Welcome to our Board briefing for October.

With news in the past few weeks dominated by the Optus data breach, we hope that you have read the CHOICE article on what you can do to protect yourself if you were affected. The CHOICE team has already held discussions with key regulators about how to protect consumers and will be taking up the case for stronger data protection laws to reduce the risk of these sorts of breaches in the future.

The Board met by video conference on 23 September and discussed:

• financial performance in the year to date
• audited financial statements for 2021–22
• cybersecurity
• climate risk governance
• the content management system upgrade
• CHOICE's modern slavery statement
• the Annual General Meeting and Board election.

Financial performance

The management team provided an update on financial performance in the first few months of the year, with a particular focus on membership, which is our largest source of income.

While we entered 2022–23 with a historically high level of membership, it is not surprising that rising inflation is now having an impact, with the total number of memberships now starting to decline for the first time in more than two years.

The fact that we have many loyal, long-term members means that we can sustain some decline in membership, but the current economic conditions will make it more difficult for us to grow membership at the rate we had hoped to over the next few years. 

The management team has advised that it expects to be able to offset lower than expected membership growth in 2022–23 through careful cost management. We expect to roughly break even once we account for the costs of the content management system upgrade mentioned below. We have a healthy level of cash reserves that is partly intended to provide a buffer in difficult times, but the Board will closely monitor our financial performance and take a cautious approach to budgeting over the next few years, given that it's difficult to forecast when economic conditions will stabilise.

Audited financial statements for 2021–22

We received a report from our independent auditor, along with the audited financial statement for 2021–22.

We are pleased to report that it was a clean audit, with the auditor identifying no significant issues in financial reporting or controls. As you will see when you receive the financial statements with the notice of our upcoming AGM, we achieved a surplus of $389,534 consistent with the expectation we had set for members at the 2021 AGM. This allowed us to build our cash reserves to $13 million, providing a healthy buffer over the cash reserves floor set by the Board. This is particularly reassuring given the uncertain economic climate we face over the next few years.

The Chair of our Finance, Risk and Audit Committee, Samantha Challinor, will present the statements at the AGM and take any questions you may have.

Cybersecurity

Before learning about the Optus data breach, we had scheduled for further discussion at this meeting CHOICE's approach to cybersecurity.

This briefing focused on the key types of information that CHOICE gathers and the measures in place to mitigate any risk of a data breach. Thankfully, the types of information CHOICE holds are relatively limited – for example, we do not retain records of members' credit card numbers. We do, however, hold data such as names, contact details and information on membership history, some of which could be sensitive if released.

Management briefed us on a range of measures that have been taken to protect this information. While cybersecurity will require ongoing attention from the Board and within the organisation, we were satisfied with the steps that have been taken to date and the further action underway to minimise the risks of a data breach and respond effectively if one occurs.

Climate risk governance

Regulators and governments around the world are encouraging boards to actively consider climate risks as part of their approach to governance. At this meeting we spent some time discussing the key risks to CHOICE and whether we have the right mitigations in place to address them.

Our strategy is fit for purpose in this area, as it commits us to do more to help consumers who want to make sustainable choices. You have hopefully already seen this in some of the information that CHOICE is publishing. We have also committed to campaign on consumer issues affected by climate changes, such as the affordability of insurance in areas affected by natural disasters. Finally, we are committed to maintaining our carbon neutral status and continuing to reduce the level of direct carbon emissions generated by our operations.

One key risk that stood out is the CHOICE building, which is at some risk of flooding, especially as sea levels rise and weather events become more extreme. While we have already taken some steps to mitigate this risk, such as elevating expensive equipment in our labs, we will be considering what other mitigations are required.

Content management system upgrade

We have reported several times this year on a major technology project to replace the content management system that powers the CHOICE website.

We reported in our last briefing that the Board had received a report from an external review of our approach to this project. At this meeting, the Board approved an increase in the budget in order to engage a specialist agency to work alongside CHOICE staff to deliver the project. The Board also resolved to set up a small working group to work more closely with management and advise the Board on how it is progressing.

