CSL Ltd. — Governance Information 2018

Sep 13, 2018

Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

Rules 4.7.3 and 4.10.3[1]

Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

Introduced 01/07/14 Amended 02/11/15

Name of entity

CSL Limited

ABN 99 051 588 348

Financial year ended:

30 June 2018

Our corporate governance statement[2] for the above period above can be found at:[3]

☐ These pages of our annual report:

☒ This URL on our website:

http://www.csl.com.au/about/governance.htm

The Corporate Governance Statement is accurate and up to date as at 14 August 2018 and has been approved by the Board.

The annexure includes a key to where our corporate governance disclosures can be located.

Date: 14 September 2018

Name of Director or Secretary authorising Fiona Mead, Company Secretary lodgement:

1 Under Listing Rule 4.7.3, an entity must lodge with ASX a completed Appendix 4G at the same time as it lodges its annual report with ASX.

Listing Rule 4.10.3 requires an entity that is included in the official list as an ASX Listing to include in its annual report either a corporate governance statement that meets the requirements of that rule or the URL of the page on its website where such a statement is located. The corporate governance statement must disclose the extent to which the entity has followed the recommendations set by the ASX Corporate Governance Council during the reporting period. If the entity has not followed a recommendation for any part of the reporting period, its corporate governance statement must separately identify that recommendation and the period during which it was not followed and state its reasons for not following the recommendation and what (if any) alternative governance practices it adopted in lieu of the recommendation during that period.

Under Listing Rule 4.7.4, if an entity chooses to include its corporate governance statement on its website rather than in its annual report, it must lodge a copy of the corporate governance statement with ASX at the same time as it lodges its annual report with ASX. The corporate governance statement must be current as at the effective date specified in that statement for the purposes of rule 4.10.3.

2 “Corporate governance statement” is defined in Listing Rule 19.12 to mean the statement referred to in Listing Rule 4.10.3 which discloses the extent to which an entity has followed the recommendations set by the ASX Corporate Governance Council during a particular reporting period.

3 Mark whichever option is correct and then complete the page number(s) of the annual report, or the URL of the web page, where the entity’s corporate governance statement can be found. You can, if you wish, delete the option which is not applicable. Throughout this form, where you are given two or more options to select, you can, if you wish, delete any option which is not applicable and just retain the option that is applicable. If you select an option that includes “OR” at the end of the selection and you delete the other options, you can also, if you wish, delete the “OR” at the end of the selection.

• See chapter 19 for defined terms 2 November 2015

Page 1

Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

ANNEXURE – KEY TO CORPORATE GOVERNANCE DISCLOSURES

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
1.1	A listed entity should disclose: (a) the respective roles and responsibilities of its board and management; and (b) those matters expressly reserved to the board and those delegated to management.	… the fact that we follow this recommendation: ☒in our Corporate Governance Statement ☒at http://www.csl.com.au/about/governance.htm … and information about the respective roles and responsibilities of our board and management (including those matters expressly reserved to the board and those delegated to management): ☒ in our Corporate Governance Statement
1.2	A listed entity should: (a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director.	… the fact that we follow this recommendation: ☒in our Corporate Governance Statement
1.3	A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.	… the fact that we follow this recommendation: ☒in our Corporate Governance Statement
1.4	The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.	… the fact that we follow this recommendation: ☒in our Corporate Governance Statement

• See chapter 19 for defined terms

2 November 2015

Page 2

Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
1.5	A listed entity should: (a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them; (b) disclose that policy or a summary of it; and (c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them and either: (1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or (2) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act.	… the fact that we have a diversity policy that complies with paragraph (a): ☒in our Corporate Governance StatementOR ☒at http://www.csl.com.au/about/governance.htm … and a copy of our diversity policy or a summary of it: ☒in our Corporate Governance Statement … and the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with our diversity policy and our progress towards achieving them: ☒in our Corporate Governance Statement … and the information referred to in paragraphs (c)(1) or (2): ☒in our Corporate Governance Statement
1.6	A listed entity should: (a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.	… the evaluation process referred to in paragraph (a): ☒in our Corporate Governance Statement … and the information referred to in paragraph (b): ☒in our Corporate Governance Statement
1.7	A listed entity should: (a) have and disclose a process for periodically evaluating the performance of its senior executives; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.	… the evaluation process referred to in paragraph (a): ☒in our Corporate Governance Statement … and the information referred to in paragraph (b): ☒in our Corporate Governance Statement

• See chapter 19 for defined terms 2 November 2015

Page 3

Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE
2.1	The board of a listed entity should: (a) have a nomination committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively.	[If the entity complies with paragraph (a):] … the fact that we have a nomination committee that complies with paragraphs (1) and (2): ☒in our Corporate Governance Statement … and a copy of the charter of the committee: ☒at http://www.csl.com.au/about/governance.htm … and the information referred to in paragraphs (4) and (5): ☒in our Annual Report at page 46
2.2	A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.	… our board skills matrix: ☒in our Corporate Governance Statement
2.3	A listed entity should disclose: (a) the names of the directors considered by the board to be independent directors; (b) if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and (c) the length of service of each director.	… the names of the directors considered by the board to be independent directors: ☒in our Corporate Governance Statement … and, where applicable, the information referred to in paragraph (b): ☒in our Corporate Governance Statement … and the length of service of each director: ☒in our Corporate Governance Statement

• See chapter 19 for defined terms 2 November 2015

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Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
2.4	A majority of the board of a listed entity should be independent directors.	… the fact that we follow this recommendation: ☒in our Corporate Governance Statement
2.5	The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity.	… the fact that we follow this recommendation: ☒in our Corporate Governance Statement
2.6	A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.	… the fact that we follow this recommendation: ☒in our Corporate Governance Statement
PRINCIPLE 3 – ACT ETHICALLY AND RESPONSIBLY
3.1	A listed entity should: (a) have a code of conduct for its directors, senior executives and employees; and (b) disclose that code or a summary of it.	… our code of conduct or a summary of it: ☒in our Corporate Governance Statement AND ☒at http://wwww.csl.com/our-company/corporategovernance/code-of-responsible-business-practice

• See chapter 19 for defined terms 2 November 2015

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Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
PRINCIPLE 4 – SAFEGUARD INTEGRITY IN CORPORATE REPORTING
4.1	The board of a listed entity should: (a) have an audit committee which: (1) has at least three members, all of whom are non- executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chair of the board, and disclose: (3) the charter of the committee; (4) the relevant qualifications and experience of the members of the committee; and (5) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner.	[If the entity complies with paragraph (a):] … the fact that we have an audit committee that complies with paragraphs (1) and (2): ☒in our Corporate Governance Statement … and a copy of the charter of the committee: ☒at http://www.csl.com.au/about/governance.htm … and the information referred to in paragraphs (4) and (5): ☒in our Annual Report at page 46
4.2	The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.	… the fact that we follow this recommendation: ☒in our Corporate Governance Statement
4.3	A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.	… the fact that we follow this recommendation: ☒in our Corporate Governance Statement

