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News update

National Conference 2022 day two: Key takeaways and tips from our experts

It was a big second day at Governance Institute of Australia’s 39th National Conference.

In this news wrap, we highlight all the key takeaways, expert tips, and lightbulb moments. And in case you missed it, the highlights from day one can be found here.

Role of investors in tackling systemic risks

Chair: Nicholas Chilton, Governance Director APAC, Nasdaq
David Neal, Chief Executive, IFM Investors

David Neal says big pension funds are ideally placed to solve the planet’s climate and social problems because of their size and long-term time horizons, but they need to step up collaboration to drive real change.

Neal is critical of the investment practice of screening and divesting fossil fuel producers, saying simply selling out of emissions-heavy assets cannot have a systemic impact and risks starving businesses of the capital they need to transition.

“If a district heating business runs out of power, millions of people potentially freeze,” he says.

“So, our job is to deliver expertise and capital into those businesses to find a way to reduce emissions without jeopardising their critical service provision.”

He says the International Energy Agency forecasts that by 2030, close to $1 trillion will be needed every year for clean energy infrastructure.

“It means being willing – and indeed keen – to buy assets with significant emission profiles and investing to support a transition plan to get those emissions down.

“My argument is that there is a massive scope to generate stronger long-term returns by strengthening the system.”

But Neal says the superannuation industry must collaborate to influence systemic risks.

He says pension capital as a class is ideally suited to collaboration because most large pension funds can be “considered universal owners that are sufficiently large and diversified to effectively own a slice of the whole economy.

“The implication of this is that they can’t avoid the effect of externalities.”

He says the pension funds were extending their analysis “beyond the footprint of the specific investments we make” to get an understanding of how investment activity and the activity of assets “might influence the health of the economic, environmental, and social system around us.”

“Critically, this is entirely consistent with fiduciary duty,” he says.

“I’d even argue it’s required by fiduciary duty… healthy long term investment returns are dependent on healthy environmental and social systems, now and in the future.

“The quality of investment returns in 10-and 20-years’ time depends on the quality of the system in 10-and 20-years’ time.”

Neal says scenario analysis by the European Central Bank found that a disorderly transition to net zero would see European investment funds lose up to 14 per cent of portfolio assets relative to an orderly transition through 2035.

“Extend it across the $50 trillion of US dollars of pension assets in the world and we get US$7 trillion of losses.

“That’s a lot of pensions not paid.”

Neal says this obligation extends to social issues like inequality, which has real potential to impact long term returns.

“By the way, these issues are linked. Failing to address inequality and not finding a just and fair way to transition to a low carbon economy will likely stall progress on addressing climate risks.”

How do we lead this new and evolving workforce

Professor Michael Adams FGIA(Life) FCG, Head, School of Law, University of New England
Margie Seale, Non-executive Director, Westpac Banking Corporation, Scentre Group
Jad Vodopija, Chief People Officer, BHP

Managing a workforce is fundamental to all businesses that want to take opportunities and grow, Professor Michael Adams says. And it is a far greater challenge now than ever before.

BHP’s Jad Vodopija says there has been a dramatic shift in expectations of employees, and there has been a move from mechanical skills to analytical, digitisation and automation skills.

“We are likely to [have seen] more labour market disruption in the past 10 years than over the last century,” she says.

And it’s beyond the pandemic.

Global themes have impacted work – the Ukraine crisis, inflationary pressures and momentum around decarbonisation are changing the workplace.

There are three parts to leading this new and evolving workforce.

“It’s important to be a purpose-led organisation that has a positive impact on society,” Vodopija says. “Employees want to be connected to a purpose far beyond the day-to-day … Employees are leaving organisations that don’t overtly have a purpose.”

“Second is being future ready… How are you preparing for the future now? What are the needs of your business and where are the skills required to deliver on that strategy? What do you need to be doing now for the future?”

Third is whether an organisation is cultivating a flexible, diverse workforce.

“The nature of work has changed. It’s not just hybrid working,” Vodopija says.

“You need to think laterally in terms of flexibility because it enables a broader base of people to join you organisation… How are you cultivating a culture in which there is a genuine sense of belonging for everyone. As part of transition, you need to make substantial changes and genuine leaps to meet the future.”

