The Australian Institute of Company Directors (AICD) has released a practical guide to help directors identify and elevate stakeholder voices to the board.
Elevating stakeholder voices to the board: A guide to effective governance comes after recent high-profile governance scandals highlighted the resulting damage from decisions which are disconnected from stakeholder interests.
The guide was developed following the release of a consultation paper on the AICD’s Forward Governance Agenda – a program which sought to respond to debates on governance practice and standards.
AICD CEO and Managing Director, Angus Armour said boards need to understand the environment in which their organisation operates, including the interests and concerns of their stakeholders, in order to govern effectively.
“Over the past year we have seen examples of the damage that can be done when the stakeholder voice is lost in corporate decision-making.
“It’s important that directors take the long view and carefully consider inputs, particularly those external to their organisation, required to arrive at well-informed, value-creating decisions.
“It is hoped that our guide will provide an effective framework for stakeholder governance to play a part in that process,” Mr Armour said.
The guide includes experienced director perspectives on the importance of stakeholder engagement in governance and also explores:
- The board’s role in stakeholder governance;
- Directors’ legal duties in relation to stakeholders;
- Principles boards should apply to ensure effective stakeholder governance;
- How boards can balance the interests of stakeholders when making decisions; and
- The hallmarks of good stakeholder governance.
The guide incorporates insights and advice from Australian stakeholder groups representing customers, employees, suppliers, Aboriginal and Torres Strait Islander people, as well as activists and community groups on matters such as climate change, human rights and workforce culture.
The guide also offers key questions boards should be asking and features case studies demonstrating effective stakeholder governance.