• See chapter 19 for defined terms 2 November 2015

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Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE
5.1	A listed entity should: (a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and (b) disclose that policy or a summary of it.	… our continuous disclosure compliance policy or a summary of it: ☒in our Corporate Governance Statement
PRINCIPLE 6 – RESPECT THE RIGHTS OF SECURITY HOLDERS
6.1	A listed entity should provide information about itself and its governance to investors via its website.	… information about us and our governance on our website: ☒at http://www.csl.com.au/about/governance.htm
6.2	A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.	… the fact that we follow this recommendation: ☒in our Annual Report at page 46
6.3	A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.	… our policies and processes for facilitating and encouraging participation at meetings of security holders: ☒in our Annual Report at page 46
6.4	A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.	… the fact that we follow this recommendation: ☒in our Corporate Governance Statement

• See chapter 19 for defined terms 2 November 2015

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Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
PRINCIPLE 7 – RECOGNISE AND MANAGE RISK
7.1	The board of a listed entity should: (a) have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework.	[If the entity complies with paragraph (a):] … the fact that we have a committee or committees to oversee risk that comply with paragraphs (1) and (2): ☒in our Corporate Governance Statement … and a copy of the charter of the committee: ☒at http://www.csl.com.au/about/governance.htm … and the information referred to in paragraphs (4) and (5): ☒in our Annual Report at page 46
7.2	The board or a committee of the board should: (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and (b) disclose, in relation to each reporting period, whether such a review has taken place.	… the fact that board or a committee of the board reviews the entity’s risk management framework at least annually to satisfy itself that it continues to be sound: ☒in our Corporate Governance Statement … and that such a review has taken place in the reporting period covered by this Appendix 4G: ☒in our Corporate Governance Statement
7.3	A listed entity should disclose: (a) if it has an internal audit function, how the function is structured and what role it performs; or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes.	[If the entity complies with paragraph (a):] … how our internal audit function is structured and what role it performs: ☒in our Corporate Governance Statement

• See chapter 19 for defined terms

2 November 2015

Page 8

Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
7.4	A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.	… whether we have any material exposure to economic, environmental and social sustainability risks and, if we do, how we manage or intend to manage those risks: ☒in our Corporate Governance Statement and ☒in our Annual Report at pages 51-52

• See chapter 19 for defined terms

2 November 2015

Page 9

Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …
PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY
8.1	The board of a listed entity should: (a) have a remuneration committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive.	[If the entity complies with paragraph (a):] … the fact that we have a remuneration committee that complies with paragraphs (1) and (2): ☒in our Corporate Governance Statement … and a copy of the charter of the committee: ☒at http://www.csl.com.au/about/governance.htm … and the information referred to in paragraphs (4) and (5): ☒in our Annual Report at page 46
8.2	A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives.	… separately our remuneration policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives: ☒in our Corporate Governance Statement and ☒in our Annual Report at page 46
8.3	A listed entity which has an equity-based remuneration scheme should: (a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and (b) disclose that policy or a summary of it.	… our policy on this issue or a summary of it: ☒in our Corporate Governance Statement and ☒in our Annual Report at page 46

• See chapter 19 for defined terms

2 November 2015

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Corporate Governance at CSL 2017/18

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Driven by
Our Promise [™]
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2018 Corporate Governance Statement

The CSL Limited Board of Directors is pleased to present CSL’s Corporate Governance Statement for 2018. This statement outlines CSL’s principal corporate governance practices in place during the financial year ended 30 June 2018. Copies of all governance documents referred to in this statement can be found in the ‘Corporate Governance’ section of CSL.com.

The Board and management

team maintain high standards of corporate governance as part of their commitment to maximise shareholder value through effective strategic planning, risk management, transparency and corporate responsibility.

The Board and management team remain committed to continuing to review CSL’s corporate governance practices in response to changes in market conditions or recognised best practices, including the careful consideration of any changes to the Australian Securities Exchange (ASX) Corporate Governance Principles and Recommendations or ASX Listing Rules.

The Board believes that CSL’s

corporate governance practices have complied with the recommendations contained in the 3rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations throughout the year ended 30 June 2018. The following table indicates where each principle is dealt with in this statement.

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ASX Corporate Governance Section Reference
Principles and Recommendations in this Statement
Principle 1 – Lay solid foundations for management and oversight 1, 2
Principle 2 – Structure the Board to add value 1, 4
Principle 3 – Act ethically and responsibly 3
Principle 4 – Safeguard integrity in corporate reporting 4, 5
Principle 5 – Make timely and balanced disclosure 4, 6
Principle 6 – Respect the rights of security holders 6
Principle 7 – Recognise and manage risk 4, 5
Principle 8 – Remunerate fairly and responsibly 4, 7
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1 CSL Limited Corporate Governance Statement 2018

1. The Board of Directors

Relevant governance documents:

Board Charter

Nomination Committee Charter

1.1 Role of the Board

The Board has a formal charter documenting its membership, operating procedures and the allocation of responsibilities between the Board and management.

The Board is responsible for overseeing the management of CSL and providing strategic direction. It monitors operational and financial performance, human resources policies and practices, and approves CSL’s budgets and business plans. It is also responsible for supervising CSL’s risk management, financial reporting and compliance framework.

The Board has delegated the dayto-day management of CSL, and the implementation of approved business plans and strategies, to the Managing Director, who in turn may further delegate to senior management. In addition, a detailed authorisations policy sets out the decision-making powers which may be exercised at various levels of management.

The Board has delegated specific authority to five Board committees, which assist the Board by examining various issues and making recommendations. A description of each committee and their responsibilities is set out in section 4 of this statement. The Board also delegates specific responsibilities to ad hoc committees sometimes.

CSL has entered into a written

agreement with each director and senior executive setting out the terms of their appointment, including their respective roles and responsibilities.

The Company Secretary ensures that Board and committee procedures are complied with and advises the Board and its committees on governance matters. The Company Secretary is accountable directly to the Board, through the Chairman, on all matters to do with the proper functioning of the Board. All directors have access to the Company Secretary for advice and services. The Board approves any appointment or removal of the Company Secretary.

Directors are entitled to access

independent professional advice at CSL’s expense to assist them in fulfilling their responsibilities. To do so, a director must first obtain the approval of the Chairman. The director should inform the Chairman of the reason for seeking the advice, the name of the person from whom the advice is to be sought and the estimated cost of the advice. Professional advice obtained in this way is made available to the whole Board.

Details of Board meetings held during the year and individual directors’ attendance at these meetings can be found in our 2018 Directors’ Report.

2 CSL Limited Corporate Governance Statement 2018

1. The Board of Directors continued

1.2 Board Composition

Throughout the year there were between nine and ten directors on the Board. Each director, their length of service and their status as an independent or non-independent director is set out in the following table.

