We can also provide a high level health-check, tailored boardroom briefings, workshops and training in good governance in health & safety. Important developments over recent years have underlined our long-standing view that effective health & safety management at Board level involves strong health & safety leadership, integrated risk management and good corporate governance.
We’ve worked with a number of organisations to promote good governance in health & safety including CIPFA’s Better Governance Forum, the Centre for Excellence in Leadership and the Learning and Skills Improvement Service. We have also recently been working with IOSH to develop a board level training product in Corporate Governance in Occupational Safety & Health, along with a related CPD course for OSH professionals.
An opportunity and a need
Good governance as an effective system of direction, control and accountability – and a value-adding organisational perspective – has to include good governance in health & safety. In our view, there is an important opportunity for Boards and directors to use their responsibility for good governance to improve health & safety at a strategic level, and to gain real benefits and increased confidence from this.
Aligning and integrating health & safety with the direction, vision, ethical tone, expected behaviours and culture of a forward-looking organisation not only makes sense – it works, as good practice increasingly shows.
Increased expectations for accountability, responsible and ethical behaviour and good corporate citizenship also increasingly encompass health & safety, as should a wider perspective of business resilience and sustainability.
The indisputable fact is that both private and public sector organisations need to take good governance seriously. Proactive organisations recognise that health & safety is, or should be, an integral part of this. For those that still need convincing, it is also an indisputable fact that there are now significant legal, financial and reputational costs to both organisations, and increasingly individuals, of getting health & safety badly wrong.
Some important developments
Over recent years these have included:
The new penalties regime – the significant impact already being felt of the Sentencing Council’s definitive guidance on Health and Safety Offences, Corporate Manslaughter and Food Safety and Hygiene Offences, which came into force on 1st February 2016. These set potential fines of up to £10 million for breach of health and safety legislation and up to £20 million for corporate manslaughter offences. For ‘very large organisations’ (based on turnover) fines could be even higher. The guidelines also increase the likelihood and length of custodial sentences for individuals. In their first six months the guidelines resulted in as many penalties of £1m or more as there were in the previous two decades;
Strengthened standards of corporate governance – all of which are also relevant to good governance in health & safety. These include directors duties codified in Sections 171-177 the Companies Act 2006 and the latest UK Corporate Governance Code (July 2018). In the public sector, codes such as The Good Governance Standard for Public Services (2004). And, most recently, BS 13500:2013 Code of Practice for Delivering Effective Governance of Organizations;
Non-financial Reporting of performance – as part of this strengthening of standards of corporate governance, there have also been important developments in both expectations, and in some cases, legal requirements for reporting of non-financial performance. The Companies Act 2006 Section 414 now includes requirements for companies (except small companies) to produce Strategic Reports – containing amongst other things information on the company’s principal risks – as part of their Annual Reports. For some companies there is also a requirement for a ‘Non-Financial Statement’ within their Strategic Report and these should cover matters including employee health, safety and wellbeing, associated policies, KPIs and principal risks. On a wider level, there is also a movement towards Integrated Reporting of performance based on a growing view that better communication about value creation should be the next step in the evolution of corporate reporting;
Corporate Manslaughter – the introduction of the Corporate Manslaughter and Corporate Homicide Act 2007 and the related guidance from the HSE and the Institute of Directors; ‘Leading health and safety at work’ – and the associated increased expectations of directors;
Prosecutions of individuals – clear indications that the number of prosecutions of directors under Section 37 of the Health & Safety at Work etc Act 1974 are increasing; as is the focus on the disqualification of directors related to H&S offences;
Risk management – an increased board level focus on the importance of structured risk management and the introduction of ISO 31000 on Risk Management which was recently revised; now ISO 31000:2018 Risk management – Guidelines. The Standard now puts equal focus on the importance of the Principles and Framework for risk management in addition to the Process itself. It also makes the importance of leadership on risk management by top management clear along with the need for an integrated approach, starting with the governance of the organization.
Good practice integration – work done to explore how occupational health & safety fits within corporate governance and the benefits of an integrated approach – notably HSE Research Report RR506 Defining Best Practice in Corporate Occupational Health and Safety Governance (2006);
H&S leadership failures – high-profile serious incidents rooted in failures of leadership – eg the BP Texas City report (2007) and the Haddon-Cave report into the loss of a Nimrod aircraft in Afghanistan in 2006. Our experience is that underlying failures in H&S leadership and culture can be all too common in organisations of all types and sizes;
ISO 45001:2018 Occupational health and safety management systems – last but not least, the first global occupational health and safety Standard finally arrived in March 2018. It’s early days, but forward looking organisations will recognise that the Standard includes a number of links with good governance – including more focus on; organisational context; top management commitment; leadership and culture; employee engagement; risk and opportunities; compliance evaluation and assurance; and continual improvement. Very real benefits should flow from this wider understanding and use; in addition to a strengthened safety management system. BSI put it well in the run up to the release of the Standard –
“The introduction of risk and opportunity management into the occupational health and safety management system now reinforces its use as a governance tool.”
BSI Mapping guide for understanding the new Standard
Please take a look at our 60 Second Insight on good governance in health & safety and don’t hesitate to contact Neil Molyneux for an informal, no obligation discussion and some suggestions about how you could benefit from our assistance in this key area. There are many ways we could help, including our high level health-check of good governance in health & safety, and we always value the opportunity to work in partnership with forward looking organisations wanting to continually improve.