ASIC chief preaches “tough love”, says being a director isn’t easy and isn’t meant to be

Being a company director is tough and a wave of incoming regulations is unlikely to make it any simpler, Australian Securities and Investments Commission (ASIC) chair Joe Longo says, but following some basic precepts can help corporate leaders stay compliant with the rules.

Speaking at the Australian Institute of Company Directors summit on Thursday, Longo reflected on what he called a “complex and high-stakes” environment that is “characterised by an array of sometimes labyrinthine statutory obligations”.

“It’s tough love but being a director isn’t easy,” Longo said.

“If it were, anyone could do it.”

Beyond today’s existing requirements, corporate leaders can expect mandatory climate disclosures, cyber security concerns, and the role of AI to add new complexity to their roles, Longo said.

Referencing an American corporate director who recently appeared on a McKinsey podcast, Longo said that geopolitics, generative AI, sustainability requirements, and digitisation are making board directorship more complex than ever.

Boards are increasingly tasked with navigating corporate strategy, M&A activity, performance management, and talent acquisition, too.

“That’s every bit as true here in Australia,” he said.

While ASIC itself has pledged to assist many businesses as they adapt to new climate disclosure rules, a wholesale simplification of the system is not forthcoming.

Instead, Longo said leaders should lean in to the principles-based approach to director duties put forward by the Corporations Act.

Acknowledging that some may see the principles-based approach as vague and subject to interpretation, Longo said corporate leaders could adapt to incoming changes by continually asking the same set of questions.

Are you acting honestly?
Are you putting the company first?
Do you have a continuous curiosity to understand all aspects of the company’s core business and the risks associated with it? and
Are you challenging management to ensure your understanding is well-founded, and getting trusted professional advice?

Rolling through those questions, continually, will mean “you have a reasonable likelihood of compliance.

“You can not only comply, but thrive.”

You can read Longo’s full address here.