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Length of Service
Director (as at 30 June 2018) Independent/Non-Independent
Professor John Shine AC 12 years Independent, non-executive director
Mr Paul Perreault 5 years, 5 months Non-independent, executive director
Mr David Anstice 9 years, 9 months Independent, non-executive director
Mr Bruce Brook 6 years, 10 months Independent, non-executive director
Dr Megan Clark AC 2 years, 5 months Independent, non-executive director
Mr Abbas Hussain 4 months Independent, non-executive director
Dr Brian McNamee AO 4 months Independent, non-executive director
Ms Marie McDonald 4 years, 10 months Independent, non-executive director
Ms Christine O’Reilly 7 years, 5 months Independent, non-executive director
Mr Maurice Renshaw 13 years, 2 months Independent, non-executive director
Dr Tadataka Yamada KBE 1 year, 9 months Independent, non-executive director
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Mr Maurice Renshaw retired as a director at the conclusion of the 2017 Annual General Meeting (AGM).

The relevant skills, expertise, qualifications and experience of each of the directors are set out in the directors’ profiles in our 2018 Directors’ Report available at CSL.com.

1.3 Director Independence

The Board considers an independent director to be independent of management and free of any interest, position, association or relationship that could, or could reasonably be perceived to, materially interfere with the exercise of their unfettered and objective judgement.

Information about any such interests or relationships, including any related financial or other details, is assessed by the Board to determine whether the interest, position, association or relationship could, or could reasonably be perceived to, materially interfere with the exercise of a director’s unfettered and independent judgement. As part of this process, the Board takes into account each of the factors relevant to assessing the independence of a director set out in the ASX Corporate Governance Principles and Recommendations, and other facts, information and circumstances that the Board considers relevant.

In determining whether an interest or relationship is considered to interfere with a director’s independence, the Board assesses the materiality of the

interest or relationship. For this purpose, the Board adopts a conservative approach to materiality consistent with Australian accounting standards.

The Board Charter sets guidelines as to the desired length of service of nonexecutive directors. However, fixed tenure limits for non-executive directors have not been set. Tenure remains a matter for the Board’s discretion on a case-by-case basis and according to the needs of the Company.

The Board assesses the independence of new directors upon appointment, and makes an annual assessment of each non-executive director to determine whether it considers the director to be independent.

The Board has determined that all of its non-executive directors are independent and were independent for the duration of the reporting period. Accordingly, a majority of the directors on the Board are independent.

The Chairman of the Board, Professor John Shine AC, is an independent, nonexecutive director. The responsibilities of the Chairman are described in the Board

3 CSL Limited Corporate Governance Statement 2018

1. The Board of Directors continued

Charter. The roles of the Chairman and the Managing Director are exercised by separate individuals..

1.4 Nomination and

Appointment of Directors

Two new directors, Mr Abbas Hussain and Dr Brian McNamee AO, were appointed to the Board during the financial year. One director, Mr Maurice Renshaw, retired from the Board during the financial year. Professor John Shine AC, Mr Bruce Brook and Ms Christine O’Reilly were re-elected as directors, at the 2017 Annual General Meeting.

On 13 December 2017, the Company announced that once elected following the close of the 2018 AGM, Dr Brian McNamee AO would assume the position of Chairman of CSL.

Prior to the expiry of a director’s current term of office, the Board reviews that director’s performance.

In addition, before a director is nominated for election or re-election, it is CSL’s policy to ask directors to acknowledge to the Board that they have sufficient time to

meet CSL’s expectations of them. The Board requires that all its members devote the time necessary to ensure that their contribution to CSL is of the highest possible quality. The Board Charter sets out procedures relating to the removal of a director whose contribution is found to not be effective.

In the case of long-serving non-executive directors who are standing for re-election at an AGM but who intend to retire from the Board within their next term, this intention to retire will be clearly disclosed in the AGM notice of meeting.

Before a person is appointed as a director or put forward to shareholders as a candidate for election as a director, CSL undertakes appropriate background checks of that person, including the person’s character, experience, education, criminal record and bankruptcy history.

CSL provides its shareholders with all material information (that is in CSL’s possession) relevant to a decision on whether or not to elect or re-elect a director (including any material adverse information).

1.5 Induction of New Directors and Ongoing Development

CSL provides an induction program to assist new directors to gain an understanding of:

• CSL’s financial, strategic, operational and risk management position;

• the culture and values of CSL;

• the rights, duties and responsibilities of the directors;

• the roles and responsibilities of senior executives;

• the role of the Board committees;

• meeting arrangements; and

• director interactions with each other, senior executives and other stakeholders.

In addition to the briefing papers,

agenda and related information regularly supplied to directors, the Board has an ongoing professional development and education program designed to give directors further insight into the operation of CSL’s business, and to provide opportunities for directors to develop and maintain the skills and

knowledge needed to perform their role as a director effectively. The program includes education on key developments relating to CSL and the industry and environment within which it operates. As part of this program, directors regularly visit CSL’s facilities, including all major operating sites in the United States (US), Europe and Australia, and attend meetings and information sessions with CSL’s local management and employees.

1.6 Knowledge, Skills and Experience

The Board is focused on maintaining an appropriate mix of skills and diversity in its membership. This includes range of skills, experience and background in the pharmaceutical industry, international business, finance and accounting and management, as well as gender diversity.

The following Board skills matrix describes the combined capabilities of the Board across a range of general and specialist areas. The Board considers that collectively the directors have the appropriate range of skills and experience necessary to direct CSL’s businesses and achieve CSL’s strategic objectives.

4 CSL Limited Corporate Governance Statement 2018

1. The Board of Directors continued

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Board
Board Capability Matrix Representation
GENERAL EXPERIENCE
Managing and Leading
Success in business at a senior level in a successful career. 10
Global Experience
Senior executive or similar exposure to a range of political, cultural, regulatory and business environments. 10
Business/Commercial
Senior executive or similar experience in business/commerce in a large business enterprise. 10
Strategy
Track record of developing and implementing successful strategies. 10
Governance
Commitment to high standards of governance, including experience with a large business enterprise which is subject to rigorous governance standards. 10
SPECIALIST EXPERIENCE
Industry-specific Knowledge
Senior executive experience in a large biopharmaceutical, pharmaceutical or medical organisation. 6
Finance/Legal/Risk Management
Board audit/risk management membership or senior executive or similar experience in financial accounting and reporting, corporate finance,
internal financial controls or the provision of legal services to large business enterprises. 6
Marketing
Senior executive experience in marketing and a detailed understanding of the Group’s corporate objective to create long-term value through the provision of innovative products. 6
Capital Projects
Experience in an industry with projects involving large-scale capital outlays and long-term investment horizons. 9
Health, Safety and Environment
Experience related to workplace health, safety, environment and social responsibility within a large business enterprise. 8
Remuneration
Board remuneration committee membership or senior executive or similar experience relating to remuneration, including incentive programs. 9
Government Affairs
Experience in liaising with government and experience with public and regulatory policy. 9
Research and Development/Product Development
Experience in research and development or product development with a large biopharmaceutical, pharmaceutical or medical organisation. 7
Manufacturing/Quality
Experience in manufacturing or quality operations with a large biopharmaceutical, pharmaceutical or medical organisation. 5
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5 CSL Limited Corporate Governance Statement 2018

2 Diversity

Relevant governance documents:

Diversity Policy

Code of Responsible Business Practice

2.1 Diversity at CSL

At CSL, diversity refers to the unique backgrounds, beliefs and experiences that our people possess. We define diversity in the broadest of terms, including gender and gender identity, nationality, ethnicity, disability, sexual orientation, generation/age, socioeconomic status, religious beliefs, professional and educational background, and global and cultural experiences.

