The Challenge of Deploying ‘Comply or Explain’ in Scottish Higher Education Governance

In our recent article (see here and published as (2026) 30 Edinburgh Law Review 25), we question the suitability of transplanting the ‘comply or explain’ (CorE) approach from the UK Corporate Governance Code (UKCGC) into the higher education governance framework. The UKCGC is widely regarded as the leading example of corporate ‘soft law’: It sets out a series of best‑practice standards, comprising broad ‘principles’ — which companies must apply and report on (the ‘apply and explain’ model) — and more detailed ‘provisions’, with which companies may either comply or explain any departures.

CorE as a soft‑law approach offers guidance that companies may follow or, alternatively, justify their non‑compliance through public disclosure. This mechanism, a crucial part of the UKCGC, relies on disclosure to shareholders who, if unhappy with management’s explanations, can act to discipline management either directly (eg, by removing directors) or indirectly (eg, by selling shares). This disciplinary potential is intended to restrain managerial excess and promote accountability.

Our article examines whether it is appropriate or effective to transplant the CorE approach from the corporate sector into the governance framework of Scottish higher education institutions. Despite the growing prominence of university governance issues in Scotland and globally, the academic literature on this intersection remains sparse. At the same time, the transplantation of corporate governance codes into other sectors is increasingly common, often occurring without sufficient adaptation to the specific needs and contexts of the receiving sector.

We contend that CorE mechanics are predicated upon conceptual and historic rationales that are lacking in the higher education sphere. This acts as an inter-sectoral warning for transplants of the UKCGC, as parts of it are so heavily based on specific UK corporate considerations that there is limited value in copying or transplanting them into other spaces.

Our main arguments are:

• The CorE approach does not fit the governance context of higher education. The mechanism’s effectiveness in the corporate world relies on the existence of residual claimants (ie, shareholders) who can discipline management if explanations for non-compliance are unsatisfactory; a feature that Scottish higher education institutions and higher institutions, more generally lack. 
• There is a fundamental purpose divergence between corporations and universities. Corporate governance codes address for-profit entities with clear financial objectives and market accountability, whereas higher education institutions operate as charities with diversified missions, making the direct application of corporate governance tools like CorE inappropriate.
• The disciplinary pressures, stakeholder dynamics, and historical development of the UK Corporate Governance Code do not translate to the highly institutional and volunteer governance environment of universities, undermining the transplanted CorE approach.

Although the UKCGC offers valuable principles of good practice and its influence beyond the corporate sector is commendable, caution is needed when it is directly transplanted into other contexts. Outside of the corporate context, whilst the content of the UKCGC may be transplantable, its enforcement mechanism through CorE is often not. While the intention to promote sound governance is well founded, such transplantation can create a misleading impression that adopting the Code’s framework alone is sufficient. 

This article thus demonstrates that the transplant of CorE into higher education is flawed for three primary reasons: the absence of residual claimants with direct disciplinary rights in Scottish Higher Education Institutions and Higher Education more generally, the fundamental divergence in corporate purpose between for-profit companies and charities, and the highly contextual nature of the UKCGC’s development in response to specific UK corporate landscape issues.

The authors’ article can be accessed here.

Dr Katarzyna Chalaczkiewicz-Ladna is Senior Lecturer in Commercial Law at the University of Glasgow.

Prof Irene-marie Esser is Alexander Stone Chair of Commercial Law at the University of Glasgow, Extraordinary Professor at Stellenbosch University and Fellow of the Academy of Social Sciences. 

Dr Jonathan Hardman is a Senior Lecturer in Company and Commercial Law at the University of Edinburgh, and Honorary Associate Professor at the University of Auckland.