Making health and safety a 'governance' issue

The report, which was prepared by consultants Acona for the Health and Safety Executive (HSE), set out to highlight examples of "best practice" in occupational health and safety (OHS) governance and make recommendations concerning new guidance for directors.

In recent years the UK's health and safety authorities have increasingly called on companies to move beyond regulatory compliance and recognise the social and economic benefits of controlling risks to safety and health.

This, according to the report, has turned health and safety into not just a management issue, but one of governance for which boards need to take responsibility.

Acona's Jacqui Boardman explained: "Put simply, governance is the system by which organisations are directed and controlled by their boards of directors. It is distinct from management - which can be thought of as the regular day-today decisions and actions required to run the business.

"Governance refers to the higher level processes by which managers are held to account and through which the broadest strategic decisions are taken."

'Basic principles'

Although the report's authors suggested that because of a variation in size and complexity of companies there was no "one-size fits all solution" for OHS governance, there were a number of "basic principles" it had identified.

The first was 'director competence' - where all directors should have a "clear understanding of the key OHS issues for their business and be continually developing their skills and knowledge."

Likewise, the report said all directors should understand their legal responsibilities and their role in governing OHS matters for their business. Their roles should be supported by formal individual terms of reference, covering as a minimum - setting OHS policy and strategy development, setting standards, performance monitoring and internal control.

Acona also recommended that at least one nominated director - preferably the chairman or an independent non-executive director - had the additional role of overseeing and challenging the OHS governance process.

The report added: "The board of directors should take ownership for key OHS issues and be ambassadors for good OHS performance within the business, upholding core values and standards. They should set the right tone at the top and establish an open culture across the organisation with a high level of communication both internally and externally on OHS issues."

Legislation coming?

In addition, Acona said the board should set out the key objectives and targets for OHS management, and create an incentive structure for senior executives to drive good OHS performance.

Non-executives, through a remuneration committee for example, should be involved in establishing the appropriate incentive schemes.

The report also recommended that boards integrate the OHS governance process into the main corporate governance structures within their business, including the activities of the main board and its sub-committees such as those tackling risk, remuneration and audit. In some cases, the creation of an additional board sub-committee to consider OHS (and/or Risk/Corporate Responsibility) "may be relevant".

The Health and Safety Commission (HSC) has indicated that its existing guidance on directors’ responsibilities for OHS will be updated in the near future. It seems likely that many of the recommendations included in the report will form part of any new guidance.

The report also highlighted how the issue of imposing more stringent legal responsibilities on directors for health and safety had led to pressure on the Government to legislate, including two private members bills being brought before Parliament in recent years.

It noted that the HSC/E were "currently undertaking work to identify the practicability, feasibility and effect of placing new legal duties on directors in respect of OHS."