BOARDWORX BRIEFING | Diversity Policies
Welcome to this edition of the Boardworx newsletter, which serves as a reminder to ASX listed companies to ensure they address the Diversity recommendations in the ASX Corporate Governance Principles and Recommendations (ASX CCPRs), in the upcoming Annual Reporting season.
Change in ASX CCPRs – Diversity Recommendations
Amendments to the ASX CCPRs, published in July 2010, came into effect for financials years commencing on or after 1 January 2011.
For a significant number of listed entities, the period ended 30 June 2011 will be the first financial year end that they have to report on the new recommendations.
The recommendations in brief
The amendments and commentary have been published and are readily available in detail, but in summary they include:
Establish a policy concerning diversity and disclose the policy or a summary of it.
The policy should require the Board to establish measurable objectives for achieving gender diversity and assess annually the objectives and progress of achieving them.
Disclose the measurable objectives for achieving gender diversity set by the Board and the progress towards achieving them in the entity’s annual report.
Disclose in the entity’s annual report the proportion of women at three levels – employees in the whole organisation, women in senior executive positions and women on the board.
Recommendation 2.6 Commentary
Included in the corporate governance statement of the annual report should be a statement as to the mix of skills and diversity which the Board is looking to achieve in its membership of the Board.
Recommendation 8.1 Commentary
The Remuneration Committee should specifically consider remuneration by gender and report to the Board. Copyright Boardworx Australia Pty Ltd 2011 Want to unsubscribe? Email us at firstname.lastname@example.org www.boardworx.net.au
‘If not, why not’
The ASX had advised that it will be reviewing compliance to these amendments in the upcoming reporting season. If entities have not complied with the Recommendations, they need to provide a reason – the ‘if not, why not’ approach.
The ASX have reported that companies which materially fail to comply with the ‘if not, why not’ disclosure requirements will be individually written to, reminding them of their reporting obligations under Listing Rule 4.10.3.
Other issues to consider
(a) Other areas of diversity
These recommendations primarily deal with the topic of gender diversity – it is the topic d’jour.
The realm of diversity though is much more encompassing than the balance of men and women on the board.
The mix of membership of a board should include:
– Diversity of thought
– Diversity of professional background
– Diversity of age
– Diversity of ethnicity
Remember, board composition needs to be balanced and reflect the correct mix of skill-set to drive the business to achieve its strategic business goals.
(b) Investor relations
After the release of upcoming annual reports it will be interesting to monitor how the media views and reports on those companies who fail to implement a diversity policy and set gender diversity targets.
For all ASX listed entities, ensure that your corporate governance statement addresses the amended Recommendations.
Remember, if your entity hasn’t complied with the Recommendations, then a reason as to why not, needs to be provided.
For entities that have an existing diversity policy, ensure that the policy complies with the ASX CCPRs and interacts with other employment policies appropriately.
For those entities that don’t have a diversity policy, consider whether such a policy is appropriate for your organisation.
Boardworx can attend to drafting of your governance statement, review of your existing diversity policy or drafting of a new policy.