A new guide, developed in light of the Pike River Coal Mine tragedy, has clarified the role that company directors must play in the governance of workplace health and safety.
The 2012 Royal Commission on the November 2010 Pike River methane explosions, which killed 29 underground workers, found that Pike River’s board of directors had focused primarily on short-term coal production and failed to ensure that health and safety was being properly managed.
According to the new Good Governance Practices Guideline, developed by the New Zealand Ministry of Business, Innovation and Employment, and that country’s Institute of Directors, company directors and officers are obligated under New Zealand workplace health and safety laws to ensure their organisations provide a safe workplace.
Similar laws apply in Australia.
In the harmonised states and territories, for example, company officers, including directors, are required to exercise due diligence to ensure PCBUs are complying with the model WHS Act.
At Pike, the board’s focus on meeting production targets set the tone for executive managers, who failed to properly assess health and safety risks, the guide says.
“The chairman’s general attitude was that things were under control unless told otherwise. This was not in accordance with good governance responsibilities.”
According to the guide, the role of directors in the governance of health and safety consists of the following four key elements:
1. Policy and planning.
Directors must determine the board’s charter and structure for leading OHS, develop a high-level OHS strategy and policy with a statement of vision, manage the OHS performance of the CEO, and specify targets.
Health and safety targets should be measurable, challenging but realistic, and place more weight on lead rather than lag indicators to focus on prevention, the guide says.
“‘Zero harm’ is often used as an aspirational target. Before applying this target, consider the strength of your organisation’s risk and reporting culture.
“If it is a weak one, there may be a risk of cover-ups and non-reporting.”
Directors must exercise due diligence to ensure the company’s health and safety management system is best practice, fit for purpose and being properly implemented.
“The size, sophistication and detail of the system [must] reflect the organisation’s risk profile, with high-hazard organisations requiring more substantial systems.
“Merely having a good system will not achieve good health and safety. Systems need to be implemented with rigour and consistency. Directors should hold management to account for effective implementation… [They should] become personally aware of [the] organisation’s hazards and control systems.”
Directors should outline clear expectations on what should be reported to the board and in what timeframes, review reports to determine whether intervention is required, and seek independent expert advice when required.
“The implementation of long-term goals and strategy through business planning ?is the responsibility of management. However, the board needs to ensure, through appropriate monitoring, that these strategies are being effectively implemented.
“Directors must never turn a blind eye to undesirable information.”
The board must conduct a periodic formal review of its health and safety system to determine whether any changes or an external review are required.
“[Directors should] specify arrangements for the formal review of health and safety in the board’s charter, including frequency, who is involved and how, [and] what input is required.
“Audit and system reviews arranged by management will inform the board’s formal review.
“It is normal for audits and systems reviews to recommend actions for improvement. Directors should ensure that these recommendations are properly considered.”