We believe diversity and inclusion are crucial to strong business growth and performance. Specifically, diversity and inclusion help us to:

• better understand and connect with our patients;

• attract, develop, retain and engage the talent needed to sustain our long-term success;

• foster creativity and innovation; and

• improve the quality of the decisions that we make.

2.2 CSL’s Diversity Profile

CSL is a multigenerational company with employees ranging in age from 17 to 74. Currently, millennials make up half of CSL’s total workforce and are also the largest and fastest-growing segment in the global workforce overall. We believe this generational diversity helps ensure we are considering and leveraging a wide range of perspective and experiences when addressing patients’ needs now and in the future.

CSL’s employee brand – Promising

Futures – represents our commitment to building a workplace where employees can have promising futures by fulfilling their career aspirations, realising their potential and being inspired by being part of a purpose-driven company with a values-based culture. This goal requires us to have a culture of inclusion where all employees are respected, valued and able to freely share their perspectives, experiences and ideas.

We rely on our people’s unique perspectives, ideas, capabilities and experiences to deliver for our business, our patients and our shareholders.

In addition, our continued success depends on authentically living the CSL values – patient focus, superior performance, innovation, integrity and collaboration.

CSL has a global diversity policy, which is integral to our overall talent and culture strategies and guides our investment in this area. We support an inclusive work environment where people have equitable access to career opportunities, training and benefits.

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11%
50% 39%
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Baby Boomers (1946–1961) Generation X (1962–1979) Generation Y/Millennials (1980–2000)

Data as of 30 June 2018 and includes all employees globally where birthdate is recorded (97% of workforce).

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2. Diversity continued

CSL continues its strong commitment to advancing women in the workplace. Female employees represent 56% of our global workforce. The Board and executive team monitor the percentage of females in the workforce with a focus on senior executive positions. We are pleased to report that we have once again achieved our target percentage of 30% for female representation across

BOARD MEMBERS

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10
Male 70%
Female 30%
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PEOPLE MANAGER

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2,250
Male 61%
Female 39%
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our senior executive positions and we are at less than 1% below our target of 40% female representation for all people management positions. In line with ASX guidelines, the following graphs highlight the proportion of women and men on the Board, in senior executive positions (Senior Director and above), other management roles and across the whole organisation as of 30 June 2018.

SENIOR EXECUTIVES

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298
Male 70%
Female 30%
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ALL EMPLOYEES

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22,220
Male 44%
Female 56%
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7 CSL Limited Corporate Governance Statement 2018

2. Diversity continued

2.3 Report on Measurable Objectives for 2017/18

CSL’s management sets and reports on measurable diversity objectives on an annual basis in accordance with ASX guidelines and CSL’s Diversity Policy.

In CSL’s 2017 Annual Report, CSL announced three measurable objectives for achieving diversity to be undertaken in the 2017/18 financial year. We are pleased to share our year-end progress against these important objectives. Given the long-term or complex nature of some of these objectives, we will continue to invest in them in the new financial year as part of our 2018/19 objectives.

Objective

Results Achieved

	Advancing women’s education and opportunities in STEM	A key element of CSL’s global talent strategies is our relationships with schools at both the secondary
	**careers. **	and university levels as well as professional diversity organisations. We met our goal of forming and/or
	As CSL’s talent demands continue to increase, we recognise the challenges associated with hiring female STEM (science,	deepening our strategic relationships in all major markets. A number of noteworthy accomplishments in fostering women’s education and opportunities in STEM careers were achieved.
	technology, engineering, and math) talent given the competitive	• In Australia, we continued to make progress with CSL’s Australian Graduate Program, which gives
	hiring environment. The demand for talent in this area exceeds	students the chance to explore a wide range of positions at CSL. We had 40% female participation in
	the supply of talent in our major geographies, leading to a dearth	the program and every female student who was subsequently hired also received a leadership mentor.
	of talent available to CSL and other organisations. To bolster our early career talent supply, advance our diversity objectives and support corporate social responsibility outcomes, we are committed to identifying talent pools in secondary schools*, colleges and universities in all of CSL’s major markets (Australia, Switzerland, Germany, the US and the United Kingdom [UK]) and continuing (or developing) relationships with these schools and/	• In the US, CSL formed a partnership with Penn State to invest in creating the multidisciplinary Center of Excellence in Biotechnology, and to revitalise the Shared Fermentation Facility, an engine for collaboration and innovation in biological training and research on the University Park campus. By closely matching what is available in today’s premier manufacturing settings, this investment will help elevate the University’s educational and research capabilities and ability to attract top STEM students and create a pipeline of potential experts to help address health challenges worldwide.
	or colleges/universities to align educational curriculum to industry	• At our Marburg, Germany site an Engineering Training program was implemented and led to one of
	needs and build a pipeline of early career female talent potentially	two graduate positions being flled by a female. In addition, 31 internships were focused on young
	available to be recruited to CSL.	women in STEM areas. The site is also partnering with the largest university network in Europe to
	*Secondary education refers to structured education that concludes at age 18–19 after 12 or 13 years of formal education.	strengthen leadership skills for women with eight female CSL leaders being matched with STEM students to collaborate over a one-year period.
		• At our Bern, Switzerland site we continued visiting local schools to foster interest in STEM professions,
		especially among young women. The site also participated in seven university events and fairs with
		increased representation from the site’s female CSL ambassadors.

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2. Diversity continued

Objective

Increasing diversity in senior leadership (Senior Director and above) through talent acquisition and development strategies.

Diversity in our leader population results in several benefits for CSL. It is a key factor in strengthening our inclusive culture and mentoring the next generation of diverse talent. We continue our strong commitment to having a diverse leadership team and building a strong culture by updating our CSL Diversity Policy, expanding partnerships with organisations across the globe to reach a broader array of potential candidates, training hiring managers to be unbiased in talent selection, and developing our diverse leadership talent.

Results Achieved

As a global organisation, CSL embraces diversity and inclusion. It is the foundation of who we are. We believe that by harnessing and honouring the unique capabilities, experiences, and perspectives of our people, we are better able to serve our patients. To do this, we must continually be hiring from a qualified and diverse candidate pool and building our leaders’ capabilities around forming and effectively managing diverse teams. In 2017/18, we measured our successful achievement of this objective in a number of ways.

• We ensured a diverse talent representation in the interview process, resulting in 30% of our Senior Director and above hires being female.

• We updated our CSL Diversity Policy to incorporate the importance of authentically living our CSL values and expectations for all business. This included a range of topics from equitable access to learning and development opportunities to helping employees balance their work and personal commitments at different career and life stages.

• Relationships with women’s professional associations were nurtured, including opportunities for CSL female employees to attend workshops and forums through the National Association of Women in Operations (NAWO) and the Diversity Council of Australia.

