Corporate governance

Members of cooperatives in corporate governance

The (re)discovery of a specific form of corporate governance by cooperative banks has occurred in stages. EACB thus reviewed the notions of values (EACB, 2004) and corporate social responsibility (EACB, 2005) in order to eventually produce a report on corporate governance (EACB, 2006). The specific feature of such corporate governance may be a factor differentiating cooperative banks from other economic agents. The issue then consists in checking as to whether cooperative banks are able to convey this difference. Our approach thus consists in reviewing the arguments that are used by cooperative banks in their annual reports in order to point out, where applicable, their specific corporate governance mode. More specifically, we shall try to discern what messages are related to the membership system. Indeed, the existence of members is one of the major differences between cooperatives and any other type of enterprise. Members are, at the same time, the basis and justification of cooperative enterprises. This issue deserves specific and educational communication efforts. If all members have the same voting right in the cooperative's general meeting, this feature imposes an obligation to communicate and explain the place of each member in this original system. Members thus exercise a major influence on the governance systems, as they elect from among their number the local and national representatives. Many pressing questions must then be answered: is the information that is provided in annual reports always sufficient in order to respond to this challenge? Do the communication efforts made in the annual reports reflect the intent to adopt an educational approach vis-à-vis members? Finally, do cooperative banks present this democratic advantage as a major difference when communicating with the general public?

Author : Olivier Boned, Institutional and International Relations Manager, Confédération Nationale du Crédit Mutuel, Ph.D in Management Science