1. Institute of Public Administration Institute of Public Administration | 57-61 Lansdowne Road | Dublin 4 | Ireland | Ph. +353 1 2403600 | www.ipa.ie Irish Institute of Pensions Management Governance Codes, Ethics and Codes of Conduct Paul Turpin 31 October 2013

2. 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

3. How can Governance Codes promote trust?  Crises have created mistrust  Calls for more regulation  Criticisms of boards of directors  Concerns with stewardship

4. © IPA 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)

5. 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

6. What is the impact of more regulation and guidance? © IPA “My basic message today is that the buck stops with the Board of Directors”

7. Or? “These new regulations will fundamentally change the way we get around them” © IPA

8. The Challenge  Concern about behaviors despite guidelines  Are there basic enduring principles?  How can you insure ethical standards?  The Board must set the tone

9. Governance Codes Why have a Code? © IPA

10. 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

11. © IPA Governance Briefing  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

12. © IPA 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”

13. © 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?

14. © 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

15. 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

16. Governance Codes  Do things still go wrong? © IPA

17. Why do things go wrong  Poor leadership and decision making processes  Inadequate systems and controls  Ineffective risk management  Poor standards of conduct

18. © IPA Responses to controversy and misconduct  Loss of business  Legislation and regulation  Codes of Governance  Codes of Conduct

19. © IPA Codes of Conduct “A Code of Conduct (contains) the principles that an organization considers significant and believes are fundamental to their successful operation”

20. © IPA Content of a Code of Conduct  Integrity –neutrality, honesty  Information –Enhance accountability; Respect confidentiality  Obligations  Loyalty  Fairness –(impartiality, employment equality)  Work/ External Environment

21. © 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.

22. © 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

23. © 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

24. © 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

25. © 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

26. Governance Codes  Some Conclusions © IPA

27. UK (Combined) Corporate Governance Code  What a Board does and how it sets the values of the company  Five Principles –Leadership - Board –Effectiveness - Composition –Accountability - Reporting –Remuneration - Sufficient –Relations with Shareholders - Dialogue

28. © IPA Corporate Governance Codes- what benefits?  Aiding performance  Legislation/ avoiding sanctions  Reputation  External credibility  Ethical leadership and oversight

29. © IPA Compliance with Codes should give assurance  Board  Employees  Customers  Suppliers  Investors

30. © IPA 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

31. Appendix © IPA

32. 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 The principles of good governance

33. © IPA 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 Principles of good governance