Corporate Governance Trends in Australia

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Double-down on boards’ culture oversight role

With additional regulatory and reporting requirements adding to the compliance workload for boards, there is little evidence that the demands on directors will reduce in 2025. It is staggering that only five years ago, board accountability for corporate culture became an explicit duty for APRA-regulated entities. Further, in 2024, the events of Qantas, Mineral Resources, WiseTech and Nine Entertainment all underscored that investors will hold boards to account for corporate culture when issues occur, regardless of what the ASIC’s Corporations Act actually dictates. This change has been pioneered by Industry Super Funds, who have been very active in engaging with boards on how they are reducing risk in this area. For example, one Industry Super Fund, Aware Super, went as far as asking its fifty largest investments to answer eleven questions focusing specifically on conduct risk. What’s more, boards are being more transparent about how they are addressing issues, as seen in the recent example in the Qantas’ Governance Report. This report remains essential reading for any ASX Director.

Preparing for climate reporting and potential shifts in political activism

Australia’s largest businesses have spent two years preparing for mandatory climate reporting, and this has been an extensive draw on the board’s time. With Group 2 and Group 3 “going live” in 2026 and 2027, many of Australia’s smaller businesses still have significant work to do. Furthermore, investors expect all businesses to demonstrate they have considered climate risk and the implications of carbon transition. Beyond climate change, the implications of businesses’ involvement in the failed “Yes” vote on adding an Indigenous Voice to parliament are still being felt. In the aftermath, most directors have understandably been more cautious about allowing businesses to engage in active commentary on social issues. This trend may accelerate as the U.S. and parts of Europe experience a political swing to the right.

Diversity takes a broader focus

The initial draft of the fifth version of Corporate Governance Principles caused some controversy, with a proposal for voluntary reporting on broader diversity measures. While pushback is likely to result in a fundamental rewrite of this section, there is no doubt that stakeholders are looking for diversity beyond gender. Indeed, with 91% of ASX 300 Directors being Anglo-Celtic in background and only four openly LBGQTI directors, there is still work to be done. There are some indications that larger company boards are already starting to think more broadly about the true diversity of the directors they’re hiring, and the Australian Institute of Company Directors has launched a program specifically focused on First Nations. However, like gender diversity, experts suspect it will be easier to tackle this issue over time, rather than resolve it when some form of disclosure or reporting is introduced.

More eyes on data, AI, and cyber regulation

The government’s cybersecurity legislation has provided a helpful platform for developing future regulations that will inevitably impact boards’ focus. The current legislation will require boards to report ransom payments and has loosened restrictions on the Australian Signals Directorate’s (ASD) ability to work with businesses subject to cyber-attacks. Australia’s largest businesses have spent the last few years maturing their approach to cybersecurity – and for these businesses, the changes mean little more than a subtle revision of their cyber-response strategies and some more complexity in their next cyber wargame. However, ASD will increasingly focus on ensuring that Australia’s critical infrastructure is secured. Directors of energy, water, telecoms and transport businesses can expect stronger regulation and much greater scrutiny from the government in this area over the next few years.

The first tranche of the Australian Privacy Reform Bill provides greater room for individuals to bring claims when businesses breach their privacy. This is likely to be a focus for class actions and has resulted in boards needing additional scrutiny of what personal data is being held and how it is secured. Boards are still working through how their businesses use AI. AI has yet to cause a major media or regulatory issue for an Australian business, but its inevitability remains on the minds of Australian directors. Until more regulation is developed here, the government’s Voluntary AI Safety Standards will continue to provide boards with a useful template for approaching governance in this area.