The latest draft of the ASX Corporate Governance Principles and Recommendations has me thinking—is evolution enough in a world that’s rapidly revolutionizing? Personally, I think this is the central tension at the heart of the 5th Edition. On the surface, the draft feels like a tidy-up exercise: simplifying, modernizing, and removing redundancies. But as someone who’s watched governance frameworks evolve (or stagnate) over decades, I can’t help but wonder if this is a missed opportunity to truly lead rather than just keep pace.
The Diversity Dilemma: Flexibility or Indecision?
One thing that immediately stands out is the draft’s handling of diversity and inclusion. The decision to maintain the 30% gender target for ASX 300 boards is, frankly, underwhelming. Yes, it’s a pragmatic move given the global backlash against DEI initiatives, but it also feels like a retreat. What many people don’t realize is that the earlier, more specific recommendations were instrumental in driving progress—gender diversity on ASX 300 boards jumped from 38% to 73% between 2019 and 2025. Now, by shifting to a principles-based approach for other diversity characteristics, we risk losing that momentum.
From my perspective, this isn’t just about targets; it’s about accountability. The ‘if not, why not’ framework was designed to prevent performative disclosure, but without concrete benchmarks, we’re leaving it to boards to decide what diversity means. That’s fine in theory, but in practice, it often translates to lip service. If you take a step back and think about it, this approach assumes boards will prioritize diversity without external pressure—an assumption that history has shown to be flawed.
Geopolitical Risks: Are We Burying Our Heads in the Sand?
Another area that raises eyebrows is the draft’s treatment of geopolitical risks. In a world where supply chain disruptions, sanctions, and great-power rivalries are reshaping business landscapes, the Principles seem oddly detached. Yes, removing redundant recommendations is sensible housekeeping, but replacing them with generic references to ‘material risks’ feels like a cop-out.
What this really suggests is a disconnect between the governance framework and the realities boards face. For smaller listed companies, in particular, the assumption that they already have the expertise to navigate these complexities is, in my opinion, overly optimistic. A detail that I find especially interesting is the absence of specific guidance on issues like sanctions compliance or sovereign risk assessment. These aren’t niche concerns—they’re existential threats for many companies.
The AI Elephant in the Room
Perhaps the most glaring omission in the draft is its near-silence on AI and cyber governance. AI gets a single mention, tucked away in the explanatory material, as a tool for summarizing board papers. This is astonishing. By 2027, when the 5th Edition takes effect, AI will be embedded in everything from credit decisions to regulatory compliance. The real question isn’t whether directors should read their own board papers—it’s how boards should oversee algorithmic systems that make decisions with legal and financial consequences.
What makes this particularly fascinating is the contrast between the pace of technological change and the glacial speed of governance frameworks. Cyber security, too, is treated as an afterthought, lumped in with biodiversity and worker underpayments. For companies that have experienced material data breaches, the lack of specific guidance is not just surprising—it’s alarming.
Leading vs. Lagging: The Role of the Principles
This brings me to a broader question: should the Principles lead or lag? Historically, they’ve played a dual role—setting a compliance floor and signaling emerging governance expectations. But the 5th Edition seems to position itself as complementary to legislation rather than anticipatory. This raises a deeper question: if the Principles only address matters already regulated, what value do they add?
In my opinion, the most valuable contributions of earlier editions were precisely those recommendations that ran ahead of legislation. AI governance, cyber security oversight, and algorithmic accountability are prime examples of areas where a forward-looking framework could provide meaningful guidance without duplicating existing law. By retreating to a descriptive role, the Principles risk becoming redundant.
Crisis Governance: The Missing Piece
Finally, there’s the issue of crisis governance—or rather, the lack thereof. The draft includes some useful elements, like malus and clawback mechanisms, but it stops short of providing integrated guidance on how boards should operate under acute stress. This is a significant oversight. History has shown that governance frameworks are tested most in crises, yet the 5th Edition offers little beyond periodic performance evaluations and retrospective reviews.
What many people don’t realize is that crisis governance isn’t just about having a plan—it’s about testing and refining that plan under conditions of uncertainty, conflict, and time pressure. A recommendation for boards to establish and periodically test crisis protocols would, in my view, be a game-changer.
Final Thoughts: Evolution or Stagnation?
The 5th Edition is, without doubt, a cleaner, more accessible document. It reduces compliance burdens and reinforces the ‘if not, why not’ approach, which is commendable. But as I reflect on it, I can’t shake the feeling that it’s playing it too safe. Governance frameworks should be slightly uncomfortable—they should push boards to confront challenges they might otherwise defer.
In my opinion, the draft risks producing a document that’s unimpeachable in principle but lacking in substance. The consultation period, closing in September 2026, is a critical opportunity to address these gaps. If we want the Principles to remain relevant through the end of this decade, they need to do more than evolve—they need to lead.