Scentre’s Margie Seale congratulates human resource teams over the past few years. Many changes were already happening pre-pandemic, but COVID accelerated the shift, she says.

“People still want the same things they always wanted. Interesting work. Work with people they like and respect. They want a good relationship with their manager who deliberately attends to their learning, development and progress,” Seale says.

“They want what they’re doing to have meaning…. And people want to be paid appropriately but that isn’t always the most important thing.”

Seale says the role of leaders and managers are changing dramatically.

“Communications and management intra-team in the last couple of years has sometimes been stronger. Inter-team collaboration has been much harder.”

Seale says good directors now think differently about the business and people.

“The mentality of a good director is an open one and a learning one… You really have to think about what things look like not just from a commercial perspective but from a people perspective … and [with a] five-to-10-year perspective.

“I worry about losing great talent. I worry about management skills and capability and the stress of all that,” she says.

Skills are different now and you need to bring your people along for the journey, so they don’t feel stuck, Vodopija says.

“The biggest change over the past decade has been the expectation of an organisation [by employees].”

Seale says the most successful organisations allow people to bring their whole selves to work.

“Working in a hybrid way allows them to fit their work in with their life,” she says. They also are interested in what companies are doing in society, such as an ESG sense.

She says different people have different ways of working, and highlights property company CBRE which thinks about it in terms of “earning the commute.”

“There’s enormous thought and development going into what an office is and what it might look like in the future as well as what connectedness you can found in a hybrid situation.”

Fireside chat: Modern media — the conversations that matter

Chair: Catherine Fox AM, Walkley Award-winning Journalist and Writer
Professor Peter Greste, Author and Journalist, Director, Alliance for Journalists’ Freedom, Professor of Journalism, Macquarie University

Press freedom is a fundamental part of Australia’s national security architecture and new ways of funding the media must be found, says Professor Peter Greste.

“It is the media that exposes so many issues and stories and problems within society, within our business environment, within politics,” he says.

“If we allow it to become degraded to the point where it can no longer function, security and governance itself is undermined.”

Prof Greste – who was arrested and convicted of terrorism charges in Egypt in 2013 and spent 400 days behind bars – now fights for freedom of the press.

He says the pandemic saw a lift in trust in the media: “People knew that they needed good information [and] there was a great deal of scepticism about what they saw on social media.”

And the media held the government to account during the pandemic.

“I’m not suggesting that it was perfect but what the media did was act as a corrective to some policies which I think sometimes started to slip off the rails.”

He says the media, when working properly, is underpinned by a set of ethics, principles, processes and standards which are generally understood.

“If it is working to those standards… then it actually does a pretty good job.”

Prof Greste says, philosophically, the media is often spoken about in terms of freedom from government interference and control. But a better way to think about freedom is a positive freedom for citizens to have access to good quality information.

“What we’ve done is allow concentration of media which has reduced our access to a wide range of good quality sources.

“In forcing the government to refuse to regulate the way in which the media is financed… what we’ve done is allow the media business model to be hollowed out to the point where we’re seeing news deserts spreading across the country.

“There are regions that are completely without local news or local newspapers.

“We’re seeing a whole host of markets, including Brisbane where I live, where there is only one newspaper, and that’s a Murdoch paper.”

Prof Greste says the assumption that news organisations should be able to adapt to the financial pressures of the digital age is wrong.

“News has never been a profit-making business… News was the reason that people bought their papers, but the papers were still financed by the individual advertisers.”

The fight for profit means news is not engineered for public conversation but rather to monetise individuals’ attention. That means editors preference popular reporting over important stories to generate attention and revenue.

“We need to rethink the role that media plays in our society and work out how we are going to pay for that.”

He says Australia should consider radical funding models like a levy on taxpayers.

“I’m not saying that’s necessarily the solution. My point is that we need to rethink how we finance news and understand that as a public good it is something that is essential for all of us.”

He says Australia has no constitutional legislative protection for press freedom or freedom of speech which acts as a deterrent to whistleblowers and investigations into the government.

“That’s becoming a very serious problem, so we need to pass a Media Freedom Act.”

Prof Greste says social media is dangerous, toxic and addictive and policymakers have an obligation to put guard rails around the way it operates.

And he says interesting experiments in long form journalism are gaining support.