• A corporate partnership was formed in the US and Europe with the Healthcare Businesswoman’s Association (HBA), which focuses on the further advancement and impact of women in the business of healthcare.

• We continued the rollout of our ‘Hiring Top Talent’ program to educate hiring managers around topics such as creating diverse candidate slates, valuing differences, benefits of diverse teams and selecting for diverse talent.

• We introduced online Career Profiles that allow employees to capture career and developing planning information in a central place (e.g., education, career aspirations, willingness to relocate) so that their experience and personal interest are understood by the organisation. Completion of the Career Profile is required for all CSL key talent (e.g., high performers, high potentials).

• We launched new global Leadership Capabilities, which set expectations that all CSL leaders should be focused on forming teams with diverse perspectives and helping employees understand the value of diversity. These diversity capabilities and expectations are also included in our new development program for leaders.

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2. Diversity continued

Objective

Building an attractive, inclusive culture where employees with diverse backgrounds are engaged and retained.

An inclusive culture enables CSL to harness the power of difference to drive desired business results. CSL’s culture has supported our performance; however, we recognise that competitors are evolving, and we must compete more aggressively for key talent in a tight, global labour market. We attract and retain diverse talent by fostering an inclusive culture where employees’ contributions and ideas matter.

Results Achieved

We believe people want to be part of and contribute to a purpose-driven company with a values-based culture. By fostering an inclusive environment, we help ensure employees feel valued and able to freely share their perspectives and ideas. We worked on a number of areas to achieve this objective.

• We administered CSL’s employee feedback survey in April/May 2018. The survey provides actionable insights regarding how we are doing against our strategy to create a culture that attracts, retains and develops the best talent, employees understanding and receptivity to company-wide culture priorities, and engagement relative to global benchmarks. The survey results revealed CSL’s employee engagement index is three points above global IBM norms.

• The company was re-energised around CSL values to drive desired behaviours and respect in the workplace. This included a language change from customer-focused to patient-focused. Values were translated into numerous languages and all existing values collateral (e.g., printed materials, signage) was updated.

• We piloted a new 360-degree feedback tool for leaders, providing leaders with personalised feedback, including on the behaviours they demonstrate that positively contribute to building a values-based, diverse and inclusive culture.

• A cross-geography/cross-functional team was formed to evaluate and recommend a global recognition program and platform tied to our culture strategy that reinforces the importance of recognition and appreciation at all levels.

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2. Diversity continued

2.4 Measurable Objectives Supporting Gender Diversity for 2018/19

To comply with ASX diversity guidelines, the Board, or a relevant committee of the Board, is required to set measurable objectives for achieving gender diversity and to assess annually both the objectives and CSL’s progress in achieving them. The Board, with senior management’s support, has set the following objectives for the financial year commencing 1 July 2018. These objectives are designed to contribute to CSL’s growth by fostering an environment that enables innovation, collaboration and talent development.

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Objective Description and Measures
Advance women’s To strengthen our early career supply of STEM talent, roles that are difficult to fill, we are committed to:
education and • identifying talent pools in secondary schools, colleges and universities, and at least two strategic relationships in many of our major markets
opportunities in STEM (Australia, Switzerland, Germany, US and UK);
careers.
• continuing and developing relationships with these schools to align educational curriculum to industry needs and build a pipeline of early
(A continuation of the prior career talent to join CSL;
year objective as it is a key
• hosting programs and career fairs to market CSL and source this talent pool;
long-term investment that
• measuring our results through the hiring of STEM future leaders with 50% or better female representation, achieving an 80% favourable rating
supports talent, diversity
and corporate social or better on satisfaction surveys that assess our effectiveness in attracting students, and receiving external recognition in at least two major
markets for CSL’s women’s education investments; and
responsibility outcomes.)
• ensuring measurement results are reported to the Board as part of the year-end diversity report.
Maintain diversity in We will build a competitive talent culture and achieve this objective through a combination of efforts in talent acquisition, talent development
senior executive and and talent analytics by:
senior leader positions; • learning and implementing new processes in response to emerging legislation regarding inequality for women in compensation and biased
increase diversity in hiring practices;
CSL’s people manager
• continuing manager training focused on how to select qualified candidates from diverse talent pools;
population.
• developing diverse talent through leadership and manager development programs, key talent development plans and mentoring; and
• measuring our performance through:
– diverse interview slates and diverse hires;
– manager quality, percentage of female hires, promotions, turnover;
– adherence to compliance responsibilities (e.g., Workplace Gender Equality Agency – WGEA, Equal Employment Opportunity Commission –
EEOC);
– investments in at least two strategic relationships with global groups that support women in leadership; and
– movement/promotion of female leaders and managers who attend leadership and manager development programs.
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Objective	Description and Measures
Sustain a culture	We must compete for key talent in a tight, global labour market and access broader, diverse sources of talent to meet the growth needs of the
diferentiated by CSL’s	business. To bring diversity of thought, person and experience to the company, actively tending to our culture is of primary importance. Key
values that attracts	actions and measures include:
and retains a diverse	• conducting leadership 360 assessments for senior and executive leaders to ensure employees are experiencing an inclusive culture where their
workforce and rivals	contributions are welcome, and innovation is encouraged;
biotech competitors.	• incorporating leadership assessments into the hiring process for new senior and executive leaders whose behaviours and values greatly impact
	culture;
	• piloting a global recognition program and associated usage metrics;
	• achieving employee feedback survey results that are above global benchmarks for employee engagement index items (we currently are above
	the global benchmark); and
	• continuing partnerships with global organisations to access a broader array of potential candidates (e.g., diferent ethnicities, genders, people
	with disabilities, veterans, refugees, LGBTQ – Lesbian, Gay, Bisexual, Transgender and Queer, etc.).

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12 CSL Limited Corporate Governance Statement 2018

3 Corporate Responsibility

Relevant governance documents:

Code of Responsible Business Practice

Anti-Bribery and Anti-Corruption Policy

Statement on the Prevention of Human Trafficking, Slavery and Forced Labour

CSL’s approach to Corporate

Responsibility is guided by the CSL Group values, the Code of Responsible Business Practice (the Code) and related policies.

3.1 Group Values

CSL has developed a set of values (Group Values) common to the diverse business units that form the CSL Group. The Group Values, endorsed by the Board, serve as the foundation for everyday decisionmaking. These values are superior performance, innovation, integrity, collaboration and patient focus.

3.2 Code of Responsible Business Practice

CSL first established a Code in December 2008, and the Code has been regularly reviewed and updated. Based upon the Group Values and other guiding principles, the Code outlines CSL’s commitment to responsible business practices and ethical standards. The Code sets out the rights and obligations that all directors, senior executives and employees have when conducting CSL’s business, including in relation to business integrity, safety and

quality of products and maintaining a safe and fair workplace. CSL also expects that its contractors and suppliers will observe the principles set out in the Code.

The Code has been distributed to all directors, senior executives and employees and a training program has been implemented across the CSL Group.

