KPMG welcomes the opportunity to respond to the ASX Corporate Governance Council's Consultation Draft for the fifth edition of its Corporate Governance Principles and Recommendations.
We welcome the Consultation Draft's strong focus on evolving investor and community expectations in relation to corporate conduct, culture, risk management, stakeholder relationships, reporting, and remuneration.
Overall, KPMG considers the changes set out in the Consultation Draft's valuable in driving contemporary best practice governance aligned to the dynamic nature of the environment in which Australian listed entities operate within. The proposed changes will lead to greater transparency and thus, a higher level of trust in corporations. In addition, the changes are aligned with the goal of reducing compliance costs, increasing productivity, and promoting transparency and diversity in corporate governance.
The proposed edition's most significant changes are to Principle 3 (instil a culture of acting lawfully, ethically, and responsibly), echoing the focus globally on environmental, societal and governance considerations. The amendments proposed for this Principle are however, not entirely supported due primarily to the need for more clarity in the wording of the Principle and the underlying commentary.
Overall, KPMG strongly supports the measures that reduce compliance costs and increase productivity. The removal of duplicative reporting requirements is sensible and ensures consistency with statutory requirements.
KPMG's submission notes the firm's strong support for gender equality on boards and supports a gender-balanced board within a specified period. It also advocates for considering cultural diversity to achieve true diversity of thought in the boardroom and decision making which considers key stakeholders. KPMG also supports disclosing the effectiveness of diversity and inclusion practices.
KPMG also supports the current code of conduct reporting requirements although argues against additional whole of workforce reporting requirements that may increase costs with little overall benefit.
KPMG supports disclosing auditor tenure in annual financial reports and recommends clarifying the definition of auditor tenure and providing transparency on how the tenure duration is determined.