Fireside chat: Who is the new customer — value vs values

The Hon Victor Dominello MP, Minister for Customer Service and Digital Government, NSW Government
Julieanne Alroe, Chair, Queensland Ballet
Megan Motto, Chief executive of Governance Institute of Australia

The new game is personalisation, says Megan Motto.

“Digital transformation has played a huge role in this, and it’s gone a long way in providing insights for business and governments in what the customer values and wants.”

Victor Dominello has been responsible for digitising a number of services in NSW and was the state’s inaugural minister for customer service and for digital government.

NSW is well down the track to digitising many interactions in the economy from licences and construction white cards to first aid and education.

“It’s pretty profound when it comes to government service delivery,” he says. He uses a metaphor of the solar system, whereby normally Westminster governments are the sun and everything else revolves and evolves around that.

“We’ve tried to flip that. We’ve got to make the customer the centre of the universe and government need to evolve services round that.”

Dominello’s second metaphor is how do you move a beast – government – to focus on the customers. How do you try and control something as big as government?

“The number one thing we’ve done is…. real time customer feedback. If agencies receive real time customer feedback… and sees their scores are [low] then all of a sudden, they have to change.”

Julieanne Alroe says the customer is not homogenous and the first question a business needs to ask is ‘who is the customer’? At an airport, is it passengers or the airlines or the retailers?

“They all have slightly different needs … and sometimes those needs can be irreconcilable,” Alroe says. The first principle is to get the basics right – cost, function, cleanliness.

“Then beyond that, when you start dealing with a broader customers group you are starting to deal with ESG issues,” she says.

Investors, regulators, customers and other stakeholders are all considering societal factors.

“Increasingly important is social licence if you want to run… any public facing business,” Alroe says.

How do governments, and businesses, ensure that digital services are accessible to all cohorts including elderly people?

“When I became minister for digital services I hadn’t though enough about the accessibility piece,” Dominello says.

“It is important that when we deliver services you make them trustworthy [around privacy, ethics, transparency]… We’ve got we provide multiple channels, and that user experience is optimal, otherwise people won’t use it.”

Alroe agrees there’s a hierarchy of needs and says satisfying those comes down to implementation.

“Get the basics right and then you can get into ‘wow’,” she says. “Trying to instil that into staff… is very much about culture and driving purpose through our staff. That’s saying it over and over again and living the values yourself.”

Concurrent 3A: CoSecs Panel — the sphere of influence

Chair: Marnie Reid, CEO Issuer Services Aus & NZ, Computershare
Damien Coleman, Company Secretary, Xero
Michelle Hall FGIA, Company Secretary, Woolworths Group
Fiona Last FGIA, Company Secretary, Transurban

How does the modern company secretary influence governance practice and discourse?

“It’s a long time ago that the role of company secretary was the chief administrator,” says Computershare’s Marnie Reid.

“It’s grown substantially to incorporate compliance, advisory and strategic functions, it’s also an adjudicator, an educator, a counsellor, a predictor of the future and a keeper of the corporate history.

“And that’s just to name a few.”

Transurban’s Fiona Last agreed, saying advances in technology have allowed the role to evolve away from being an administrative, technical role to being a more interesting role as a trusted adviser.

“And that brings an ability to have a broader sphere of influence,” she says.

But she says that influence can be subtle and behind the scenes.

Xero’s Damien Coleman says alongside change, many things have remained the same.

“Good decision making, and good decision-making processes, are at the heart of good corporate governance,” he says, while considerations of wider stakeholder interests remain an important feature.

“In my experience boards and management teams are looking for company secretaries to take a very active role to be influential on how topics are framed for the board.”

This can be taking a macro view assisting boards to reflect on where they should spend their time, right down to individual matters like supporting teams on investment decisions and transactions.

This takes new skills in domains like climate and sustainability, supply chain risk, modern slavery, sourcing sanctions, data protection and privacy, says Woolworths’ Michelle Hall.

“An appropriate level of understanding similar to that of the board in order to be able to add value in reviewing board papers and setting agendas for boards and board committees,” she says.

The technical skills required by a company secretary have also shifted away from the “archive boxes and cases for files” of the past.