We will keep voting members updated through the year on the progress of this project and any impact on our overall financial performance.

CHOICE's modern slavery statement

As a result of changes introduced in 2019, organisations with revenue of over $100 million are required to consider the risks of modern slavery in their supply chains and report annually to the federal government. This is based on clear evidence that modern slavery is a problem in many countries, including Australia.

While CHOICE is not covered by this legislation as our turnover is too small, we consider it important to role model the sort of behaviour that we expect to see from businesses, especially as consumers become more interested in the ethical standards of the businesses they deal with.

Consistent with this approach, management had drafted a modern slavery statement for the Board to consider. The focus of this statement is on the risks involved in our own operations and in those of the major suppliers that we purchase products and services from. The key areas of risk identified involved cleaning services, the occasional use of contracted software developers based overseas, and the electronic equipment that we purchase for staff to use in their work. The draft statement identified the steps that had been taken to ensure that staff of suppliers in these areas are not victims of modern slavery.

The Board was happy to endorse this approach and the modern slavery statement has been published on the CHOICE website and will be reviewed annually.

Annual General Meeting and Board election

The Board approved the formal notice of the AGM, to be held at 6pm on Thursday 24 November. It will be held at the National Maritime Museum in Sydney, with the opportunity for members to participate via video conference. An informal member forum, where CHOICE staff will present on a selection of current issues and take questions and feedback from voting members, will be held from 4.45pm to 5.45pm. 

The Board also approved the information on candidates standing for election to the Board, which had been prepared by the Nominations Committee after reviewing written nominations and interviewing candidates.

You will receive the notice of AGM in early November, and it will include information on how to register to attend and instructions on how to vote in the Board election.

Other updates

The Board continues to closely monitor the litigation against CHOICE that we reported in our March briefing. There have been no significant developments in that case since we filed our defence in March. While we remain optimistic about our chances of success, we have made a provision for legal costs, which is disclosed in our audited financial statements. 

Our next Board meeting is on 23 November, the day before our AGM. This will be our first face-to-face meeting since May so we are all looking forward to it. We'll be back in touch after that with our final update for the year. In the meantime, we hope to see you at the AGM.

As always, please feel free to email us with questions or comments on any of the matters covered in this briefing.

Welcome to our Board briefing for August.

If you are one of the 500-plus new voting members of CHOICE who were recently approved by the Board, welcome! We send a message like this after each Board meeting so that members understand the issues the Board is discussing and have the opportunity to ask questions or provide feedback. We really appreciate hearing from you.

We hope that since our last briefing members have noticed the extensive reporting of CHOICE's investigation into use of facial recognition technology by retailers such as Bunnings and Kmart. This investigation highlighted the fact that some retailers were using this intrusive technology without the consent of their customers, potentially breaching the law.

It has now been attracting media coverage for over six weeks, resulting in an official investigation by the Privacy Commissioner and a public commitment by the retailers involved to pause the use of this technology. It is a great example of CHOICE highlighting new areas of risk to consumers and pressuring businesses to change their practices.

The Board met by video conference on 25 July and discussed:

• results for 2021–22
• the AGM and election process 
• cybersecurity
• how the Board operates and connects
• the CEO's performance review.

Results for 2021–22

As this was our first meeting following the end of the financial year, we reviewed results for 2021–22.

The Board was pleased to note that the organisation had made good progress in implementing our strategy. It was especially exciting to note:

• CHOICE's role supporting First Nations advocates to achieve justice for people who were misled by funeral insurer, the Aboriginal Community Benefit Fund (also known as Youpla)
• success in our new campaign priority of preventing misuse of consumer data, as highlighted by the response to our investigation of facial recognition technology, mentioned above
• growth in the membership from 196,943 to over 206,053 during the course of the year
• the emerging program of work to help people who want to make sustainable and ethical choices
• the development of our first Reconciliation Action Plan
• changes to a number of our employment practices to support diversity and inclusion.

