Adding value to governance in aged care

A practical guide for any potential or current member of a board of an aged care provider

 

The aged care sector plays a vital role in our social fabric by caring for some of Australia’s most vulnerable people. More than one million people currently receive aged care services in Australia — by 2050 it is expected that more than three and a half million Australians will be receiving aged care services as the Australian population ages and advances in medical technology increase Australians’ life expectancy.

We have developed this guide for the boards of organisations that provide aged care services. If you sit on the governing body of aged care provider or are considering doing so, this practical guide will help you:

• deal with the issues challenging your organisations
• comply with your obligations
• understand how you can best add value to the governance of your organisation.

 

Doing your due diligence: Beyond the financials

 

Two years ago, I was fortunate enough to be nominated for a position on a national board of a prestigious, internationally recognised Australian organisation. It was my first board position and directorship, and I was immensely pleased to be starting in such a way.

Naturally, I did the recommended due diligence: director’s indemnity insurance, financials of the organisation, calibre of the other board members, all of which seemed perfectly satisfactory.

Learning the hard way that financials aren’t the only important factor

However, after two years, I have just resigned, finding it is not a board that I feel comfortable being on. Problems included extensive in-fighting and division between several of the directors, as well as an antagonistic relationship between the senior executive and the board, with all attempted direction by the board met by the CEO with derision and frustration.

There had been a long history of the board being simply advisory and essentially just accepting and listening to what management was doing. However, circumstances had changed dramatically, and a firmer course of direction was needed. The management team, and particularly the CEO, simply could not adjust.

As a national board, with members located all around the country, they were also surprising old school about face-to-face meetings, rather than approaching things more sustainably and working more with hybrid or virtual meetings.

Finally, the meetings themselves were very long-winded and inefficient, taking up most of a day to get through agenda items that could easily be resolved in other ways.

So how do you go beyond the obvious and find out what sort of board environment you are potentially entering?

A deeper dive to assess your potential board appointment

My recommendations after my experience cover several key areas.

As well as the standard annual reports, ask if you can have access to at least a year’s worth of minutes and analyse these thoroughly. This should allow you to determine how these meetings run and what items are covered over an annual cycle. The important points to note are then the resolutions being made and the ongoing action list. This will provide insight into who is making the decisions (management versus board), who is acting on these and who is driving their closure.

As well as reviewing your fellow board members on standard platforms such as LinkedIn, if possible, reach out to them and see if you can make a time to discuss the board procedures and functionality. By speaking to members other than the chair (who may be more reserved), these directors can provide valuable insight into how the board functions and how satisfied they are with the board workings.

It’s also a good idea to ask them about the time commitments – these can be quite generic in board advertisements but an existing director will have better insight into the nature of meetings, the number of ad hoc meetings that occur outside of the schedule and the expectations of the management and other directors in terms of participation and contributions, such as sub-committee roles, strategy planning sessions and board and management workshops that may occur outside of the standard board program.

A review of the meeting minutes and discussion with existing board members can also provide insight into the function of the board and the role of the directors. It may be a position where the intention is to maintain the status quo and provide guidance, or maybe change management is needed and the organisation is going through a transition.

Keep your own goals in mind

Does this opportunity match your skill set and your own objectives? Are you wanting a position where you can really contribute and make a difference, or are you looking to just learn the skills and not rock the boat? Be very sure of what it is you are expecting from the position and that you have the temperament and skills to achieve what is needed. Even in my short time as a director so far, I had the sense that others were in the role to make a name for themselves and aggressively pursue their own agendas, rather than consider the needs and operating environment of the organisation they were working with.

Finally, be as objective as possible when deciding whether to go ahead with the position. Whilst the board position may look good on your CV and seem a flattering offer, if the organisation does not align with your values, or provide for your expectations, you may feel continually compromised or undervalued.

 

Mandatory Reporting and the opportunities for Transformational Governance

by Kate Dundas, Executive Director, UN Global Compact Network Australia
(Sponsored article)

On Thursday 22 August 2024, the Senate passed the mandatory climate reporting bill, putting climate reporting firmly at the forefront of governance in Australia.

The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Bill) implements Australia’s first mandatory climate reporting regime. This landmark legislation puts climate reporting at the heart of the Corporations Act 2001 (Cth) (the Act) and updates the Australian Securities and Investments Commission Act 2001 (Cth). The legislation will be supported by sustainability and assurance standards made and maintained by the Australian Accounting Standards Board (AASB) and the Australian Auditing and Assurance Standards Board (AUASB).

Who does this legislation impact?

More than 6,000 entities will be required to report under new climate-related disclosure requirements in the coming years. The legislation will be phased in on the basis of the size of an entity or level of emissions.

Group 1, 1 January 2024:

• Two out of the following: $500 million or more in consolidated gross revenue, $1 billion or more in consolidated assets, > 500 employees.
• Asset owners are scoped out of Group 1.
• National Greenhouse and Energy Reporting reporters above the publication threshold.

Group 2, 1 January 2025:

• Two out of the following: $200 million or more in consolidated gross revenue, $500 million or more in consolidated assets, > 250 employees.
• $500 billion or more assets under management.
• All other National Greenhouse and Energy Reporting reporters

Group 3, 1 January 2026:

• Two of the following, $50 million or more in consolidated gross revenue, $25 million or more in consolidated assets, > 100 employees.