3.3 Modern Slavery

Each year, the Board approves CSL’s Statement on the Prevention of Human Trafficking, Slavery and Forced Labour. The Statement details the steps the CSL Group is currently undertaking to address and prevent modern slavery.

3.4 Serious Complaints Policy

In accordance with the Code, CSL is committed to ensuring that employees, contractors, suppliers and partners are able to raise concerns regarding any illegal conduct or malpractice and to have such concerns properly investigated. This commitment is implemented through CSL’s internal Global Serious Complaints (or

whistleblower) Policy, which sets out the mechanism (including a global telephone and internet hotline service) by which employees, contractors, suppliers and partners can confidently, and anonymously if they wish, voice such concerns in a responsible manner without being subject to victimisation, harassment or discriminatory treatment.

3.5 Anti-Bribery and Anti-Corruption

The Code provides a high-level policy statement on preventing bribery and inducements. In addition, the Board has adopted an Anti-Bribery and AntiCorruption Policy. This policy builds on the policy statement in the Code and supports the considerable amount of work being undertaken in many areas of CSL’s operations to ensure that CSL is acting with integrity (one of CSL’s core values) at all times.

CSL has established training programs for relevant employees across the CSL Group to raise awareness of CSL’s ‘zero tolerance’ approach to bribery and corrupt business practices at any level within CSL’s global operations.

13 CSL Limited Corporate Governance Statement 2018

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14 CSL Limited Corporate Governance Statement 2018
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4 Operation of the Board

4.1 Board Committees

Relevant governance documents:

As described previously, CSL has established five Board committees:

Board Charter

Corporate Governance and Nomination Committee Charter

• Corporate Governance and Nomination Committee (previously the Nomination Committee);

Audit and Risk Management Committee Charter

• Audit and Risk Management Committee;

Human Resources and Remuneration Committee Charter

• Human Resources and Remuneration Committee;

Innovation and Development Committee Charter

• Innovation and Development Committee; and

Securities and Market Disclosure Committee Charter

• Securities and Market Disclosure Committee.

Each committee is governed by a formal charter setting out its composition, functions and responsibilities. Each committee’s charter is approved by the Board.

Details of each committee meeting held during the year and individual directors’ attendance at these meetings can be found in the Directors’ Report.

A high-level description of each committee and its responsibilities is set out in the following table.

4 Operation of the Board continued

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|||||
|---|---|---|---|
|Committee|Members|Composition|Key Responsibilities|
|Corporate Governance|Ms Christine O’Reilly|• At least three directors, all of whom are non-|• Making recommendations to the Board on Board membership and ensuring appropriate mix of skills, experience,|
|and Nomination|(Chair)|executive directors.|expertise and diversity to enable the Board to oversee the delivery of CSL’s objectives and strategy.|
|Committee (previously|Dr Brian McNamee|• In the absence of the Board Chairman, chaired by|• Reviewing the membership of Board committees.|
|Nomination Committee)|Mr David Anstice|another independent, non-executive director elected|• Overseeing annual performance reviews of the Board, individual directors and Board committees.|
|(commencing from|by the members present.|
|Mr Bruce Brook|• Settling and following the procedure for the selection of new directors for nomination.|
|1 August 2018)|
|Dr Megan Clark|• Overseeing CSL’s approach to corporate governance and reporting upon this.|
|• Reviewing CSL’s compliance with the CSL Act.|
|Audit and Risk|Mr Bruce Brook (Chair)|• Between three to five directors, all of whom are non-|• Overseeing and reviewing CSL’s financial and risk management systems, compliance systems and internal control|
|Management Committee|Ms Marie McDonald|executive directors, and one of whom should have|framework (as set out in CSL’s Risk Framework).|
|Ms Christine O’Reilly|financial expertise.|• Overseeing CSL’s system of financial reporting with a view to safeguarding its integrity.|
|• Majority of members will be independent directors.|• Monitoring the activities and effectiveness of both internal and external audit functions.|
|• An independent Chair who is not Chair of the Board.|• Reviewing CSL’s global health, safety and environmental performance.|
|• In the absence of the committee Chair, chaired by|
|another independent, non-executive director elected|
|by the members present.|
|Human Resources and|Dr Megan Clark (Chair)|• At least three non-executive directors.|• Assisting the Board in fulfilling its responsibilities with respect to human resources and remuneration matters.|
|Remuneration Committee|Ms Christine O’Reilly|• Members will be independent directors.|• Overseeing the establishment of and regular review of CSL’s diversity policy.|
|Ms Marie McDonald|• Chaired by an independent director.|• Reviewing and recommending to the board the design of any share, performance option, performance rights,|
|Mr Abbas Hussain|• In the absence of the committee Chair, chaired by|retention and deferred cash incentive plans including performance measures and any amendments to such schemes|
|another independent, non-executive director elected|or plans.|
|by the members present.|

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|||||
|---|---|---|---|
|Committee|Members|Composition|Key Responsibilities|
|Innovation and|Mr David Anstice (Chair)|• At least three directors, being at least two non-|• Overseeing CSL’s technology, research and product development opportunities.|
|Development Committee|Professor John Shine|executive directors and the Managing Director.|• Ensuring relevant investments are undertaken in ways that are most likely to create long-term value for shareholders.|
|Mr Paul Perreault|• Chaired by an independent, non-executive director.|• Monitoring the strategic direction of CSL’s technology, research and product development programs.|
|Dr Megan Clark|• In the absence of the committee Chair, chaired by|• Providing guidance on issues and priorities, additions to the research and development pipeline and significant|
|Dr Tadataka Yamada|another independent, non-executive director elected|development milestones.|
|by the members present.|
|Dr Brian McNamee|• Overseeing the management of risk associated with the research and development projects.|
|• CSL’s Chief Scientific Officer is a required attendee of|
|Mr Abbas Hussain|
|committee meetings.|
|Securities and Market|Professor John Shine|• A minimum of any two directors, one of whom must|• Assists CSL in complying with reporting and disclosure obligations under the Corporations Act and ASX Listing Rules,|
|Disclosure Committee|(Chair)|be an independent director.|including continuous disclosure obligations and trading halts.|
|Mr Paul Perreault|• Chaired by the Board Chairman.|• Approving the allotment and issue, and registration of transfers, of CSL shares.|
|• In the absence of the Board Chairman, chaired by|• Overseeing compliance with other formalities which may be urgently required in relation to matters affecting CSL’s|
|another non-executive director elected by the non-|share capital.|
|executive directors present.|

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In addition, the Board may establish ad-hoc committees or empower existing committees to oversee specific activities.

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4 Operation of the Board continued

4.2 Remuneration of Directors and Senior Executives

CSL is committed to ensuring that it has competitive remuneration and human resources policies and practices that offer appropriate and fair rewards and incentives to directors and employees in the countries in which they are employed. CSL also seeks to align the interests of senior management and shareholders.

Details regarding the Human Resources and Remuneration Committee charter, and CSL’s remuneration policies and practices are set out in the Remuneration Report in the 2018 Directors’ Report.

The Remuneration Report includes details of the remuneration of directors (executive and non-executive) and other key management personnel of the CSL Group, details of CSL’s short-term incentive plans, and details of CSL’s longterm incentive plans.

