Ireland rises to 7th in the 2019 IMD World competitiveness rankings but the quality of our corporate governance is still very weak
The 2019 IMD World competitiveness rankings were published yesterday. Ireland was ranked 7th (from 12th in 2018) of the 63 countries benchmarked in the 2019 IMD World Competitiveness Yearbook. Ireland also ranks 2nd in the EU after the Netherlands.
The Irish respondents were asked to select 5 out of 15 indicators that they perceived as being the key attractiveness factors for the Irish economy as per the chart below. However, the quality of our corporate governance is perceived as being very weak as per the chart below.
TABLE 1 – KEY ATTRACTIVENESS INDICATORS FOR IRELAND
The table below indicates that compared to the 6 countries above us, we were one of the weakest in the quality of corporate governance along with Switzerland and Holland.
Not unexpectedly the UK was perceived as being stronger, given they have had a focus on corporate governance since 1992 with the publication of the Cadbury Report.
TABLE 2 – PERCEIVED QUALITY OF CORPORATE GOVERNANCE BY COUNTRY
Our first code was published in 2009 and was called “The Code of Practice for the Governance of State Bodies”. It aims to ensure commercial and non-commercial State bodies meet the highest standards of corporate governance. It was updated in 2016.
Despite this and the publication of other codes, notability from the Central Bank and the Charites Regulator, we do not seem to have an overall plan to ensure that we have fit for a purpose Governance Framework for all sectors of the economy.
So we need a plan!
Proposed Action Plan
- Develop an action plan led by Government to ensure that we have fit for a purpose Governance Framework for all sectors of the economy, not just some.
- Make it mandatory that individuals complete basic corporate governance training. before they become directors for the first time.
- Test director competency every 3-5 years to make sure they still have the relevant competencies to carry out their role.