What does this legislation include?

The Senate-approved Bill requires relevant entities to disclose their climate-related plans, financial risks and opportunities in accordance with Australian Sustainability Reporting Standards (ASRS) made by the Australian Accounting Standards Board (AASB). The standards are expected to be released in September 2024.

Required information will include disclosures on climate-related risks and opportunities and on scope 1,2 and 3 emissions.

What is the impact on Company Directors?

Directors will be required to declare whether, in the directors’ opinion, the substantive provisions of the sustainability report are in accordance with the Act and the sustainability and assurance standards. Accordingly, under the Act, directors can now be held liable for greenwashing if climate disclosure statements are misleading.

Entities will be provided relief for a fixed three-year period for disclosures relating to Scope 3 emissions and certain climate-related forward-looking statements. For reports issued between 1 July 2025, and 30 June 2028, only the regulator will be able to bring an action relating to breaches of relevant provisions made in disclosures of scope 3 emissions and climate-related forward-looking statements, and the remedies available to the regulator will be limited to injunctions and declarations. Beyond this period, the existing liability arrangements will apply.

 

The UN Global Compact Network Australia (UNGCNA) has been hosting an Advanced Climate Reporting Community of Practice with Australia’s leading ASX-listed companies to explore emerging issues around climate disclosure. This included a focus on building director capability alongside governance and legal matters associated with climate-related disclosures, such as greenwashing. Other topics from the Community of Practice included integrating scenario analysis into corporate and financial planning processes, scope 3 supplier relationships and the supporting technology necessary to streamline data for reporting.

These insights will form the basis for a broader Community of Practice in 2025, where UNGCNA participating businesses can upskill and network with peers around non-financial disclosures.

A transformational opportunity

Treasurer Jim Chalmers stated that “these critical reforms provide investors and companies the clarity and certainty they need to support the net-zero transformation and further strengthen Australia’s reputation as an attractive destination for international capital.”

This is a climate-first, but not only, approach. Nature and biodiversity disclosures, while not currently mandatory, are widely considered to be next for Australian businesses. The time to start gearing up for broader disclosures is now.

The opportunity for boards to oversee the transformation potential that sustainability reporting can bring is both challenging and exciting.

This past year, the world recorded its first full year exceeding the 1.5C threshold of the Paris Agreement. “We are in a climate and nature emergency,” asserted Assistant-Secretary General and CEO of the United Nations Global Compact, Sanda Ojiambo in a recent address. “Business leaders are increasingly recognising the urgent need for innovative solutions, without which they cannot hope to thrive as the global economy transitions to net-zero.” Indeed, we are fast-tracking to a point of no return.

In regard to Australian businesses, UN Global Compact Network Australia Director Kate Dundas explains that board directors need to assess climate and nature impact beyond their legal duty and incorporate efforts into their core strategy. “We are fast tracking past 1.5C of the Paris Agreement. We just had our hottest year on record. We have surpassed six of the nine planetary boundaries named by the Stockholm Institute. The most pressing question for directors should be, how might we leverage reporting efforts to reimagine Australian business efforts so that we can operate within the planetary boundaries and the Paris Agreement?”

 

The UN Global Compact Ten Principles offer a framework for transformation that ensures that intersectional sustainability across environment and climate change, business and human rights, labour and anti-bribery and corruption is embedded into company strategy and operations.

Find out more

 

This October, off the back of the United Nations’ Summit of the Future, the UN Biodiversity Conference (COP16) in Cali, Colombia, the UN Climate Change Conference (UNFCCC COP29) in Baku, Azerbaijan and the inaugural Global Nature Positive Summit, the spotlight will be on Australia.

In a watershed moment for corporate accountability, UNiting Business LIVE Australia, the UN Global Compact Network Australia’s flagship conference, will equip businesses to navigate ongoing socio-environmental and regulatory changes.

Join the sharpest minds locally and globally to help us all lead, learn and connect and to shape what a sustainable future looks like for Australia.

The event’s program is tailored to the bespoke needs of Australia’s C-Suite and Chief Sustainability Officers (CSOs), board members, and emerging and future sustainability leaders. It will equip them with technical and actionable solutions to challenges at the intersection of net zero, nature-positive, human rights and governance.

Attendees will leave armed with practical knowledge to implement in their organisation and drive positive change for the future of business, Australia and the planet.

Hear from Sanda Ojiambo, Assistant Secretary General and CEO of the United Nations Global Compact, as she provides a global context to sustainable development.

Hear from Christine Holgate, CEO of Team Global Express, as she addresses the tension between publicly prioritising sustainability and driving meaningful action for sustainable change.

Hear from Debby Blakey, CEO of Hesta, as she explores how investor influence can drive sustainability impacts and organisational change at a board level.

Hear from The Hon. Matt Kean, Chair of the Climate Change Authority, as he explores the history, connections, strategies, and collaborations between government and business that are essential to propel us towards a net-zero future.

Over 60 speakers will be joined by Australia’s leading businesses, boards and civil society to determine what the future of Australia can become.