The introduction of the Companies (Directors’ Duties) Amendment Act 2023 has some concerned about unintended consequences for directors and their decision-making.
There is concern that directors will now need to consider triple line factors as part of the process of maintaining a company’s reputation and brand equity.
Since August, directors are in no doubt that they can consider matters other than profits, giving more weight to environmental, social and governance (ESG) factors when deciding what is in the best interest of their company.
If you’re a director that is wondering what to do here, there are some key steps you can take to ensure you are across this:
- Get ESG factors on your agenda.
- Understand what risks they pose.
- Understand how these risks are being managed.
- Get external advice if needed.
- Set up a Risk Management Committee if you don’t already have one so you can actively consider and address issues.
- Document steps taken to identify and access any ESG factors that might affect the business.
This change may actually achieve very little in the end as it largely reflects what is already considered by many to be best corporate practice.