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Governance Principles Released for Cooperatives and Mutuals

23 August 2018 at 3:46 pm
Luke Michael
The first official governance principles for cooperatives and mutuals in Australia have been released, hoping to promote effective member-focused governance in the sector.

Luke Michael | 23 August 2018 at 3:46 pm


Governance Principles Released for Cooperatives and Mutuals
23 August 2018 at 3:46 pm

The first official governance principles for cooperatives and mutuals in Australia have been released, hoping to promote effective member-focused governance in the sector.

The Co-operative and Mutual Enterprise (CME) Governance Principles were designed to clearly distinguish CMEs from investor-owned enterprise through its member ownership and governance.

The Business Council of Co-operatives and Mutuals (BCCM) – the peak body for CMEs – put together the principles over 18 months, with considerable input from cooperative and mutual businesses.  

BCCM CEO Melina Morrison told Pro Bono News the release of these principles was extremely timely for the sector.  

“Their release is very timely given the revelations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry,” Morrison said.

“[We] wanted to ensure that correct governance for cooperative and mutuals could be defined and shared amongst all Australian member-owned businesses.

“Our research told us that board members wanted to better understand their responsibilities around CMEs and deepen their understanding of co-operative principles.”

BCCM developed nine central principles for CME governance. Eight of these principles reflect the Australian Securities Exchange (ASX) Corporate Governance Principles and Recommendations.

But BCCM found while CMEs generally wanted to confirm their commitment to robust governance, the current ASX guidelines did not articulate “the member value proposition”.

“This is because the ASX principles were developed for the paradigm of an investor-owned business, not a member-owned business,” the principles document said.

Morrison said these new CME principles had a “stronger member-owned focus”.

“And there is one new principle: create, protect and return value to members,” she said.

“The new principle distinguishes the CME sector from investor-owned bodies and informs the CME principles, recommendations and commentary generally. The CME principles also emphasise the importance of showing concern for other stakeholders apart from members.

“CME Governance Principles and Recommendations use these as guidelines for cooperatives to put their values into practice.”

Morrison said she hoped BCCM members and the sector more broadly embraced these principles, either alone or together with other adopted principles and codes.

“CME Governance Principles are voluntary, and we encourage the ASX’s ‘if not why not’ approach for those Australian CMEs that wish to formally adopt the principles,” she said.

“The BCCM welcomes feedback on these principles, and looks forward to working with the sector on developing practical application tools to assist smaller CMEs on implementation.”

“These principles offer CMEs a common set of principles to use when explaining to the public what differentiates their approach, to the approach taken by listed companies,” Morrison said.

BCCM believes these principles will lay the foundations for stronger collaboration between CMEs, and Morrison added CMEs could “serve their members even better by forming cross-sectoral alliances”.

“In this tense atmosphere of the royal commission into business behaviour and misconduct, a focus on strong governance is very timely,” she said.

“It is a set of principles by the directors of CMEs that speak directly and assist them in making the decisions they make on behalf of members.”

BCCM will publish a set of notes for small CMEs shortly.    

Luke Michael  |  Journalist  |  @luke_michael96

Luke Michael is a journalist at Pro Bono News covering the social sector.

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