Prelude: This blog provides a background to the upcoming PAI Corporate Governance Course which starts on the 25th January 2022. It is in two parts – Part 1 republishes a blog that I wrote in August 2016 to coincide with the launch of the then updated the Code of Practice for the Governance of State Bodies.
Part 2 relates to supplementary material that has been published for the Code. Publication has been in two tranches. The September 2020 publication contains a new Annex to the Code focussing on Gender Balance, Diversity, and Inclusion.
The June 2021 publication is a reaffirmation and a revision of the framework of governance procedures applying to State Bodies in relation to specific superannuation and remuneration proposals – can be found at https://www.gov.ie/en/publication/7adff-governance/
On 10 September 2020 a new Annex on Gender Balance, Diversity, and Inclusion was launched to supplement the existing Code of Practice for the Governance of State Bodies. The overarching target is that each State Board should have at least 40 per cent representation from each gender. At the launch of the Annex, the Minister for Public Expenditure and Reform, Michael McGrath TD said
– “…Although there has been very good progress in improving gender equality in State boards, still, as of last year approximately 40% of State Boards did not yet meet this requirement. Ireland is making good progress at achieving gender balance on State boards, but the progress is uneven and is far from complete. We need to do more”.
The new Annex has been designed to ensure that the Governance Code will strengthen the pressure on all State Boards to accelerate progress towards full gender balance, as well as promoting a culture of diversity and inclusion more generally throughout each organisation. In particular, State bodies which have not reached the 40 per cent target are now required to set out the measures that they will take to deliver on the target.
On 29 June 2021, the Government agreed to re-affirm and revise the existing framework of governance procedures applying to State Bodies in relation to specific superannuation and remuneration proposals.
To implement the decision, a number of amendments to the Code were necessary. For example, the following two amendments have been included:
- A new paragraph in relation to severance schemes (Voluntary Redundancy and Voluntary Early Retirement Schemes), and
- A new paragraph in relation to pension schemes was included.
Sum-up: The rationale behind changes to the Code is to ensure that both commercial and non-commercial State bodies continue to meet the highest standards of corporate governance. As the Department of Public Expenditure and Reform stated in its Press Release on 29 June 2021 regarding the Code
– “It provides a framework for the application of best practice and is intended to take account of developments in respect of oversight, reporting requirements and the appointment of Board members. The Code is based on the underlying principles of good governance: accountability, transparency, probity and a focus on the sustainable success of the organisation over the longer term”.
If some State Bodies feel they haven’t got the resources to meet all of the Code’s requirements, then they must explain why. Specifically, in the section of the Code on ‘Comply or Explain’, it is made clear that State Bodies can get exemptions from specific Code provisions, provided the objectives of those provisions can be achieved by other governance measures. Any State bodies with derogations from the provisions of this Code should also have explanatory notes written into their oversight agreements with the relevant Minister or parent Departments with reasons for the exemptions clearly explained.
Finally, it is important that all of the State bodies continue to recognise that the Code is a living document and that they have to be familiar with the latest changes so that they put them fully into play.
Tom Ferris, Consultant Economist.
Tom Ferris is a Consultant Economist specialising in Better Regulation. He lectures on a number of PAI courses and blogs regularly for PAI. He was formerly the Senior Economist at the Department of Transport, Ireland.