Co-operatives UK has released a new Code of Governance for the sector. Launched at the Practitioners Forum in Manchester, the revised code draws on best practice from the wider business sector, while reflecting the distinctive characteristics of co-ops, such as accountability to members and member ownership and control.
Co-operative advice manager, Emma Laycock, says the review was required in light of changes to corporate governance practices occurring both nationally and internationally.
“The code hadn’t been updated since 2013,” she says. “Within that time, there has been a new UK corporate governance code and the Wates Corporate Governance Principles for Large Private Companies – so there had also been more thinking around what best practice looks like. Since we do not follow those exact codes, it made sense that we then looked at our code for co-ops as well to make sure it reflects best practice.”
In consultation with members and the Co-operative Governance Expert Reference Panel, Co-operatives UK developed a new code that can be used by all co-operatives, irrespective of type or size. The code follows a similar structure to that adopted by the UK Corporate Governance code, but maintains a focus on the co-op difference through a series of principles and provisions that can be followed to demonstrate compliance.
“There will be some elements in our code that you will be able to see in the UK corporate governance code or in the Wates Principles of Corporate Governance where they apply to all types of organisations,” says Laycock. “But there may be some instances where it may be directly the opposite of what it is in the UK code or where we have changed it based on practice within co-ops.”
Unlike the previous editions, the code has been written for all co-operatives, regardless of the sector they operate in.
“We made an early decision that this code would not be for one specific sector and instead it would be applicable to all co-ops,” says Laycock. She adds that co-ops should feel they can apply the code in the way that works best for them and provides the most value to their members.
Like earlier editions, the revised code is written in the form of principles that all co-ops can abide by, as well as provisions that co-ops can use to map their compliance. However, the new version is shorter and includes fewer provisions to make it easier to apply.
“We hope that all co-ops can get behind the principles, even if the ways they demonstrate them through the application of the provisions are different,” she says.
Emma Laycock highlights how it remains important for Co-operatives UK’s retail society members to be able to demonstrate compliance against the code, but acknowledges that will be less important for smaller co-ops: “So, as a result, it is less about compliance with the provisions and more about how the co-ops are embodying the principles and communicating their practice to their members.”
She adds: “We would like co-operatives to see and feel compliance rather than just stating that they comply with a certain percentage of the code. It is also about telling success stories and being able to explain why they are not complying in a compelling way so that, in turn, their members have all the information they need to hold their co-op to account. That may differ depending on the size of each co-op.”
Co-operatives UK has created a suite of resources available to help co-ops to use the code in a way that is right for them. The trade body is also developing guidance to assist co-ops to communicate their governance practice and compliance with the code principles to members.
Co-ops requiring assistance to check their compliance with the code can receive further support from Co-operatives UK, particularly in the process of collecting compliance data, auditing it and introducing subsequent governance changes.
“Where governance is weak or neglected co-ops can be less effective and sustainable. Part of the co-op difference is underpinned by good governance and having a code, which can be linked to clear principles,” adds Laycock.
“Other sectors have codes. Our revised code provides a level playing field for co-ops. This does not make them more mainstream, but can provide reassurance to co-ops and their members around governance practices.”
Co-operatives UK’s initiative echoes those of movements in Sweden and the Netherlands where new governance codes were recently adopted by national trade bodies.