The revised Co-operative Corporate Governance Code
Of interest to governance professionals working in all types and sizes of co-operatives and others involved in good governance
In November 2019, Co-operatives UK published the revised version of the Co-operative Corporate Governance Code. The updated version fully incorporates the specific nature of governance in member-owned entities, as one would expect, and reflects recent developments in the UK Corporate Governance Code and the Wates Corporate Governance Principles. Of interest in the revised version is the focus on democracy and quality leadership in establishing good governance.
The Code is divided into six governance headings supported by principles and provisions, similar to other governance codes. The headings are:
- Member voice, participation and engagement
- Co-operative leadership and purpose
- Roles and responsibilities
- Board composition, succession and evaluation
- Risk, financial management and internal controls
- Remuneration of the board and executive leadership.
Member voice, participation and engagement
It is unsurprising that this aspect of governance is placed ahead of others given the nature of ownership in co-operatives and that the first principle emphasises the accountability of the board to members. The second principle specifically relates to the role of members in holding the board to account in accordance with the sector’s values and principles, and is somewhat refreshing in its explicit approach.
Co-operative leadership and purpose
The leading principles under this heading relate to the board’s role in meaningfully exhibiting, informing and upholding the values and culture of the organisation and the movement. The provisions focus on the importance of articulating how the core facets of member ownership, democracy and the sector’s values help deliver the organisation’s strategy.
Roles and responsibilities
This section’s principles will be familiar to those working in governance and reflect the good practice set out in various codes. With 22 supporting provisions, it has more detail as to how the board should undertake its functions and duties. These include member and wider stakeholder engagement; conflicts of interest; other directorships; tenure of the chair; board information and support; committees; and the role of the secretary.
Board composition, succession and evaluation
In addition to the usual principles one would expect to see under a heading such as this, there is a focus on the need for the board to reflect the diversity of the co-operative’s membership: gender, social and ethnic backgrounds, cognitive and personal strengths. Supporting this drive for diversity is the requirement for collective competency and the importance of formal inductions, ongoing development, support and annual evaluations.
Risk, financial management and internal controls
This is another aspect of many governance codes which will not surprise those in the governance profession. The issue of subsidiary and group structure oversight and control is tackled in one of the principles, alongside provisions relating to the role and composition of the audit committee.
Remuneration of the board and executive leadership
Once more the important role of members is emphasized, this time regarding the approval of remuneration policies.
The updated code should not present any new or unfamiliar governance concepts or practices for experts, but is refreshing in its espousal of board diversity, in its widest sense. Provisions relating to member and stakeholder engagement and accountability are welcome and offer ideas for other codes looking at enhancing this aspect of their recommended practice.
It is interesting that there is little, if any, explicit mention of the importance of governance mechanisms relating to cybersecurity and digital developments or to the way in which boardroom behaviours and ethics can have an impact on the effectiveness and success of the organisation. While the code does underline the importance of sustainable success, there are no provisions specifically relating to environmental sustainability. These are areas that are likely to exercise all boards in every type of organization in the coming years and will undoubtedly lead to many governance codes being reviewed and revised accordingly.
