Governance Institute of Australia raised a number of concerns with the draft of the fourth edition released for consultation in May 2018. Two of the principal areas of concern related to the increased level of prescription overall and the inclusion of imprecise terms such as ‘social licence to operate’.
As a founding member of the ASX Corporate Governance Council, Governance Institute is a strong supporter of the ‘if not, why not’ approach to their application’. The concern around the increased level of prescription was that it could be counterproductive and encourage a ‘tick the box’ approach to disclosure. There was also concern about the proposed changes to Principle 3 to recognise the fundamental importance of a listed entity’s ‘social licence to operate’ and the need for it to act lawfully, ethically and in a ‘socially responsible manner’. This related to the fact that this phrase, first originated in the mining and gaming sectors and is now being used in a way that makes it open to a broad range of potentially extremely subjective interpretations.
Over 100 submissions were received during the public consultation and the final version of the fourth edition is expected to be released in early 2019.