We also reviewed preliminary financial results. These will be finalised as part of the independent audit that is currently underway but we can indicate that we expect to report a surplus to members. That is consistent with the financial strategy that we outlined at last year's AGM, which has seen us return to surplus in the previous year after four years of planned deficit budgets.

AGM and election process

The Board made a number of decisions to set up this year's AGM and the process for election of board directors.

We approved a preliminary notice of the AGM, which you should have now received from our Company Secretary. Unless there are changes to government COVID restrictions, this year's AGM will be a hybrid event – with the opportunity to attend in person or online – on 24 November. While our 2020 and 2021 AGMs were held entirely online, temporary changes to the law that allowed this have now ended, so we need to hold an event that allows people to attend in person. We will also ensure good opportunities for members across the country to participate by video. If you can attend, it would be great to see you there, either in person or online. You will receive a formal invitation with more details in early November.

We also approved the election process. Consistent with our usual process, if a ballot is required, it will be an online ballot with postal ballots available to members who request them.

We were required under the constitution to approve the key skills that candidates and members will be asked to consider in the election process. Following a detailed skills audit, we identified the following skills as priorities for 2022:

• Data analysis and digital marketing: Experience in applying sophisticated analytics and marketing techniques to improve member/supporter/donor acquisition, engagement and retention.
• Digital content, products and services: Skills and experience in growing new and existing products and audiences for digital channels.
• Policy and campaigning: High-level skills and experience in campaigning, advocacy and policy development across a wide range of policy areas relevant to CHOICE's role and strong political nous.
• Technology: Experience in leading technology strategy and delivery to support digital products and services and/or overseeing major technological changes, ideally at a senior level in a number of medium to large organisations.

In addition to these specific skills, there are a range of general requirements that all candidates are required to satisfy, including governance experience and support for CHOICE's purpose and values.

There are three positions open for election this year: Robert Southerton has reached his term limit so will be retiring from the board, and two other current directors have indicated they will be standing for re-election. Nominations will close on 26 August. If you would like further information about the nomination process, please contact our Company Secretary Sarah Coombs.

Cybersecurity

As we noted in our March Board briefing, cybersecurity is a priority for boards of most organisations. It is particularly important for CHOICE given our heavy reliance on digital technology to communicate with members and consumers.

At this meeting the Board received a briefing on the findings of an independent review of CHOICE's capability as an organisation to manage cybersecurity risks and respond to an attack if required. This review made a number of recommendations covering areas such as improving security on devices used by staff, improving internal processes for identifying and managing cybersecurity risks and enhancing staff training. 

While there will always be more work to do to improve management of cybersecurity risks (because they are impossible to completely eradicate), we were pleased to see that the program of improvements recommended by the review is on track. We will be commissioning a further independent review early in 2023.

How the Board operates and connects

This far into the COVID-19 pandemic, it is clear that we should expect to continue to see changes in health advice in response to new variants and changes in infection rates. It is also clear that there will often be directors or managers who are unable to attend a meeting because they are unwell or caring for somebody who is. We therefore considered it timely to revisit our arrangements for holding Board meetings and events.

Unsurprisingly there was a range of views among the Board members – from the preference for all meetings to be face to face, to all meetings being hybrid, with flexibility for directors about how to participate. After discussing the different views, we agreed to aim to hold full-day meetings (which is what most of our meetings are) face to face, with shorter meetings by video conference. Where a meeting is held face to face we'll expect directors to attend in-person, while also making provision for participation by video conference to ensure our meetings remain inclusive and accessible.

Regardless of how the Board meets, we'll continue to provide opportunities for directors to build strong connections with each other and with staff, recognising that this is essential to the good operation of the Board and organisation.

