Submission on IFRS Foundation’s consultation paper on sustainability reporting
The IFRS Foundation have published a consultation paper to identify the demand in the area of sustainability reporting.
This is the underlying message in the discussion paper Always on duty: the future board released today by the Institute of Directors (IoD) and MinterEllisonRuddWatts.
The paper highlights that today’s boards have to be across a staggering array of issues and risks, such as business disruption, new technologies, cyber risk and climate change. They also need to be responsive to escalating stakeholder demands and expectations. This is at a time of heightened director accountability and increasing personal liability.
“Despite significant change in the operating environment, boards have been functioning in much the same vein for decades,” says IoD’s GM Governance Leadership Centre Felicity Caird.
“Many boards are now facing a time dilemma. They are weighed down by often voluminous board papers, compliance and risk, which can compromise time to discuss and debate critical strategic and performance issues.
“Directors are also having to spend increasing hours staying up to date with the changing operating environment, their industry and understanding the business. Rising stakeholder expectations will drive greater engagement adding to the board’s workload.
“Boards’ traditional ways of working need to be challenged for directors to continue to add value and fulfil their governance responsibilities in the future.
“The future boardroom will unquestionably be digital,” Caird adds.
The discussion paper outlines trends, challenges, and opportunities for how boards may evolve and operate in the future.
“Organisational purpose is becoming paramount, and boards are being challenged globally to lead for a purpose that goes beyond profitability. In achieving such objectives, boards are expected to take into account and be familiar with a breath-taking range of new and emerging issues, and not just focus on shareholders’ returns” says Silvana Schenone, partner and head of corporate at law firm MinterEllisonRuddWatts.
“The legal landscape is also changing, with increasing potential liability for directors, the rise of class actions, active regulators and litigation funders holding directors to account and escalating their responsibilities.
“In this context, technology should help save time and enable more efficient and effective ways of meeting and operating. It should help ensure boards get relevant and timely information, and may ultimately radically change reporting and stakeholder engagement,” says Schenone.
“Boards will access and use real time, interactive data in, and out, of the boardroom. Artificial intelligence and other technology advancements such as virtual reality and instant voice translation will help break down global barriers,” says Caird.
The discussion paper suggests ‘Robo’ directors could be a real possibility.
“In a dynamic, ever changing world, the role of the board is, and will be, more important than ever in guiding companies to deliver sustainable success for shareholders, employees, customers, organisations and communities,” says Schenone.
“Tomorrow’s directors will be constantly learning – always on duty,” Caird adds.
In a call to action, the IoD and MinterEllisonRuddWatts urge all boards to set aside time to challenge how they are operating and to innovate to improve board effectiveness.
The discussion paper raises a number of issues for discussion including:
Go to discussion paper Always on duty: the future board