With a new laws and governance focus for 2025, Australian directors and boards can look forward to a busy and challenging year, where expectations and accountability remain front-page news.
In terms of regulatory direction, new laws are taking effect that should be on the radar of all Australian boards. Further elements of workplace law reforms passed last year have now taken effect — most notably, criminalisation of deliberate wage underpayment from 1 January. The civil liability threshold has been lowered, and civil penalties increased fivefold.
New cybersecurity laws passed late last year set new obligations to report (to government, not publicly) on ransomware payments from 30 May, and a new “limited use” provision to support sharing information with the Australian Cyber Security Centre during a cyber incident (effective now). AICD’s updated Cyber Security Governance Principles
Australia’s new climate reporting regime takes effect, applying to reporting periods commencing from 1 January 2025 for Group 1 entities (roughly equivalent to ASX 200 firms). See the AICD’s guide for directors
Substantial reforms to the Privacy Act 1988, including a new statutory tort, take effect from June. Directors in the aged care sector will focus on the new Aged Care Act, taking effect from 1 July. And financial services firms will deal with the expansion of the Financial Accountability Regime (FAR) from March, and APRA’s major review of governance standards during this year.
ASIC has also flagged that it is continuing its focus on greenwashing and financial services market conduct and consumer outcomes, as well as closer review of private markets and equity. ASIC chair Joe Longo ended the year with a call-out of Australia’s excessive regulatory complexity, and the AICD looks forward to working with ASIC on options to simplify corporate regulation.
The broader governance environment — and the role of boards in driving strong governance outcomes and accountability — will continue to be a political, media and stakeholder focus.
Globally, geopolitical changes herald new divisions and dynamics, from tariffs to climate change. Domestically, the upcoming federal election will see cost of living pressures dominate, with the role and perception of business in the community a factor in potential responses.Corporate issues and increased expectations of boards will keep governance in the spotlight, with regulators and stakeholders proactive in their focus on any perceived failures.In preparing for an eventful year, it is worth directors taking some time to review how their boards are positioned and prepared.
There are two governance reviews that can help with reflection.
Firstly, the 2024 Qantas Governance Review, with its review of board effectiveness, culture, CEO oversight and non-financial risk.
Secondly, APRA’s 2018 governance review of CBA.
Themes of board effectiveness and oversight of non-financial risk are explored in each of these very different reviews, and the lessons they offer are great reflections for all boards and directors.
AICD director primer on circular economy
The Australian government released a new Circular Economy Framework in December 2024, with the aim of doubling the circularity of the economy by 2035. The AICD has now launched a new resource for directors on opportunities in the circular economy.
In a circular economy, materials and products are kept in use longer, through longer-lasting and repairable products, and improved waste and recycling infrastructure. Policymakers around the globe are focused on supporting more efficient and productive use of resources. Governments and experts argue this is better for the environment and for business.
Australia has significant opportunities for improvement — our economic output per kilogram of materials consumed is less than half the OECD benchmark. The new national framework lists industry, the built environment, agriculture and food, and resources as priority areas of focus, and sets targets to:
- Reduce Australia’s per capita material footprint by 10 per cent
- Boost Australian material productivity by 30 per cent
- Safely recover 80 per cent of resources.
The Productivity Commission has also been tasked with a review of the benefits of a circular economy, to report in the second half of 2025.
To support boards and directors, the AICD has collaborated with Accenture on guidance for circular economy principles, business models and practical steps for the private sector.
Opportunities in the circular economy: A primer for Australian directors launched in January 2025 and is available through the AICD’s Climate Governance Initiative website
Modern slavery reporting reforms
Late last year, the Australian government tabled its response to the independent review of the Modern Slavery Act 2018. The review, led by Prof John McMillan AO, made 30 recommendations and the federal government has agreed, or agreed in principle, to 25 of these. Key positions worth noting by directors include:
- No change to the $100m reporting threshold (the AICD argued against a lower threshold)
- No new obligations for due diligence systems (the AICD argued against new obligations at this time)
- New civil penalties for reporting breaches, to be developed over 2025
- Consultation on expanding reporting criteria to include incidents or risks identified, complaints and consultation processes
- Declarations of high-risk regions, suppliers and products by the new Anti-Slavery Commissioner (the AICD endorsed this recommendation).
The government is expected to consult on changes during 2025 and the AICD will be an active participant to ensure director perspectives are considered.
The ACCC has also issued industry guidance on its website on how companies can work together on modern slavery prevention initiatives without contravening Australian competition law.
This article first appeared under the headline ‘What's on the radar’ in the February 2025 issue of Company Director magazine.
Louise Petschler GAICD is General Manager Education & Policy Leadership at the AICD.
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