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Corporate Governance Assignment: Analysing The Key Issues And Practices Of Woolworths


Task: Select an ASX listed company and prepare a report on corporate governance assignment analysing the key issues involved in the recent changes in the principles of corporate governance.


The aspect of corporate governance examined in this study of corporate governance assignment implies the rules and processes set by the governing bodies to ensure good governance in the company and achieving the business results in the best of the interest of all key stakeholders. The concept of corporate governance is based on the fundamental concept of betterment of all the stakeholder groups such as shareholders, employees, lenders, environment, society, and government at large (Tricker and Tricker, 2015). Further, the concept of corporate governance focuses on spreading ethical behaviour within the organization, adoption of best practices and compliance with laws and regulations. The laws regarding corporate governance have been strengthened by amending them from time to time in the light of prevailing circumstances and changing conditions. In the light of this discussion, a report has been prepared here that deals with analysis of key issues involved in the recent changes made in the corporate governance principles. Further, the report analyses corporate governance practices of Woolworths, an ASX listed company, and it also includes discussion on implications of amendments in corporate governance principles on the company.

What are the complexities and key issues identified in this corporate governance assignment?
The corporate governance council of ASX has released 4th edition that includes changes to the corporate governance principles and new recommendations for the listed entities operating in Australia. The two major changes have been observed in the principle 3 and 4. The principle 3 has been amended with the inclusion of three new recommendations in it. Further, the principle 4 has been amended with the inclusion of one new recommendation (ASX.Com, 2019).

The recommendation 3.1 in principle-3 asks the listed entities to include and articulate its values in the corporate governance report. The emphasis is on inculcating culture of honesty and integrity across the organization at all levels. Earlier the principles were based on the “social licence to operate” concept which now through amendment in the principle-3 have been brought to social reputation and standing. It is mentioned in this corporate governance assignment that the organization is required to maintain such culture that supports its status in the society and builds on it (ASX.Com, 2019).

Further, recommendation 4.3 in principle 4 states that the listed company would be required to make disclosures in respect of process adopted in verifying integrity of the corporate report issued by it. This requirement is in respect of the reports which are not reviewed or audited by the external auditor. The changes made in the new 4th edition of the corporate governance rules are expected to alleviate the poor governance issues (EY, 2019).

These new changes in the corporate governance reporting would raise issues and challenges for the listed entities. The entities now would be required to make changes in their policies, values, and governance reports. The organization structure would also be needed to be relooked. The changes in principle 3 seek to enhance diversity in the board. This implies that the companies now would be required to reconstruct the board of directors to align it with the corporate governance rules. The reconstruction of the board of directors would big challenge in front of the company (EY, 2019).

Further, the companies would face biggest challenge in spreading the values of honesty and integrity at all levels. The listed companies operate at such a large scale that ensuring honesty and integrity from the lower level to the upper level would become a real challenge (EY, 2019).

Critical Analysis of Corporate Governance of Woolworths
The two major changes as enunciated in the principle 3 and 4 in this corporate governance assignment would change the corporate governance mechanism in Woolworths at a large scale. These changes are expected to further strengthen and enhance the governance mechanism within the company. The principle 3 emphasizes on creating a culture of honesty. The concept of “social licence to operate” is changed to “reputation and standing in society” which is expected to enhance the corporate governance in the company. Due to the changes in principle 3, Woolworths would be required not only to concentrate on the needs and interest of the shareholders but also the interest of the other stakeholders such as employee, society and environment.

The governance statement of Woolworths reads as, “Good corporate governance is central to Woolworths Group's approach to creating sustainable growth and enhancing long-term shareholder value” (Woolworths, 2019). The statement mentioned in this corporate governance assignment is focused on maintaining sustainability and thereby focusing on creating long term wealth for the shareholders. Thus, as of now, the centric point of corporate governance at Woolworths is the interest of shareholders. However, the changes made in the principle 3 would require this focus to shift from solely on the shareholders to all the stakeholders. The current corporate governance mechanism at Woolworths has been prepared on the basis of third edition thus, as soon as, the company adopts the 4th edition it would require changing its corporate governance policy (Woolworths, 2019).