“A lot of CoSecs now have responsibility for legal and strategic advice for developing governance, risk, compliance policy, engagement on those policies and training within the business; for leading teams, which perhaps wasn’t always the case in the past, and for providing counsel on potential consequences of actions of the board and the company,” says Hall.

Still, there is tension in the dual role of a company secretary, which straddles management and board matters.

“It is part of what makes it a really interesting role,” says Last.

“It’s really important to have built that trust with all those key stakeholders because it enables you to have those trusted conversations.”

Hall adds that the company secretary is in a unique position.

There’s a “handful a couple of people in the organisation who have the visibility that the CoSec has… as well as having influence on management, governance forums and various proposals that are coming up through the business,” she says.

“This is particularly relevant to large organisations… It is possible for there to be multiple streams of work happening without connectivity between them. We are one of the few people who can identify when that’s happening.”

But she says there is room to reform the way the role works: “What it is that you can do more efficiently or stop doing all together?”

“Can directors [get] up to speed in different ways rather than during board meetings?”

She says influencing director succession pipelines is another way company secretaries can influence, especially by lifting diversity of board candidates.

Concurrent 3B: The forces reshaping the enterprise security landscape

Chair: Lyn Nicholson FGIA, General Counsel, Corporate & Commercial group, Holding Redlich
Dr Ian Oppermann, Chief Data Scientist, NSW Government
Anafrid Bennet, Head of Security, Great Western Water

In the enterprise security space, there are many challenges, from budgets to endless and emerging risks, Holding Redlich’s Lyn Nicholson says.

But cyber risk is now critical for boards.

Great Western Water’s Anafrid Bennet says partnerships are key in building cyber resilience.

“Yes, there will be an attack. It’s not a matter of if, but when, as long as we are connected to the internet… hackers find innovative ways to attack our systems, our people and our information,” she says.

“It’s important to bring diversity of perspectives to cyber security… and the industry is facing a skills shortage,” Bennet says.

Ian Oppermann says the state of NSW has been on a data journey with a push to become customer centric.

Since 2015 the state has used many data sets to understand the journey of children, households, businesses and communities, to find service solutions.

The period up to 2019 was very instructive on the use of data sets, Oppermann says. The COVID pandemic allowed the state to move towards action in real time.

“Ultimately data is the big game that brings it all together and allows us to be smart and personalise,” he says.

How do organisations think about cyber risk?

“Safety is also about cyber safety. Well-being is also about cyber well-being. Why? Because water is a critical infrastructure … and there’s always a human impact,” Bennet says. She says cyber-attacks are increasingly having physical impacts and people are the cornerstone for businesses resilience.

“How do you assess risk? Number one: know your critical business processes. What is the business impact if there is a cyber-attack?

“Number two: know your assets. If you don’t know what they are, you won’t be able to protect them. Number three: know your enemy. Who are your threat actors?”

“When looking at mitigation look across people, processes and approaches,” she says.

Oppermann likes the zero-trust framework, whereby you don’t trust anyone. That framework can be used when people want to access data.

“Only provide some people access, and increasingly at arm’s length, depending on what they are using the data for,” he says.

What frameworks demonstrate a mature model to address cyber risk?

Bennet says no set of mitigations or strategies will protect from a cyber-attack, and the Essential 8 baseline gives guidelines around protecting against compromise.

“We should be looking at a holistic set of standards,” she says. “Cyber is not an IT problem, it’s a business problem.”

“When cyber makes its way up the strategy risk register, that’s when the board should know the company is on the path to cyber maturity,” she says.

Oppermann says: “Every organisation is now a data organisation, so every organisation is now susceptible to cyber-attacks.

“You must have a framework … and be part of boards’ front and centre digital risks.”

Indigenous Australia: what constitutional recognition will mean

Sean Gordon, Chair, Barkly Regional Deal

Aboriginal and non-Aboriginal people must get better at sharing their stories with each other, says Sean Gordon, who advises boards and councils on Indigenous matters.

Gordon speaks of his Wangkumarra family history on the “corner countries in NSW, Queensland, South Australia border”.

“In 1938, the NSW government made a decision to round up all the Wangkumarra, put them on the back of cattle trucks and ship them from Tibooburra 500 kilometres away to the Brewarrina Mission.

“The way in which they got our people on the Mission was through the NSW Aboriginal Protections Act.

