Everyone backs openess in corporate governance but, in Australia, there is a row brewing over new rules that would see disclosures about company directors become personal.

A proposed new corporate governance code for the Australian markets asks listed companies to go beyond reporting gender balances on boards to report other diversity measures, which have been taken by some to mean sexuality and whether directors may come from Indigenous ethnic groups.

A report in the Australian Financial Review cites one governance advocate, Diane Smith-Gander, chair of Zip Co, who views the diversity measures as going too far.

“I don’t support the extension of the guidelines to include rules about the personal characteristics of the directors.

“I don’t think anyone should be compelled to make disclosures about their personal information if they don’t want to.”

The fifth edition of the Australian Corporate Governance Council Principles and Recommendations also asks boards to lift board gender diversity to a form of parity—40% women, 40% men and 20% from any gender.

Recommendation 2.3 asks boards that are considering diversity characteristics for board members beyond gender to “disclose those characteristics”.

It also calls on boards to reveal a “measurable objective and timeframe for achieving gender diversity”.

‘Diverting significant resources’

The Governance Institute of Australia, a national association, has worried that increasing demands for governance and disclosures are going too far.

A response to the consultation says the governance requirements have reached the level of “excessive” for some members. “In our members’ experience this is already diverting significant resources and boards’ and companies’ attention away from creating shared value for stakeholders towards a ‘tick-the-box’ approach.”

The new code asks companies to disclose the “effectiveness” of their diversity policies. Some also viewed that as a step too far. The organisation Chartered Accountants Australia and New Zealand instead wants boards to disclose the “process the board undertakes to determine the effectiveness of their diversity and inclusion policy”–a very different thing.

The UK last year revamped its own corporate governance code, the first refresh since 2018.

The focus, however, was on new responsibilities on internal controls and a stress on the flexibility of its “comply or explain” approach to code measures.

The code emerged as a campaign got under way from the Capital Markets Industry Taskforce, a lobby group chaired by the chief executive of the London Stock Exchange, aimed at a “reset” of UK governance to make the country more competitive.

The new UK code disappointed others by dropping proposed new ESG disclosures. At the time, Luke Hildyard, director of the High Pay Centre, a think tank, said: “ It suggests that efforts to denigrate environmentally and socially conscious business are becoming increasingly effective.”