A short history of corporate governance – and why we’re reviewing the NHF Code of Governance

Paul Bayly
Paul Bayly

Paul Bayly, 09 March 2020

Since we published the current NHF Code of Governance in 2015, a lot has changed in the housing sector and in the wider world of governance. For the sector, the Grenfell Tower fire and considerable political change instantly come to mind. Beyond housing, the UK Corporate Code and Charity Governance Code have recently been reviewed and new versions published.

Why is now the time to update our code?

I think we need to start by understanding why we have a code of governance in the first place.

Back in the early 1990s, a number of high profile corporate failures led the Financial Reporting Council and the London Stock Exchange to set up a committee, which would eventually produce the Cadbury Report. The report’s recommendations went on to inform the development of codes of governance around the world.

Issues of trust, accountability and control were at the heart of the Cadbury Report. The committee’s focus was on the relationship between companies and their shareholders and other financially interested parties. The issues raised by Cadbury are as relevant today as they were 28 years ago, and the report was important for ensuring there was trust and confidence in the market. The guidance Cadbury produced can be traced through to its successor, the UK Corporate Code, and other modern codes of governance, including our own.

The corporate world has evolved significantly since the 1990s, as have the challenges boards need to face to lead an organisation. The same applies to our sector – the challenges we face today aren’t the same as those five years ago, and the operating environment has altered. As part of this review, we’re looking at some of the big issues facing the sector, such as accountability to residents, health and safety, and equality and diversity. If our code is to meet the needs of the sector now and in the coming years, it makes sense that we should review it now.

How we’re reviewing the code

I want to ensure that a truly diverse range of stakeholders’ voices are heard through this process, and that there is opportunity for all to feed in at the earliest moment. I also want the new code to be supported by evidence that whatever makes it in is essential and relevant. That’s why, in the first of a three-phase review process, we’re seeking your views on the principles that will frame the new code up until this Friday 13 March. This will be followed by a collaborative drafting process, and the opportunity to share your views on the draft code.

As the custodian of the NHF Code of Governance, it’s important that we show leadership in keeping it relevant, up-to-date and fit for purpose. However, we want to ensure that the new code reflects the views of as many of our members as possible, and that it is informed by a wide range of governance expertise and perspectives.

That’s why we’ve created a new advisory group, which reflects the diversity of knowledge and expertise within – and beyond – our sector. The group met for the first time a few weeks ago and, reflecting on our first meeting, I’m delighted that we’ve created a group that will be able to provide healthy challenge and a variety of different views.

The discussions at our first meeting highlighted the importance of the topics I expected, and that we have highlighted in the first phase of the review. There was also plenty of interesting and unexpected food for thought that we’ll consider as we decide how the new code should be written and who should write it. I found the discussions around the need for clarity in the new code, and how we reflect the principles in the code, of particular interest.

There was a real shared sense of purpose that the new code must reflect the ambition of our sector, and how it has changed since 2015. We’re a more diverse and mature sector now, which will continue to develop, and I’m confident that we’ve convened a group that understands this and has high expectations for the new code.

I’m really excited to see the new code develop, and I’m looking forward to working with our members, stakeholders, residents and the advisory group as it takes shape.