Institute of
Public Administration
Irish Institute of Pensions
Management
Governance Codes, Ethics
and Codes of Conduct
Paul Turpin
31 October 2013
Institute of Public Administration | 57-61 Lansdowne Road | Dublin 4 | Ireland | Ph. +353 1 2403600 | www.ipa.ie
Questions
1. What is the value in adopting a corporate
governance code?
2. Will things still go wrong?
3. What role for ethics and codes of
conduct?
4. Who is accountable?
© IPA
How can Governance Codes
promote trust?




© IPA
Crises have created mistrust
Calls for more regulation
Criticisms of boards of directors
Concerns with stewardship
Regulation and guidance seeks
to address concerns
 UK Corporate Governance Code (formerly
Combined Code)
 Code of Practice for the Governance of State
Bodies
 Corporate Governance Code for Credit
Institutions and Insurance Undertakings
 Stewardship Code (responsibilities of
Institutional Investors)
© IPA
Focus on the Board/ those with
governance responsibilities
“Every company should be headed by an
effective board which is collectively
responsible for the long- term success of the
company”
- Corporate Governance Code
What is the impact of more
regulation and guidance?
“My basic message today is that the buck
stops with the Board of Directors”
© IPA
Or?
“These new regulations will
fundamentally change the way
we get around them”
© IPA
The Challenge
 Concern about behaviors despite
guidelines
 Are there basic enduring principles?
 How can you insure ethical
standards?
 The Board must set the tone
© IPA
Governance Codes
Why have a Code?
© IPA
Adopting a Governance Code
for an Organisation
 What benefits should Code bring?
 What should be in a Code
– Learning from previous problems
 Who will use a Code?
– Internal
– External
© IPA
Governance Briefing






© IPA
Key roles and mandate of the organisation
Strategic and business planning
Risk management, audit, internal controls
Role and composition of the Board
Reporting and external relationships
Standards of Behaviour
Constant review of
Governance codes
 UK Code (formerly Combined Code)
– Boards of directors are responsible for
the governance of their companies
– Comply or explain
– (aim to) attack “the fungus of “boiler
plate” which is …dead communication”
© IPA
Corporate Governance Code
for Credit Institutions (CBOI)
 “The Board of each institution is
responsible for:
– The effective ,prudent and ethical oversight of
the entity
– Strategy
– Risk and compliance being properly managed
 What does CB mean by ethical?
© IPA
Ethics
 Determine what is
– Wrong, right, good, bad
 Reflected in codes of conduct
 Codes of conduct provide an aide against
which decisions can be made and acted
upon
© IPA
Stewardship Code
 Institutional investors should
– Engage with companies on matters such as
strategy, risk…and corporate governance
– Have a policy for identifying and managing
conflicts of interest
– Be satisfied companies adhere to the spirit of
the Corporate Governance Code
© IPA
Governance Codes
 Do things still go wrong?
© IPA
Why do things go wrong
 Poor leadership and decision making
processes
 Inadequate systems and controls
 Ineffective risk management
 Poor standards of conduct
© IPA
Responses to controversy
and misconduct




© IPA
Loss of business
Legislation and regulation
Codes of Governance
Codes of Conduct
Codes of Conduct
“A Code of Conduct (contains) the
principles that an organization
considers significant and believes are
fundamental to their successful
operation”
© IPA
Content of a Code of Conduct
 Integrity
– neutrality, honesty
 Information
– Enhance accountability; Respect confidentiality
 Obligations
 Loyalty
 Fairness
– (impartiality, employment equality)
 Work/ External Environment
© IPA
Code of Conduct - definition
 The Code of Conduct serves as
– a framework for ethical decision making within an
organization
– a communication tool that informs internal and
external stakeholders about what is valued by a
particular organization, its employees and
management.
© IPA
Code of Conduct- examples
 Supplier Code of Conduct
– Apple is committed to ensuring that working
conditions in Apple’s supply chain are safe, that
workers are treated with respect and dignity, and that
manufacturing processes are environmentally
responsible.
 Google code of conduct – “Don’t be evil”
– “it's about providing our users unbiased access to
information, focusing on their needs and giving them
the best products and services that we can. But it's
also about doing the right thing more generally
© IPA
Revenue Commissioners
 Commitment to Quality Service
– “devotes a great deal of time and effort to
providing a top quality service to our
customers. We have a responsibility to
provide clear information and to make dealing
with us as easy as possible.
 Presumption of Honesty
– You can expect to be treated as honest in
your dealings with Revenue unless there is
clear reason to believe otherwise
© IPA
The Seven Principles of Public
Life (Nolan Principles)
1. Selflessness
Decisions solely in the public interest
2. Integrity
no obligation to outside individuals or organisations
3. Objectivity
Choices made on merit
4. Accountability
submit to appropriate scrutiny
© IPA
The Seven Principles of Public
Life
5. Openness
Restrict information only where public interest
clearly demands
6. Honesty
Declare and resolve any conflicts with private
interests
7. Leadership
Promote by example
© IPA
Governance Codes
 Some Conclusions
© IPA
UK (Combined) Corporate
Governance Code
 What a Board does and how it sets the
values of the company
 Five Principles
–
–
–
–
–
© IPA
Leadership - Board
Effectiveness - Composition
Accountability - Reporting
Remuneration - Sufficient
Relations with Shareholders - Dialogue
Corporate Governance
Codes- what benefits?





© IPA
Aiding performance
Legislation/ avoiding sanctions
Reputation
External credibility
Ethical leadership and oversight
Compliance with Codes
should give assurance





© IPA
Board
Employees
Customers
Suppliers
Investors
Good governance requires
leadership to walk the talk
 “The tone at the top sets the tune in the
middle…
 “You don’t have to be a weather man to
see which way the wind is blowing..
– Bob Dylan
© IPA
Appendix
© IPA
The principles of good
governance
Independent Commission on Good Governance in
Public Services (2004)
1. Focus on the organisation’s purpose and
outcomes for citizens and service users
2. Performing Effectively in clearly defined
functions and roles
3. Promoting values for the whole
organisation and demonstrating the values
of good governance
© IPA
Principles of good governance
4. Taking informed, transparent decisions
and managing risk
5. Developing the capacity of the governing
body to be effective
6. Engaging stakeholders and making
accountability real
© IPA