28 September 2015
Sir Adrian Cadbury founded governance, says Simon Osborne
Sir Adrian Cadbury’s recent death has put the spotlight once more on the 1992 report bearing his name, which is still recognised worldwide as the starting point on how companies should be governed. Not only is the Cadbury Report one of the best-known works on corporate governance, much of it endures within today’s UK Corporate Governance Code and it has also been replicated in many other jurisdictions.
Sir Adrian is considered by many to be a founding father of corporate governance. His work for the family firm taught him the importance of teamwork, an underpinning tenet of the Cadbury Code. ‘You listen, learn, get to know and work together. It is one of the biggest lessons.’ A valuable lesson that he took with him into the boardroom.
He became chairman of the family business in 1965 aged just 36 and presided over the successful 1969 merger with Schweppes. Cadbury Schweppes was one of the biggest mergers of that time and the only one to survive largely intact for the next 40 years.
In 1989 he handed the chairmanship over to his younger brother, insisting on retiring at the same age as his managers. This move was indicative of the strong ethical compass that directed his actions. This moral certainty, together with his attention to detail and clarity of analysis, may explain why he was asked to chair the committee on the financial aspects of corporate governance in the wake of failures that included Polly Peck, BCCI and the late Robert Maxwell’s empire.
Sir Adrian described it as his toughest assignment, but in typical fashion he saw it as an opportunity to raise standards. His inherent belief, despite some damning evidence to the contrary, remained that people will behave well if properly encouraged and the code is built upon that expectation.
So was Sir Adrian’s belief in people’s natural honesty and goodness well founded? Shenanigans such as those witnessed at News Corp and FIFA would have us believe otherwise, but the question should really be ‘How many corporate failings have been averted because of the code?’ There are millions of companies in the world and, by comparison, only a handful let the side down.
It is my firm belief that without the Cadbury Code and its later incarnation as the UK Corporate Governance Code, the world would be a much more risky place in which to do business. The links between good governance and business prosperity are well documented, and doubtless Sir Adrian’s family are very proud of his legacy. We cannot rest on our laurels, however, and we should be seeking new ways in which to continue Sir Adrian’s good work.
That is why we are inviting recent graduates with a passion for governance or students early in their career to challenge received wisdom and showcase new and innovative ways of thinking by writing an essay on the theme ‘Does good governance require a fresh approach?’ It is the new generation who will lead the governance debate going forward and I am eager to read their ideas. More information about the Tom Morrison Essay Prize Competition, launched by ICSA and ShareGift in memory of Tom Morrison FCIS, can be found at www.icsa.org.uk/tmep.
I would also like to invite ICSA members to do their bit to encourage the new generation of governance professionals. If you are attending events at your old school, college or university please do ‘big up’ the profession. We need more governance champions and your enthusiasm for your work is an ideal way to get people interested.
As Sir Adrian himself said when reflecting on 20 years of ICGN, ‘The underlying principles of transparency, accountability, fairness and responsibility are just as relevant today as they were two decades ago. I encourage you all to maintain the momentum, cherish the memories and embrace the challenges and opportunities ahead. Together, you can help drive consensus and reform for sustainable economies upon which our future generations depend.’
Simon Osborne is Chief Executive of ICSA