FUTURE OF GOVERNANCE STRATEGIC GOVERNANCE: Business not as usual

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Alaina Johnson
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FUTURE OF GOVERNANCE STRATEGIC GOVERNANCE: Business not as usual By Nava Subramaniam Director Governance, Accountability and the Law; RMIT University Governance "Corporate governance involves a set

1 FUTURE OF GOVERNANCE STRATEGIC GOVERNANCE: Business not as usual By Nava Subramaniam Director Governance, Accountability and the Law; RMIT University Governance "Corporate governance involves a set of relationships between a company s management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined... OECD definition The first documented use of - "corporate governance" is by Richard Eells (1960) meaning "the structure and functioning of the corporate polity". 1

Masters Woolworths Debacle Aug 25 2009: Woolworths announce Project Oxygen

2 Masters Woolworths Debacle Aug : Woolworths announce Project Oxygen Hardware business May 2015: Masters will be a long term profit contributor to the Woolworths Group. 150 power point slides Jan Will close Masters by 11 th Dec Losses $200 million pa & $4 bill write-down before tax 2

CG CHALLENGES 1)Board Dynamics Politics, Aggressive Leadership and Incentives 2) Lack of Agility Strategic Thinking & Decisionmaking 3)Inadequate attention to Social Contracts -In other words,

3 CG CHALLENGES 1)Board Dynamics Politics, Aggressive Leadership and Incentives 2) Lack of Agility Strategic Thinking & Decisionmaking 3)Inadequate attention to Social Contracts -In other words, Ethical and Social Responsibility 4) Building Social Capital Leadership Poor attitudes A lot of our management at governance are all about not me taking responsibility but rather how to disperse the responsibility so actually nobody is accountable for delivering anything (excerpt Subramaniam et al. 2014) Lack of direction Leadership is the issue. I m not talking about just the CEO I m also talking about the Deputy Chief. They don t seem happy to address the internal processes and machinery that are required for clarity around issues. That is a fundamental issue, the leadership Short Termism 3

4 Agile Governance Agile governance is the application of Lean-Agile values, principles and practices to the task of governance. This includes Being Adaptive, Being Connected, Timely Decision-making, Clarity of Purpose/Value Collaborative Networks Block-Chain Concept 4

5 Social License / Contract Russell, Russell & Honea (2016) JBE...the authority of the social contract derives from members of a community establishing norms, such as consumers, and a firm consenting to macro contracts that reflect hypothetical agreement to principles and micro social contracts reflecting actual but informal agreements. Results of study of - CSR violations led to boycotts by consumers. Particularly mandated (vs voluntary) CSR stds violations and environmental awareness levels stronger impact on boycotts Proxy Monitor 2014: A Report on Corporate Governance and Shareholder Activism A study of trends from the 2014 proxy season in Fortune 250 companies by Copland and O Keefe - In 2016, a record percentage of shareholder proposals concerned social or policy issues. However Risky Business ----Australian Case: In 2014 media news -Australian National University was selling out of its shares (and six other resources companies) because they were not socially responsible, and doing harm based on Centre for Australian Ethical Research [CAER] Copper miner Sandfire Resources sued ANU and later dropped case. 5

Contextual Propositions for Accounting Research - Building Strategic Governance Social Enterprises --- How do we govern institutions that embed NFP / FP? Whose accountability dominates?

6 Contextual Propositions for Accounting Research - Building Strategic Governance Social Enterprises --- How do we govern institutions that embed NFP / FP? Whose accountability dominates? Should they dominate? CSR Governance in India --- Societal Impacts --- Indigenous and Migrant Challenges? Risk Management Disclosure Climate Change-related Risk Impacts Financial Stability Board-led There is Hope! 6

7 Social capital theory Shared Cognition Meaning of Risks Social Impact Structural Non-linear Timely Collaborative Agile Relationships Trust Adaptive Networks BONDING VS BRIDGING MECHANISMS Nothing ventured Nothing gained! 7

8 THANK YOU & Over to You! 8

International Labour Organization. Topic A: Human Rights in Regards to Multinational Corporations and other Business Entities

International Labour Organization Topic A: Human Rights in Regards to Multinational Corporations and other Business Entities There can be no peace without development, no development without peace, and