4.3 Performance Evaluation

The Board resolved that from 1 August 2018 the Nomination Committee will adopt a new charter and be renamed the Corporate Governance and Nomination Committee.

The Corporate Governance and

Nomination Committee meets annually to review the performance of the Board, individual directors and the Board committees.

The effectiveness of the Board and its committees is assessed against the roles and responsibilities set out in the Board Charter and each committee charter.

Matters considered in the evaluation include:

• the conduct of Board and committee meetings, including the effectiveness of discussion and debate at those meetings;

• the effectiveness of the Board’s and committees’ processes and relationship with management;

• the timeliness and quality of meeting agendas, Board and committee papers and secretariat support; and

• the composition of the Board and each committee, focusing on the skills, experience, expertise and diversity of the Board necessary to enable it to oversee the delivery of CSL’s objectives and strategy.

The Chairman also holds discussions with individual directors to facilitate peer review.

This financial year, the Board appointed an external consultant to assist with the annual evaluation. The Corporate Governance and Nomination Committee suggested a number of actions for improvement as a result of this review. Actions agreed by the Board in response were documented and continue to be actioned by the Board. An internal assessment of the Board’s progress with these actions has been carried out.

The Corporate Governance and Nomination Committee is responsible for periodically evaluating the performance of the Managing Director, who in turn evaluates the performance of all other senior executives and makes recommendations in respect of their remuneration. These evaluations are based on specific criteria, including CSL’s business performance, whether the long term strategic objectives are being achieved and the achievement of individual performance objectives.

These performance evaluations took place in accordance with the previously described processes during the last financial year.

17 CSL Limited Corporate Governance Statement 2018

5 Risk Management and Financial Reporting

Relevant governance documents:

Audit and Risk Management Committee Charter

Corporate Responsibility Report Code of Responsible Business Practice

5.1 Role of the Audit and Risk Management Committee

The Audit and Risk Management Committee assists the Board in overseeing the integrity of financial reporting, the effectiveness of risk management and compliance systems and internal control framework, and the external and internal audit functions.

The Audit and Risk Management Committee has (in conjunction with management) reported to the Board as to CSL’s effective management of its material business risks in respect of the financial year ending 30 June 2018.

Senior executives and internal and external auditors frequently attend meetings on invitation by the Audit and Risk Management Committee. The Audit and Risk Management Committee holds regular meetings with both the internal and external auditors without management or executive directors present. Any director who is not a member of the Audit and Risk Management Committee may attend any meeting of the committee in an exofficio capacity.

5.2 Risk Framework

CSL has adopted and follows a detailed and structured Risk Framework to ensure that risks in the CSL Group are identified, evaluated, monitored and managed. This Risk Framework sets out the risk management processes and internal compliance and control systems, the roles and responsibilities for different levels of management, the matrix of risk impact and likelihood for assessing risk, and risk management reporting requirements.

The risk management processes and internal compliance and control systems are made up of various CSL policies, processes, practices and procedures, which have been established by management and/or the Board to provide reasonable assurance that:

• established corporate and business strategies are implemented, and objectives are achieved;

• any material exposure to risk is identified and adequately monitored and managed;

• significant financial, managerial and operating information is accurate, relevant, timely and reliable; and

• there is an adequate level of compliance with policies, standards, procedures and applicable laws and regulations.

CSL has adopted an internal ‘Risk Appetite Statement’ which is implemented throughout the CSL Group. CSL’s risk appetite is integral to the Company’s overall risk management processes and the Risk Appetite Statement sets forth the types and extent of risk that CSL is willing to accept in pursuit of its global strategic objectives, while adhering to CSL’s core values and reinforcing its commitment to corporate responsibility.

As part of the Risk Framework, an Operational Risk Management Team of responsible executives reports to a Global Risk Leadership Team, which in turn reports to the Audit and Risk Management Committee, including an assessment of the effectiveness of CSL’s management of material risks. These teams are responsible for implementing,

18 CSL Limited Corporate Governance Statement 2018

5 Risk Management and Financial Reporting continued

coordinating and facilitating the risk management process across the CSL Group. This includes quantifying and monitoring certain business risks identified and evaluated as part of the risk management process, including those relating to operating systems, the environment, health and safety, product quality, physical assets, security, disaster recovery, insurance and compliance. Each manufacturing site and each major function in the Group has its own Risk

Management Committee which reports to the Operational Risk Management Team on a semi-annual basis. The CSL Group also has a Global Risk and Insurance Manager who is responsible for monitoring and coordinating the implementation of the Risk Framework throughout the CSL Group. The governance and oversight of risk management as described is illustrated following.

The oversight of risk management associated with research and development projects is one of the responsibilities of the Innovation and Development Committee. The research and development operations have a number of management committees that report into the Innovation and Development Committee.

The oversight of the management of risks that are not the subject of the Risk Framework or associated with research and development projects, such as strategic and reputational risk, is a responsibility of the Board.

Risk assessment and management policies are reviewed periodically, including by the CSL Group’s internal audit function.

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Board
RESPONSIBILITY
Oversight of Risk Audit & Risk Internal Audit
Management and Materiality Management Committee
Implementation of process Global Risk SDGRIM/Insurance
and Board reporting Leadership Team
Specialist Risk Strategy and IA Strategy CSLB Global R&D Finance Governance & Quality &
implementation of standards ComOps Quality Sustainability Business Services
Oversight and implementation of Operational Risk
Risk Framework for BU application Management Team
Logistics Legal EHSS MBR BERN KAN PLASMA BMW SEQIRUS SOURCING BT
PKV LVP HS
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19 CSL Limited Corporate Governance Statement 2018

5 Risk Management and Financial Reporting continued

5.3 Sustainability Risks

In the course of CSL’s business operations, CSL is exposed to a variety of risks that are inherent to the pharmaceutical industry, and in particular the plasma therapies industry. Key business/industry risks and key financial risks are set out in the 2018 Annual Report available at CSL.com.

In addition, further detail regarding CSL’s ongoing efforts to operate ethically and responsibly in respect of sustainability are set out in CSL’s annual Corporate Responsibility Report.

5.4 External Auditor

One of the chief functions of the Audit and Risk Management Committee is to review and monitor the performance and independence of the external auditor. CSL’s external auditor for the financial year was Ernst & Young, who was appointed by shareholders at the 2002 Annual General Meeting.

The Audit and Risk Management Committee has established a policy in relation to the engagement of the

external auditor for non-audit services to ensure the independence of the external auditor. The Audit and Risk Committee has considered the nature of the nonaudit services provided by the external auditor during the financial year and is satisfied that the services provided, and the amount paid for those services, did not compromise the independence of the external auditor. Details of fees paid (or payable) to Ernst & Young for non-audit services provided to the CSL Group in the year ended 30 June 2017 are set out in the 2018 Directors’ Report, available at CSL.com.

