Q&A with Governance Institute

Q. Do companies have policies on keeping or erasing annotations made by directors on board papers stored on board portal electronic platforms?

A. Many companies establish protocols about annotations stored in board portals. Some companies keep annotations until the end of the end of the following meetings. Annotations are then deleted. Other companies delete annotations once the minutes of the relevant meeting are approved. While some companies retain annotations for longer periods it is also important to conduct regular director training sessions about the issues relating to retaining notes.

For more information see the Joint Statement on Minutes.

Q. The Government is gradually winding down the Australian cheque system by no later than 2030, with government use to be phased out by 2028. What are companies doing in response to this change?

A. Some companies have used direct credit for shareholders for some time, although it is important to check if this is permitted under a company’s constitution. There may also be some practical issues for companies because of provisions in constitutions. For example, some company constitutions provide that if a dividend is unclaimed the funds will be reinvested in shares in the company. This can be challenged by a shareholder. While it is similar to a dividend reinvestment plan it is actually a payment of a dividend to a shareholder, paid in shares. Other companies donate the funds to charity if they are unclaimed which may require a constitutional amendment. Where companies are planning to make changes to the way they make payments to shareholders it is important to advise shareholders in advance of the proposed changes.

For more information about the phasing out of cheques see A Strategic Plan for Australia’s Payment System June 2023.

Q. Regulators, ASIC and the ACCC, have been talking about ‘greenwashing’ a lot lately. What is greenwashing and where can I learn more about it to help have the right governance structures in place?

A. The prevalence of greenwashing has increased in recent years, as has awareness of it amongst regulators, investors and the public both in Australia and globally.

Greenwashing is claiming that something – a product, practice, service or organisation – is more sustainable or environmentally friendly than it truly is. Greenwashing generally occurs in two key areas: disclosures and marketing.

• Disclosure – This relates to sustainability reporting, investor communications and other types of reports, and applies to climate, environmental or other sustainability-related disclosures, such as those produced by listed companies or by organisations in the financial services and asset management sectors.
• Marketing: This relates to product advertising, public relations and brand image, such as how fashion, transport or consumer goods are advertised.

While greenwashing may be deliberate, it can also be done inadvertently, for example because of a lack of understanding on the part of management about the rigour required to produce high-quality disclosure. This misrepresentation, whether deliberate or not, is potentially misleading for investors and consumers.

Another issue that has emerged is that of ‘green hushing’, namely avoiding publicising communications about environmental or climate-related activity to avoid scrutiny, defend against the risk of greenwashing accusations or to hide insufficient progress. For example, organisations may choose to not publicise information about their emissions’ reductions goals to avoid scrutiny. There may be legitimate reasons for holding back information, but it can also have negative consequences for transparency.

Given the seriousness of the possible consequences of greenwashing it is essential that governance professionals equip themselves and their boards to tackle the issue. Having robust governance structures in place means that organisations are less likely to fall foul of accusations of greenwashing.

For more information see Governance Institute’s publication Greenwashing: A governance perspective.