Review of the CEO's performance

Consistent with good governance practice, we conducted our annual review of the performance of our CEO, Alan Kirkland. The Board met in-camera to discuss Alan's performance and agreed that he had delivered another year of solid performance, leading the organisation through continuing challenging times. We are currently working with Alan to confirm specific goals for the current financial year.

Other updates

The Board continues to closely monitor the litigation against CHOICE that we reported in our March briefing. This litigation was from a business that was unhappy about CHOICE's reporting on its practices. CHOICE remains confident that the information published was accurate and important to report. We have filed a defence in this case but there have been no other significant developments at this stage. We'll continue to keep you updated on this matter.

We also received a further update on the Content Management System upgrade. This included the report from an external review, which has recommended some changes to the way we are approaching the project. The Board will continue to take a close interest in this project.

Our next Board meeting is in late September. At that meeting we'll be receiving the report from our auditor and approving the 2021–22 financial statements. We'll be back in touch shortly after that.

As always, please feel free to email us with questions or comments on any of the matters covered in this briefing.

Welcome to our June Board briefing.

Wherever you're reading this from, we hope that you're surviving some of the wild winter weather that many parts of the country have experienced so far.

Since our last Board briefing in March, the Board met for a full-day strategy workshop with the management team in early April, a short workshop on our new responsible investment policy in late April, and a full-day regular Board meeting on 30 May. Our agenda for the Board meeting included:

• strategic priorities for 2022–23
• impact priorities
• 2022–23 budget
• responsible investment policy
• director remuneration
• content management system replacement.

Strategic priorities for 2022–23

At the strategy workshop in April, we discussed how the organisation was tracking as we approach the end of the first year of our three-year strategy and the key external factors likely to affect us in the next few years. Those discussions identified three key areas of the strategy where we believe the organisation needs to focus effort in the next year:

• Sustainable and ethical choices: To respond to the growing numbers of people who want to consider sustainability and ethics when buying products and services, we need to expand the ways in which we help people with these choices.
• Helping members in new ways: To ensure we remain relevant, we need to grow the range of ways in which we help members beyond reviews of household products.
• Digital capability: We must continue building the capabilities that are needed to support the organisation's growth.

Having observed the rapid growth in concern about cost of living pressures in the period since our April workshop, the management team recommended that we add to this list a focus on helping people with advice on managing increasing household costs. The Board agreed with this additional priority.

While these aren't the only things the organisation will need to do in the next year, they are the most strategically important. The management team briefed the Board on the work that is underway and planned in each of these areas.

Impact priorities

The Board provided feedback on proposed priorities for achieving change for consumers through campaigns and investigations over the next year. The key priorities we discussed were:

• strengthening the Australian Consumer Law, through expanded penalties for businesses that breach the law, better travel rights and improved product safety laws
• stamping out misuse of data by businesses, such as using it to price services in a discriminatory way or to target vulnerable people with predatory advertising
• fairer financial protections, including passing the remaining banking royal commission recommendations, protecting consumers from 'buy now, pay later' products and crypto scams, and working with First Nations advocates to achieve justice for people who lost money through the collapse of predatory funeral insurance business Youpla
• ethical and sustainable markets, including a right to repair, access to insurance for people affected by extreme weather events, and ensuring businesses address ethical issues such as modern slavery.

While these priorities had been developed before the recent federal election, they were intended to be adaptable to any election outcome. Our CEO and campaigns team have already been in touch with key ministers and departments of the new government. We have been pleased to already see action on some of our priorities, such as the commitment to regulate buy-now-pay-later products.

Budget

We reviewed and approved the final budget for 2022–23.

Consistent with our three-year strategy, we expect to continue to grow revenue, especially from membership, although at a slower rate than over the past few years.

Expenditure will also increase, through pay rises for CHOICE staff, technology costs and general expenses as activities like learning and development return to pre-pandemic levels.

The budget includes capital expenditure on modifications to our building to accommodate new ways of working, with more staff working from home on a regular basis, and the content management system replacement mentioned below.

