Report from Former Group Chair – Ursula Lidbetter
We are at the start of a three-year recovery programme for the Co-operative Group that has at its heart our new statement of Purpose: ‘Championing a better way of doing business for you and your communities’. Everything we are doing – from implementing our governance reforms and making business improvements, to reducing our costs and controlling our debt – is vital if we are to deliver on that promise.
In 2014 our Members voted overwhelmingly for a radical overhaul of our constitution. These changes, essential to our recovery, were our response to the two reports, from Sir Christopher Kelly and Lord Myners, commissioned by the Group after the crisis year of 2013. Both the Kelly Report and the Myners Review pointed clearly to the need for us to address structural and cultural failures in our management and governance. We took these findings on board, as painful as they were to hear, and set to work to reform our ways of working.
At our Annual General Meeting (AGM) in May 2014 we agreed to make far-reaching changes to the way we will run our Society. Collaborating closely with our elected Members, and drawing on expertise from the wider co-operative movement, we set about writing a new Rulebook which was overwhelmingly supported at a Special General Meeting of Members held in August 2014 and approved by the Financial Conduct Authority in the autumn. It was the culmination of a great deal of reflection, careful thinking and intensive debate about what had to change to enable the long-term recovery of our Society to begin. Central to our reforms was the need to strengthen the professionalism in the boardroom and to ensure that we are truly accountable to our millions of Members.
I would like to take this opportunity to thank our Board directors and elected Members for their commitment in seeing through the reforms and for their dedication in supporting the transitional structures that have been operating since last autumn.
In February 2015 we announced the appointment of Allan Leighton as the Group’s first Independent Chair. This new role is one of the highly significant governance changes we have made. Allan brings the depth and breadth of experience that is essential in overseeing a business of our scale and complexity. As Independent Chair, Allan will lead our Board as it challenges and supports our Group Executive to deliver the Rebuild programme.
Suitably qualified independent non-executive directors will comprise a majority of the Board, as well as two members of the Group Executive and three elected from the wider membership, who will also have to pass high standards of professionalism and demonstrate the requisite experience. We have already appointed Sir Christopher Kelly as our Senior Independent Director, who brings valuable experience and insight to the challenges we face. The new constitution gives us a national Members’ Council, replacing the previous seven Regional Boards, with the responsibility to hold the Group Board to account, and to protect and promote our co-operative values.
For the first time in our long history all members of the Board will be subject to election or ratification by our mass membership through our new One Member One Vote constitution. At our first AGM under the new arrangements this May, our Members will also be able to vote on motions put to the meeting by the Board, the Council or by ordinary Members.
Although no corporate constitution can guarantee business success, we have greatly reduced the risk of poor decision-making in the future and addressed the lack of proper democratic oversight. Implementing our governance reforms is still work in progress and we expect it will take time before our millions of Members fully understand the opportunities we have created for their involvement in the business.
What we do over the next few years must restore the Co-operative Group to its rightful place at the heart of communities up and down the UK and revitalise our business for the next and future generations.
As this report shows, we have begun that journey, turning the huge loss of 2013 into a modest profit in 2014. Our Rescue phase is now over and we have created a stable and firm platform upon which to build. We have a comprehensive plan that we estimate will take three years to deliver. But we are up and running and we have committed and talented colleagues to see it through, led by Richard Pennycook, our Group CEO, and his Executive team. This new team was instrumental in saving the Group during the crisis of 2013 and is now beginning the hard work of rebuilding every aspect of our business.
It has been an honour for me to serve as Chair during such a challenging period in the Group’s history. I wish Allan and the new Board directors, the Council and the Group Executive every success in implementing our Rebuild strategy. I also want to thank our Group colleagues and all our Members and customers for their loyalty. With their continued support we are well positioned for recovery.
Former Chair, The Co-operative Group
Note – Ursula Lidbetter served the Society as Chair from November 2013 to 19 February 2015. She was therefore Chair throughout the financial period under review.