“They turned up at the school… put all the kids on the back of the truck and wait until the mothers come home in the afternoon to get their kid from school.

“And they said to the mothers: you either get on the truck or you’re going to get left behind.

“The Missions were essentially a prison. The only way you could get off the Mission is through the approval of the Mission manager.

“The kids were forced into apprenticeships at a very young age and indentured.”

He relates the story of his great grandmother’s intake into the Mission.

“Not only do they stand around and take a photo while they’re going through the process, but they measured every aspect in every part of the body. They captured the colour of the hair and the eyebrows, how large her nostrils were, how big her ears were… any distinct marks that she may have had on her body.”

He says the information collected was designed to understand whether Aboriginality could be bred out over time.

He draws a direct line between the Australian’s fighting a war against Nazi Germany at the same time as Aboriginal people were being forcibly moved from their lands.

“Think about what Nazi Germany was doing at the time to the Jewish people.

“But this is something happening in our own backyard.”

He says modern Australians have disconnected from these facts.

“A part of that disconnection is because I don’t believe that we’ve been forthcoming in having true, meaningful, open conversations as Aboriginal people with non-Aboriginal people – and vice versa.

“As a part of this process that we’re going through now toward Indigenous constitutional recognition, it is about having these conversations.”

The NSW Aboriginal Protections Act was not repealed until June 1969, which led to the closure of Missions. But the repeal did not stop the removal of Aboriginal kids from their families.

“I was raised in a foster home on the Brewarrina Mission,” he says.

“When the mission was closed down, it was converted into a foster home for Aboriginal kids.”

Gordon says the Uluru statement asks for three simple things: voice, treaty and truth.

“It can’t be right that Aboriginal people who have lived in the country for 60,000 years just disappear.

“Disappear within our founding documents, disappear within our society, that we’re not properly acknowledged or recognised.

“I’d like to think that we would have a say on laws, programs, policies and funding that impact on Indigenous people.

“Right now, the solutions come out of Canberra, or they come out of out of capital cities, and they’re imposed on Indigenous communities.

“The model hasn’t worked.

“We’re no different to you. We want our kids to thrive. We want our kids to have success.”

And so how will constitutional recognition and the Voice to Parliament affect non-Aboriginal Australia?

“It won’t,” says Gordon.

“Your lives will continue to go on and you’ll continue to do what it is you do.”

But “you might see some of the success of what a Voice might do if you’re out working in Aboriginal communities and you start to see that communities are organising themselves, establishing their own regional development agendas, their own priorities as to what’s important to them.”

“For far too long governments have overreached into the lives of Aboriginal people.

“What we’re saying to governments is it is now time for you to step back.”

Risky business — the legacy of the pandemic and the risks to recovery

Jacqui O’Dea, Chief Risk Officer, GPT Group
Catherine Robson, Non-executive Directors and Chair of Risk Committee, Equity Trustees
Kenneth Weldin, Chair, Victoria Council, Governance Institute of Australia

COVID has put risk in the spotlight, and it is our moment to shine, says GPT’s Jacqui O’Dea.

So how do we keep it there, fresh and relevant?

“Risk teams’ quality of insights need to be of the utmost quality … and be able to sort through the tsunami of information… and distil information is really important to your business.

“Secondly you need a strong risk appetite statement … and that involves liaising with the board and executive team.

“Thirdly, talk about opportunities. How can risk identify and facilitate opportunities? The last point is to embed risk deep into business processes,” O’Dea says.

Catherine Robson said risk is some of the most fascinating work for directors.

“I like the idea of moving from best practice to best fit. We can get a bit formulaic and not see the wood from the trees,” Robson says.

“The experience at Greater Bank, where we are at the end of a system replacement is a good example. It was strategic response to a small bank thinking of how to stay relevant. From a risk mitigation perspective, it was [appropriate] but there were metrics along the way, such as staff turnover, that you have to expend your risk appetite,” Robson says.

O’Dea agrees with the concept of best fit. “It’s all about the grey and adapting it your unique circumstances … and think about the challenges for your company.”

She says visibility of risk was heightened during COVID and that triggered new groups and processes, and many of these will remain in place post-COVID.