Overall, we expect to deliver a small surplus by 30 June 2023.

Responsible investment policy

As discussed in our last Board briefing, we have been working with a specialist adviser to develop a policy to guide investment of some of our funds outside term deposits.

Most of our cash reserves will remain invested in term deposits to ensure we have sufficient working capital and ready access to funds if required in response to an unanticipated event. We have, however, identified a portion of our funds – $3 million initially – that the Board is willing to invest with a longer term view.

We propose to invest this in a range of managed funds, with the target of 5% return above CPI (after fees and charges) over a rolling seven-year period. We want to invest these funds ethically, through funds that have a robust process for screening out investment in harmful activities such as the production or sale of alcohol or tobacco, gambling, armaments or adult entertainment.

At this meeting the Board approved our final Responsible Investment Policy, which includes the guidelines described above. We will soon be seeking to appoint an investment manager to help us invest in line with the policy.

Director remuneration

As part of our ongoing approach to reviewing our approach to governance, the Board last year agreed to consider the issue of remuneration of directors. While Board members are currently unpaid, we were aware that some not-for-profit organisations provide remuneration to directors. Any change to introduce remuneration of directors would require voting members to approve a change to our constitution.

The Board considered a paper provided by the Governance, Culture and Ethics Committee, which was informed by data produced by the Australian Institute of Company Directors and a series of interviews with longstanding voting members.

While there are arguments for and against remunerating directors of not-for-profit organisations, we noted that the lack of remuneration has not to date been a barrier to recruitment of directors with a diverse range of skills. We agreed with the recommendation of the Committee not to pursue any further consideration of this issue within the next three years.

Content management system replacement

The Board received an update from the Chief Data and Technology Officer on the progress of our largest technology project in recent years: the replacement of the content management system (CMS) that supports our website.

This project has been underway for some months and it is fair to say it has encountered significant delays, largely due to the complexity involved in changing from an old CMS to a new one built on a different software platform. Workforce disruptions caused by COVID-19 have also slowed us down.

The Board affirmed our commitment to supporting this complex project because our website is the key way in which we communicate with consumers. We need more modern technology in order to be able to innovate. The management team is currently seeking specialist advice on how to improve how we are approaching this project and the Board will continue to receive regular updates.

We will meet again in late July, to review results for 2021–22. At that meeting we'll also be approving the process for the Board election so that we can open nominations for people with skills in the areas required on the Board.

As always, please feel free to email us with questions or comments on any of the matters covered in this briefing.

Warm regards

CHOICE Co-Chairs Anita Tang and Robert Southerton

Welcome to our first confidential Board briefing for 2022. 

If you are on the eastern side of the country, we hope that you have remained safe through the extreme weather that we've experienced in the past month. The scale of these events means they have affected thousands of CHOICE members and their families, some in severe ways. We are also conscious that our members in Western Australia will be dealing with the effects of the Omicron wave, after many months of being largely shielded from COVID-19. Wherever you are reading this from, we hope that you are keeping safe. If you have any suggestions about things that CHOICE can be doing to better support people in your community, please feel free to email us.

The Board met for the first time for 2022, on 28 February (via videoconference), with a diverse and interesting range of topics on our agenda, including:

• our first Reconciliation Action Plan
• a litigation matter against CHOICE
• our investment strategy
• cybersecurity and governance.

Our first Reconciliation Action Plan

Over the past year, a group of staff has been working to draft our first Reconciliation Action Plan, which was presented to the Board at this meeting. 

As a Board, we consider it important for CHOICE to support reconciliation and justice for First Nations people because it's core to our purpose – people from First Nations communities are often the target of unethical and exploitative business practices. 

Just last year, for example, Telstra was fined $50 million for sales practices including signing up Aboriginal and Torres Strait Islander consumers to expensive mobile phone contracts that they did not use and could not afford. That's just one prominent example – we continue to see similar practices in other industries across the country.

