Council governance

Spreading their wings: Building a successful local authority trading company

This report by the English arm of the international chartered accounting practice Grant Thornton provides an overview of experience of local authority trading companies within England. It’s a marked contrast with practice in New Zealand. Specifically, there is no statutory framework equivalent to our CCO framework and, perhaps as a consequence, a number of examples of failure.

The Governance, Management and Accountability of Arms’-length Entities

This report was prepared by the local government think tank for a consortium of New Zealand and Australian supporters. The term arm’s-length entities was used rather than council controlled organisations as this was the preferred term for the principal funder, Local Government Victoria. It’s an in-depth look at the strengths and challenges with the CCO model in particular.

Council of Scottish Local Authorities Submission to Local Governance Review

This submission was prepared in response to the Scottish Government’s Local Governance Review. It places a very strong emphasis on involvement of communities in decisions which affect them stating in the executive summary “in making the voice of local people heard across all public services, we can address the huge social and financial costs of persistent inequality in this country.”

Community Banking

Community Banking Report

This report was prepared some years ago on behalf of a number of New Zealand local authorities interested in learning more of the experience of the Bendigo Bank in community banking. Although the Bendigo experience has developed since the time of the report, it still provides a very useful insight into the principles which have underpinned what has been a very successful partnership between a listed for-profit bank and the communities it serves.

Corporate Governance

Both of the reports listed under this heading can be seen as resonating with the current interest within local (and central) government in well-being.

King IV Report

This report was prepared for the Institute of Directors Southern Africa which in recent years has been an international leader in rethinking the role and responsibilities of corporate governance in the commercial sector. The King IV Report has had a significant influence on thinking within institutes of directors globally. It takes a much broader view of the responsibilities of good governance than simply optimising the interests of shareholders. Its overarching theme is sustainable development which it describes as “sustainable development understood as development that meets the needs of the present without compromising the ability of future generations to meet their needs is a primary ethical and economic imperative. It is a fitting response to the organisation being an integral part of society, its status as a corporate citizen and its stakeholders’ needs, interests and expectations.”

Why and how investors can respond to income inequality

This report looks at the responsibilities of corporate governance from the perspective of major institutional investors (some of the world’s largest were supporters). It was prepared jointly by Principles for Responsible Investment (a United Nations affiliate) and The Investment Integration Project a US based NGO. The report’s rationale is expressed as “Institutional investors are increasingly realising that income inequality — the gap in income and wealth between the very affluent and the rest of society — has become one of the most noteworthy socioeconomic issues of our time. It has the potential to negatively impact institutional investors’ portfolios as a whole; increase financial and social system-level instability, damage output and reduce economic growth, and contribute to the rise of populism, extremism, isolationism and protectionism.”

New thinking

The three reports in this section reflect different strands in thinking about corporate governance.

Shareholder Capitalism: a system in crisis

This report from the New Economics Foundation is intended to be a radical rethink of current shareholder capitalism. The report has underpinned current thinking in the UK about options for extending share ownership to company employees. The essence of the argument in the paper is “companies should be explicitly accountable to a mission and a set of interests beyond shareholder returns. Equally, investment must provide long-term capital for socially and environmentally useful projects, and damaging forms of speculation must be restricted.”

Humanity at work: Mondragon, a social innovation ecosystem case study

The Mondragon cooperatives have long been recognised as one of the largest most successful and capital intensive cooperative groups ever developed. Reviews of the group have typically looked at their success from a business development perspective. This report by the Young Foundation takes a different perspective considering Mondragon as a case study to help better conceptualise the potential for social innovators to come together in eco-systems and to consider how to create inclusive yet successful economic strategies based on an ongoing commitment to social benefits and egalitarian cooperative working model. The Young Foundation puts this forward as an example of an inclusive approach to industrial organisation.

Subnational Governance and Development: a new perspective

This paper was co-authored by Peter McKinlay, Jenny Hodgson who is chief executive of the South African based Global Fund for Community Foundations and Barry Knight from the UK-based Centre for Research & Innovation in Social Policy and Practice. It examines how the practice of governance, especially at a subnational level, has been evolving since the 1990s, focusing on the implications for “community governance”. An overview of recent thinking on the nature of governance opens up the question of whether “governance” may be exercised through institutions entirely separate from government. Examples are considered from Australia’s experience with “community banking”, and from trusts and foundations that have emerged from major public sector restructuring. The paper considers the work of the Global Fund for Community Foundations as an important civil society contribution to subnational governance in developing countries, examining the role of foundations in building capacity and capability in disadvantaged communities through a new approach grounded in an understanding of “community governance”.