How to navigate the reforms

Governance reform planned for 2025 signals a clear shift towards enhancing governance standards and accountability in New Zealand. This comprehensive approach challenges boards to adapt and modernise their practices, and adopt a more holistic approach to governance, including the need for boards to exercise enhanced caution and accountability in managing financial risks and corporate obligations. 
 
 This increased focus on fiduciary responsibility and transparency aligns with a global movement which emphasises transparent governance reporting, aligning board decisions with corporate strategy, and demonstrating outcomes. 
 
For directors, the heightened accountability places us in a dual role: first, delivering strategic oversight to the company and, second, as guardians of sound governance and facilitators of an evolving regulatory environment. 
 
While some aspects will be simplified, the net impact of this increasing complexity of obligations can also impact on board effectiveness if not well balanced against our core accountabilities of having a clear vision for the business and developing and overseeing the execution of the organisation’s strategy. 
 
Boards need to have a clear vision of what they want to achieve, stay with it and have all the governance and management structures working towards achieving it. We must be well-informed of changes in legislation and proactive in implementing best practice. This includes having the systems and processes to support regulatory obligations. 
 
Another important aspect of these reforms is the expectation for New Zealand boards to align governance activities with stakeholder interests.

This requires boards to articulate and communicate their governance approach transparently. By preparing and publishing governance statements, boards can demonstrate their commitment to accountability and align their actions with both shareholder and broader stakeholder expectations. 
 
For example, a board that consistently reports on its governance objectives and outcomes helps build trust and clearly communicates the value that robust governance brings to the organisation. 
 
Looking forward, boards in New Zealand must adapt to rapid technological and social changes that regulations often struggle to keep pace with. Embracing voluntary codes and best practices, especially in areas such as artificial intelligence and emerging technologies, can allow boards to address gaps in current regulation. 
 
Such foresight will enable directors to anticipate emerging risks, prioritise ethical considerations, and build stakeholder trust by demonstrating a commitment to responsible governance beyond the minimum statutory requirements. 
 
We need to remain cognisant of the need to continually elevate our governance practices. For independent directors, the challenge lies in ensuring we are not only responsive to regulatory mandates but are also forward-thinking leaders in governance. 
 
By cultivating a proactive, informed, and transparent governance approach, we can effectively navigate the complexities of these reforms and enhance the resilience, accountability, and reputation of the organisations we serve. 

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