The Board was very happy to approve the Reconciliation Action Plan. As this is our first plan, it focuses on developing relationships with First Nations organisations in our local community and at a national level, listening to the needs of their communities, and thinking about how we can change the way we work as an organisation so as to better meet those needs. This will provide a basis for us to do deeper work in partnership with First Nations organisations to solve consumer problems that their communities experience.

We now need to submit the plan to Reconciliation Australia and once approved, we'll be very pleased to share it with you.

Litigation against CHOICE

We received a briefing on litigation that has been commenced by Theracare Home, a business that sells adjustable beds, against CHOICE. The litigation concerns our article Theracare Home called out for misleading sales tactics ;published last year.

A core part of our work involves highlighting business practices that may cause harm to consumers. This article was subject to our normal fact-checking process before publication. We sought comments from Theracare Home, which were included in the article. 

Since receiving correspondence from Theracare Home, CHOICE has reviewed the evidence and remains confident that the information in the article is accurate and fairly presented.

Our ability to share information about poor business practices and unfair practices is key to informing and protecting consumers, and after considering legal advice, the Board confirmed its commitment to defend the matter. The litigation is at an early stage and we will keep you updated if it progresses further.

Our investment strategy

It is an important part of our role as a Board to ensure that the organisation's assets and investments are managed in a prudent manner. This is important because it helps to support our longer-term financial sustainability, giving us the flexibility to respond to any unexpected external events.

We currently have over $11 million in cash, and it's invested in bank accounts and term deposits. Low interest rates mean that the value of these investments is effectively going backwards in real terms. While we need to keep some of these funds readily available, we can afford to invest some with a longer term view and in a way that is consistent with our values as an organisation.

Over the past year, we have revisited our approach to investments and decided that it is appropriate to diversify our approach by investing some of our funds outside term deposits. This will involve a minority of our cash reserves – the majority will remain in term deposits. 

We have already made some high-level decisions to guide this change in investment: we won't be investing directly in any shares or property, and we want our investments to be ethical. 

We have appointed an independent adviser, Equity Trustees, to help us develop a more detailed investment policy. We held an initial discussion with our adviser at this meeting so we can start to consider the decisions we'll need to make, such as our approach to ethical investment, our other investment objectives and the types of investments we would be willing to make.

Once we've settled our investment policy, we will be looking for an investment manager who can help us to make investments in line with the policy. We'll keep you updated as we work through this process. As this is a significant shift, we would welcome any questions or feedback.

Cybersecurity and governance

An increasing risk of cybersecurity attacks means that cybersecurity is on the agenda of boards of all sorts of organisations. This is particularly important for CHOICE, given that we depend on digital technology – primarily our website – to reach and deliver to consumers. Members also expect that we will ensure that any personal information that we hold is secure.

While no organisation can completely eliminate the risk of a cyber attack, it's important to invest in reducing risk. Over the past year, CHOICE has been working on a program of improvements to our systems and processes so as to improve our overall approach to cybersecurity. At this meeting, a cybersecurity specialist from a firm that has been advising us presented on current trends in cybersecurity threats and the ways in which some of these apply to CHOICE.

We plan to spend more time during 2022 focusing on cybersecurity and in particular the program of improvements underway at CHOICE.

As this was the first meeting of the year, the Board was also required under our constitution to appoint the officers of the organisation. While we have been informally sharing leadership of the Board for the past year, the constitutional change approved by members at our AGM in November meant that we could be formally appointed as Co-Chairs. We are delighted to now be formally appointed to this shared role. CHOICE employee Sarah Coombs, who many of you will have dealt with, was reappointed as Company Secretary.

We look forward to keeping you updated throughout the year. We're meeting again in early April for a strategy workshop with the management team, so will be back in touch after that.

Until then, we hope that you keep safe, and please feel free to reach out to us with any questions or feedback.

Warm regards

CHOICE Co-Chairs Anita Tang and Robert Southerton