“Nothing beats getting out and talking to people … and whenever I am visiting a different site, I will always visit the asset teams. Those one-on-one relationships … is where you get the most useful information,” O’Dea says.

Robson says she likes to hear customer complaints and speak to staff. And she said use of tools such as innovation awards can flush out pain points in an organisation.

Active listening and showing intent are critical, says Kenneth Weldin.

Robson says a challenge for directors is that board risk-packs keep expanding. “More information doesn’t necessarily translate to more insight,” and we do need to do things in a different way.

O’Dea agrees trust is critical for risk. “You need to have a mix of the empirical and data-based information and then an overlay [from a senior manager] to exercise some judgement and make a call. I always start with the data… and then overlay that with my own judgement.”

What are the catalysts to re-assess?

Robson says board renewal is important and there are other catalysts such as COVID. Also, regular assessments after meetings about whether a board is effective are effective.

What about anchoring bias in board decisions?

“The best answer is to have a diverse board… and an inclusive board. The second is a mindset thing… It’s great when directors come to a discussion when they’ve done researched… but are happy to have their view displaced,” Robson says.

O’Dea says a good risk person needs curiosity, to be well read and interested. “Having a finger on the pulse on emerging issues… and curiosity about the world around [is important for risk professionals].”

The metaverse: will it change the way we live?

Chair: Megan Motto FGIA, Chief Executive Officer, Governance Institute of Australia
Michael McQueen, Author and Trend Forecaster

In March this year, someone paid $4.3 million for a piece of real estate in the metaverse.

“$4.3 million!” says Michael McQueen. “For real estate that wasn’t real. It has the faintest whiff of a Ponzi scheme about it from my perspective.”

But there is much more to it than that, he says.

It is a signal of something we cannot afford to ignore.

“We are seeing an entire economic ecosystem developing right now to support transactions like this.”

So, what is the metaverse?

Fundamentally, it is the term for online spaces where people can socialise, work and play, represented by avatars.

Usually, people access metaverse applications through virtual reality headsets that provide a 3D representation of a digital world where objects seem real, even though they are not.

McQueen quotes former Microsoft executive Marc Whitten, who says the metaverse will be the single biggest platform revolution, “bigger than the impact of mobile devices and the web”.

“Now even if he’s half right, this is something we cannot afford to ignore.”

McKinsey says the metaverse could be a $5 trillion market by 2030, says McQueen.

He tells the stories of the Australian Open building a metaverse representation of the tournament earlier this year and selling $2 million in non-fungible tokens, McDonalds planning a virtual restaurant where people can order food to be delivered to their real-world homes and Hyundai allowing test drives in a virtual environment.

He also tells of buying clothes and accessories to dress up an avatar: already a $40 billion market.

“Young people, this is something they do and something that they value.”

He says studies show younger people already claim to “feel more like their real selves” online than they do in real life.

So, what’s stopping mainstream adoption?

“Do people actually want to engage in the metaverse as much as all the tech companies would like?” he asks.

So far, the indications are yes: 35 per cent of Australians are keen to try metaverse applications in the workplace.

“And this is not just theory, we are seeing large scale enterprises already moving into this.

“We’ve seen Accenture fork out to buy 60,000 of those headsets.

“If you start working at Accenture, you get handed a headset and a laptop and your first week or two is spent in a metaverse space engaging with your colleagues, learning about the company.”

Horizons Workrooms by Facebook-owner Meta is the first cab off the rank providing metaverse applications for business: “It’s like a Zoom call on steroids,” says McQueen.

And Microsoft is launching Mesh for organisations that use its Teams software.

Other platforms include Arthur for collaboration and, which allows you to replicate your desktop and keyboard in a virtual environment.

“Strap on a headset and it replicates your workspace in a far more focused and productive way.”

McQueen also speaks about the concept of digital twins that replicate real world systems to allow better planning of maintenance and development.

But there are concerns. The hardware is still in early days and can be “heavy and hot and uncomfortable and weird”.

The development of lighter headsets may help adoption – Apple aims to replace the iPhone with augmented reality glasses, he says.

And one company is even developing smart contact lenses.

“This thing will work like augmented reality glasses but over the surface of your eye.

“This is not science fiction. This is happening right now.”

Investing in the long-term in the short term – the role of investors in tackling systemic risks

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