Further, the new edition of corporate governance policy issues by the council included many changes in respect of duties of the board of directors and executive management of the company. Accordingly, now the board of directors would assess as to whether there has been any non-compliance with the core values of the company at any level. The executive management would be required to report to the board not only the financial matters but also the matters connected with the non-compliance with the defined values of the company. Due to this change in the board’s responsibilities and enhanced oversight mechanism, the corporate governance at Woolworths is expected to strengthen and further enhanced (Woolworths, 2019).

As discussed in this corporate governance assignment, the principle 4 brings in new requirement regarding authentication of the non-audited or unreviewed corporate reports issued by the company. This change enhances the validity of the reports issued by the company and it is expected to enhance the trust of investors. The possibilities of manipulations on the periodic reports is going to be reduced by this change in the corporate governance policy. The manipulations in the financial statements is an act of fraud which has caused many established corporate to fail and thus, this point requires serious attention of the policy makers. Manipulating the financial statement or the fact or data on other corporate reports could devastating for the reputation of the firm. Thus, the change brought in by the principle 4 will immensely improve the standard of corporate governance at Woolworths (Woolworths, 2019).

Comparison with Industry Peers
In respect of principle 3 which brings change with respect to spreading awareness of values and culture of honesty within the organization, it has been observed that Woolworth is more proactive as compared to Wesfarmers, its industry peer. The corporate governance policy at Woolworths mentioned in this corporate governance assignment provides explicitly that the duties of board of directors would involve designing and approving the company’s value and culture. Further, the duties would involve monitoring culture in the company. However, the provisions regarding monitoring compliance with the values and reporting non- compliance are not there. Woolworths would include these provisions with more prominence when it adopts the edition 4 and prepares the corporate governance statement under the changed provisions (Woolworths, 2019).

The corporate governance statement of Wesfarmers does not provide explicitly anything about the values and culture. Thus, here is the difference between the Wesfarmers and Woolworths in respect of designing values and culture and maintaining compliance with the company’s policy regarding it (Wesfarmers, 2019).

Regarding the principle 4, it has been found out that the corporate governance statement of both the companies is silent. The corporate governance statement of Woolworths does not provide for disclosure of the process adopted in verifying the integrity of the corporate report issued. Further, the same position has been observed in case of Wesfarmers. Thus, both the companies would require adopting these provisions in the forthcoming reporting on the corporate governance.

Based on the overall analysis done in this corporate governance assignment of corporate governance statements of two companies, it could be seen that corporate governance at Woolworths is stronger than Wesfarmers. Woolworth’s corporate governance statement covers the ethical and integrity issues in more detail and comprehensively than covered by Wesfarmers.

This report on corporate governance assignment discusses the corporate governance changes made by the new edition being issues by corporate governance council of Australia recently. The corporate governance council has come up with 4th edition of guidelines which provides for more detailed coverage of governance issues. The report analyses the changes made in the 4th edition in the context of Woolworths Limited. It could be articulated from the overall analysis of corporate governance assignment that Woolworth would require to make various changes in its corporate governance statement in the light of changes brought in by 4th edition. However, when comparing governance Woolworths with its peer Wesfarmers, it comes to the conclusion that Woolworths has stronger governance mechanism.

ASX.Com. 2019. Corporate Governance Principles and Recommendations 4th Edition. [Online]. Corporate governance assignment Available at: [Assessed on: October 06, 2019].

2019. The fourth edition of the ASX Corporate Governance Principles and Recommendations looks to transform non-financial. [Online]. Available at:$File/EY-asx-corporate-governance-principles-and-recommendations-update-2019-march.pdf [Assessed on: October 06, 2019].

Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and practices. Oxford University Press, USA.

Wesfarmers 2019. Corporate governance Statement 2019 Wesfarmers. [Online]. Available at: [Assessed on: October 06, 2019].

Woolworths 2019. Corporate governance Statement 2019 Woolworths. [Online]. Corporate governance assignment Available at: [Assessed on: October 06, 2019].

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