The Institute of Directors (IoD) and WorkSafe New Zealand (WorkSafe) recently published an updated version of their 'Health and Safety Guide: Good Governance for Directors' (the Guide).

This article is the fourth in a four-part series discussing recent developments relating to health and safety governance. This article accompanies a webinar on Thursday, 5 September, discussing health and safety developments in New Zealand and Australia relating to governance. Click here for further information and to register.

In this update we discuss the practical ways a board can ensure their health and safety governance is consistent with the latest guidance. 

Practical steps to be taken

As referred to in our last update here, the Guide introduced a framework to achieve the vision for health and safety governance of “[c]apable leaders integrating health and safety into curious and courageous governance discussions and decision, that are context-rich and demonstrate care for workers.” One of the three elements of this framework is ‘What you need – foundations'. This element focuses in on the practical aspects of doing health and safety governance well.

The foundations element provides key steps each board should take for health and safety governance. These steps include a clear definition of the board’s role in non-routine situations (such as emergencies and major events) under “governance processes” and defining required health and safety capabilities at the board level under the “competence framework” and “continuous improvements” sections.

Some practical steps boards and their members can take to act on this guidance include but are not limited to the following:

Assess your current Health and Safety maturity and set a strategy

An important first step is to assess the maturity of your board in relation to health and safety governance. This will help to establish the baseline you are working from, as well as assist to identify the areas that need to be developed or improved. This assessment should ideally include a review of the maturity of the board as a body, along with each officer at an individual level.

Once the baseline level of maturity is set, the board can then set its expectations for how health and safety will look in the future for the organisation. This process involves identifying the preferred strategy for health and safety and defining clear roles and responsibilities at an executive and governance level. This should include documentation in some form (whether a board charter, terms of reference or other document) capturing the role of the board in giving effect to this strategy.

Keep clear records

A key element of the foundations is the advice for directors to keep good records of all governance activities in relation to health and safety management. The types of records that will be helpful in demonstrating compliance with the due diligence duty include:

1. Records of directors keeping themselves up to date with health and safety insights and industry developments generally.
2. Records of site visits and operational walk abouts, including what questions may have been asked, topics addressed and that there was meaningful engagement with workers.
3. Records demonstrating an understanding of critical risks and controls. Officers should be able to identify the top (say) five critical risks for the organisation, how those risks are controlled, and the processes utilised by officers to ensure that those controls are working effectively.
4. Records of regular health and safety indicators and trends reporting (although noting the further comments below under ‘Report what matters’), incident and root cause reporting, progress toward identified formal improvement plans or goals, and outcomes of internal/external audits.
5. Evidence of officer engagement with and questioning of materials, and requesting further information where appropriate. This might include evidence that appropriate time has been made available for consideration of health and safety reporting and issues (i.e. in agendas/minutes) and recorded action items for management to follow up.

It is not sufficient to assume that minutes from board meetings cover due diligence obligations.

Report what matters

As emphasised in our last update, the overarching shift in focus is from a “compliance-focused and rules-based approach” to one which embraces the role of strong health and safety practice. Reporting to the board should shift from counting incidents to those areas that contribute to safer outcomes, such as resource allocation to health and safety measures, changes to the way the organisation works for safer outcomes, training and educating people and testing key controls. Boards should seek out proactive reporting from the organisation to have a clear view not only of the incidents that have occurred, but also the risks presented to the organisation and how these risks are being controlled, managed, and minimised.

Continue improvement

A one-off review is not sufficient to ensure that health and safety governance is fit for purpose and keeping up with latest developments. Continuous reviews at regular intervals are critical to ensuring the organisation is continuing to meet its obligations, and doing health and safety well. These self-reviews should assess how the board works together, the transparency of the relationship between the CEO and management, the quality of the information received, how to keep up with best practice, and how effectively issues and concerns are addressed. Boards should also ensure they are engaging independent third-party formal reviews as required.

Importance of these changes

The recent State of a Thriving Nation report from the Business Leaders’ Health and Safety Forum, which can be found here, highlighted the impact of the costs that health and safety failures in New Zealand. Last year, lost lives, lost earnings, serious injury costs to ACC and health issues cost the country $4.4 billion in 2022. This year’s report updates that figure with the costs for 2023 increasing to $4.9 billion. Further costs include an estimate of at least $2 billion in health costs annually from work-related health (the impact work can have on people’s health both mental and physical, short and long term).

The report also looked to Australia’s more proactive approach hinting towards the direction New Zealand should be heading in. What this may look like will be discussed in our webinar, which can be registered for here.

For further guidance our updated health and safety toolkit can be found here. This toolkit provides a more in-depth response of the practical ways boards can respond to follow these guidelines.