robust sustainability initiatives.
Concluding his address, Longo advocated for a principles-based approach to governance, encouraging directors to leverage their judgment and curiosity to ask the right questions and make informed decisions.
“I am not suggesting to you that being a director isn’t tough. It is challenging, and it can be complex – but it is not impossible,” he said.
