The hot subject right now is corporate governance, or lack thereof (ahem, banks). Questions have been raised on the role of boards and what exactly is their responsibility to stakeholders (not just shareholders).

A couple of interesting developments in this discussion: APRA's independent report into the Commonwealth Bank's governance, culture and accountability; and the ASX Corporate Governance Council's consultation paper on its Corporate Governance Principles and Recommendations.

The common message in the APRA report and ASX paper is that boards must have regard to the views and interests of a broader range of stakeholders than just shareholders. This principle is arguably already part of the law, but it is very clear that community expectations are shifting strongly in that direction.

APRA chairman Wayne Byres nicely summarises where we think the law is headed: "the findings of the [APRA] Report provide important insight for all financial institutions, particularly about the need to maintain a broad focus on all aspects of risk and stakeholder interest and not allow financial success to mask or detract from other important measures of an institution's performance and risk profile."

The proposed changes to the ASX Corporate Governance Principles and Recommendations also highlights the shift in thinking. The biggest proposed change is a substantial redraft of principle 3 expanding "ethical responsibility" to include culture and social responsibility. The Council explains this change is to recognise the fundamental importance:

of a listed entity's social licence to operate and the need for it to act lawfully, ethically and in a socially responsible manner in order to preserve that licence; and that a listed entity must have regard to the views and interests of a broader range of stakeholders than just its security holders.

So what is next?

The APRA report and ASX paper highlight how the corporate governance landscape is changing and, thanks to the banking Royal Commission, now at an accelerated rate. Here are our three predictions of what is to come (and we are excited to say, we don't think it is just wishful thinking):

Directors will be obliged to ensure that their company's culture promotes acting lawfully, ethically and in a socially responsible manner in order to preserve its social licence to operate. Consumers, where they have a choice, will choose an entity that is a certified B Corp (or a similar third party standard of general social benefit practice) over another company. As a result, market forces will result in more companies seeking B Corp or equivalent certification. A new voluntary corporate structure, to be known as a "benefit company", will be introduced into Australian corporations law.