The signing partner for the external auditor is usually rotated at least every five years, and the auditor is required to make an independence declaration annually. Mr Rodney Piltz acted as the signing partner for Ernst & Young for the 2016/17 financial year, which was the first year he acted in this role for CSL. Ernst & Young has provided an independence declaration to the Board for the reporting period. The declaration forms part of the 2018 Directors’ Report. The Audit and Risk Management Committee undertakes

a formal review of the appropriateness of continuing with the incumbent audit firm prior to approving the appointment of a new signing partner by rotation.

The external auditor attends each Annual General Meeting and is available to answer questions from shareholders relevant to the audit and the preparation and content of the auditor’s report.

5.5 Internal Auditor

Another important function of the Audit and Risk Management Committee is to review and monitor the performance of CSL’s internal audit operation. CSL’s internal auditor for the financial year was PricewaterhouseCoopers.

The role of CSL’s internal audit function is to provide independent and objective assurance to the Audit and Risk Management Committee and executive management regarding the effectiveness of CSL’s risk management processes (including the state of any material risks) and internal compliance and control systems.

As noted in section 5.2, the internal compliance and control systems are made up of various CSL policies, processes, practices and procedures.

An internal audit plan is prepared by the internal auditor and reviewed and approved by the Audit and Risk Management Committee on an annual basis (for the upcoming financial year). The internal audit plan seeks to cover, over a rolling basis, all significant activities of CSL, including its controlled entities and their operations.

In addition, CSL’s internal auditor may be requested to perform investigative reviews on suspected fraudulent activities or serious (or whistleblower) complaints. In line with CSL’s Global Serious Complaints Policy, any complaint made against the Managing Director, any member of CSL’s Global Leadership Group or any regional serious complaints reports co-ordinator, must be investigated by CSL’s internal auditor, and the internal auditor’s written report in respect of that investigation must be provided directly to the Audit and Risk Management Committee.

20 CSL Limited Corporate Governance Statement 2018

5 Risk Management and Financial Reporting continued

• CSL’s financial records for the relevant period have been properly maintained in accordance with the Corporations Act; and

5.6 Integrity in Financial Reporting and Regulatory Compliance

The Board is committed to ensuring the integrity and quality of its financial reporting, risk management and compliance and control systems.

• they have established and maintained an adequate risk management and internal compliance and control system to facilitate the preparation of a reliable financial report and the maintenance of the financial records, which, in all material respects, implements the policies adopted by the Board, and the statements made above are based on that system, which is operating effectively.

Prior to giving their directors’ declaration in respect of the annual and half-year financial statements, the Board requires the Managing Director and the Chief Financial Officer to each sign a written declaration to the Board that, in their opinion:

• the financial statements and associated notes comply with the International Financial Reporting Standards (IFRS) Accounting Standards as required by the Corporations Act, the Corporations Regulations and the CSL Group Accounting Policies;

This written declaration was received by the Board prior to its approval of the financial statements for the financial year ended 30 June 2018.

• the financial statements and associated notes give a true and fair view of the financial position as at the relevant balance date and performance of CSL for the relevant period then ended as required by the Corporations Act;

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21 CSL Limited Corporate Governance Statement 2018

6 Market Disclosure

Relevant governance documents:

Communications and External Disclosure Policy

6.1 Communications and External Disclosure

CSL has a Communications and External Disclosure Policy. This policy operates in conjunction with CSL’s more detailed internal continuous disclosure policy. Together, these policies are designed to facilitate CSL’s compliance with its obligations under the ASX Listing Rules and the Corporations Act by:

• providing guidance as to the types of information that may require disclosure, including examples of practical application of the rules;

• providing practical guidance for dealing with market analysts and the media;

• identifying the correct channels for passing on potentially marketsensitive information as soon as it comes to hand;

• establishing regular occasions at which senior executives and directors are actively prompted to consider whether there is any potentially market-sensitive information which may require disclosure; and

• allocating responsibility for approving the substance and form of any public disclosure and communications with investors.

6.2 Shareholder Communication

In addition to its formal disclosure obligations under the ASX Listing Rules and the Corporations Act, the Board uses several additional means of communicating with shareholders and investors. These include:

• the half-year and annual report and Shareholder Review;

• posting media releases, public announcements, notices of general meetings and voting results, and other investor related information on CSL.com; and

• annual general meetings, including webcasting which permits shareholders worldwide to view proceedings.

CSL has a dedicated Governance page on CSL.com, which supplements the communication to shareholders in the annual report regarding CSL’s corporate governance policies and practices. The Communications and External Disclosure

Policy outlines the ways in which CSL seeks to communicate and interact with shareholders, facilitate and encourage participation at shareholder meetings and how shareholders may elect to receive electronic communications from, and communicate electronically to, CSL.

To ensure that shareholders and other stakeholders have a full understanding of CSL’s performance and strategies, CSL undertakes to convene a number of analyst briefings and investor presentations and roadshows each year. CSL also convenes two shareholder briefings each year, at different locations in Australia and New Zealand. These updates provide an opportunity for analysts, investors and shareholders to speak directly with senior management and ask questions.

The Board is committed to monitoring ongoing developments that may enhance communication with shareholders, including technological developments, regulatory changes and the continuing development of ‘best practice’ in the market, and to implementing changes to CSL’s communications strategies whenever reasonably practicable to reflect any such developments.

22 CSL Limited Corporate Governance Statement 2018

7 Securities Dealing

Relevant governance documents:

Securities Dealing Policy

By promoting director and employee ownership of shares, the Board hopes to encourage directors and employees to become long-term holders of CSL securities, aligning their interests with those of CSL. CSL, and its equitybased remuneration scheme, do not condone short-term or speculative trading in CSL securities by directors and employees, nor do they permit directors or employees to enter into any price protection arrangements with third parties to hedge such securities or margin loan arrangements in relation to CSL securities.

CSL has a comprehensive Securities Dealing Policy which applies to all directors and employees. The policy aims to inform directors and employees of the law relating to insider trading and provide them with practical guidance for avoiding unlawful transactions in CSL securities.

A copy of CSL’s Securities Dealing Policy has been lodged with the ASX in accordance with Listing Rule 12.9.

John Shine AC Chairman

14 August 2018

23 CSL Limited Corporate Governance Statement 2018

Corporate Directory

SHARE REGISTRY

Computershare Investor Services Pty Limited

Yarra Falls 452 Johnston Street Abbotsford VIC 3067

GPO Box 2975 Melbourne VIC 3001

Enquiries within Australia: 1800 646 882

Enquiries outside Australia: +61 3 9415 4178

Investor enquiries online: Investorcentre.com/contact

AUDITORS

Ernst & Young

Ernst & Young Building 8 Exhibition Street Melbourne VIC 3000

GPO Box 67 Melbourne VIC 3001

Telephone: +61 3 9288 8000 Facsimile: +61 3 8650 7777

REGISTERED HEAD OFFICE

CSL Limited ABN 99 051 588 348

45 Poplar Road Parkville VIC 3052 Australia

Telephone: +61 3 9389 1911 Facsimile: +61 3 9389 1434 CSL.com

FURTHER INFORMATION

For further information about CSL and its operations, refer to Company announcements to the Australian Securities Exchange and our website:

CSL.com