Regulating for Women on Corporate Boards: Polycentric Governance in Australia

Abstract

This article focuses on the Australian Stock Exchange's proposals on diversity in the Corporate Governance Principles and Recommendations which took effect in 2011. It argues that the manner in which Australia is regulating for more women on corporate boards of publicly listed companies is an example of polycentric governance. In the first section this article examines the prominent reasons for increasing the number of women on corporate boards, all of which are contested. This contestation makes a centralized regulatory response, such as the imposition of legislative mandates, unlikely in Australia. The second section considers the manner in which this gender deficit can be addressed and the tools available to do so, namely through hybrid regulation in the form of hard law and soft law. In order to do so the national differences to soft law regulatory approaches in comparable countries are examined. The third section closely examines the polycentric nature of Australian regulation by scrutinizing the parties involved in regulation in Australia and their communicative interactions. These parties are cooperating in trying to change corporate behavior and create new interpretative communities. The fourth section tackles the main criticism of the polycentric approach — that the stakeholders of medium and smaller listed companies either do not, or cannot, have an influence on the policies of these companies. It argues that there is an important role here for an institution to act as a fulcrum point to nudge these companies towards compliance making polycentric governance work. Although there could be a variety of institutions that could undertake this role, it is argued that in this site, that fulcrum position is best occupied by the state in Australia.