Fletcher Building, Ihumātao and the Case for Board Diversity in New Zealand
62 Pages Posted: 16 Jul 2020
Date Written: 2019
The lack of diversity on corporate boards is a serious issue in New Zealand. The most compelling argument for board diversity can be found in the recent decision by Fletcher Building to develop on Ihumātao, Māori sacred land. Using Fletcher Building and Ihumātao as an example, this paper takes a multi-faceted approach to building a case for board diversity in New Zealand. It establishes that considering minority stakeholder interests falls within the director’s duty to act in the best interests of the company. A diverse board is best able to achieve this function and mitigate the agency issues that arise between the company and stakeholders. Against this background, this paper begins to build a comprehensive case for board diversity through discussing traditional corporate governance theories. It establishes that corporate governance theories that consider the value in enhancing stakeholder relationships such as CSR are more appropriate with regard to board diversity and better reflect what is now understood to fall within the best interests of the company. To contextualise the issue, this paper outlines how board diversity fits into existing New Zealand corporate governance frameworks and current diversity statistics. The existing framework is ineffective and this paper suggests practical possibilities for reform that better address the value of board diversity. Finally, this paper theorises that the core partnership, active protection and mutual benefit principles of the Treaty of Waitangi are relevant in New Zealand corporate governance and can be used as a unique underpinning of board diversity.
Keywords: "board diversity", "fletcher building", "ihumātao", "companies act 1993", "corporate social responsibility", "shareholder primacy", stakeholder, "NZX Corporate Governance Code", "NZX Listing Rules"
JEL Classification: K00, K20
Suggested Citation: Suggested Citation