The original Cadbury committee was not actually set up to look at governance but to examine standards of accounting in the wake of some high profile corporate collapses. The Greenbury committee was forced upon us as an alternative to Government intervention in the wake of often hysterical media coverage of executive pay. The committee has its roots in a genuine belief that it is important to drive forward the principles of governance.
The selection of Sir Ronald Hampel as chairman guaranteed a sensible and thoughtful response to a difficult and much misunderstood subject. Last week's preliminary report therefore contained little of any surprise to seasoned corporate governance followers.
The tone is set at its very beginning, noting that the debate in the UK has been dominated by discussion of corporate governance in relationship to accountability to the detriment of its importance for business prosperity. The imbalance, the report argues, should be corrected.
That correction will come not from downgrading the importance of accountability to shareholders but by upgrading the broader responsibility that a board has to stakeholders at large. Indeed, the partnership approach to governance is one which runs through the report. Such an approach will steer companies away from simple box ticking of a set of rules and towards a more productive and co-operative response to the challenges a business faces. The report accepts that governance must be judged collectively on a case-by-case basis.
It was always the intention of the committee to avoid burdening business with yet more rules and regulations. That it has done, without undermining the basic principles which underpin a framework that is still developing.
The report should be welcomed and supported by directors, shareholders and stakeholders alike.