2018 board JUN / JUL roomMagazine of the Institute of Directors in New Zealand The ethics balancing act Got board hassles? Board members: Board pack not easy to read? Action items forgotten? Tired of chasing things around email and dropbox? Administrators and CEO: Too busy with the day job to manage the process well? Directors keep asking for stuff they already have!? Easy as with boardPro Learn how @ boardprohub.com CONTENTS A note from the editor This issue of BoardRoom is dedicated to Ethics and Culture – one of our What Matters themes for the year. The Agenda Directors need to be ethical leaders JUNE / JULY 2018 and set the tone at the organisations they work with. Board members have key roles when it comes to shaping INSIDE IoD strategy, and also how that strategy is carried out and the behaviour that BoardRoom details is expected from employees. Professor 01 Karin Lasthuizen, a Dutch academic 13 02 CEO letter currently in New Zealand as the Brian Picot Chair in Ethical Management at 03 UpFront Victoria University of Wellington, says ethics need to be part of an ongoing 29 GLC update discussion that informs decisions made throughout an organisation. 39 Events We also take a look at what goes into shaping a workplace culture. It’s not a 41 Out and about straightforward area of business, and will ROB FYFE / differ from organisation to organisation, What questions should so how can a board influence or contribute your board be asking FEATURES to a company’s culture? about your supply chains? 09 How can boards help Supply chains have been in the shape corporate culture? headlines in the past couple of months, highlighting the importance of knowing 13 Rob Fyfe talks modern where your products come from and human slavery how vital it is that you are upfront 16 with stakeholders about it. MBIE has 16 Ethical supply chains contributed a piece on supply chains and modern slavery and modern human slavery and what New Zealand businesses need to be aware 19 Ethical leadership of. We also talk to Rob Fyfe about the work he has been doing in this space and his 27 Generational diversity belief that human trafficking and modern in the boardroom day slavery are much more widespread than people realise. 32 Updated guide on CPD points The IoD has also recently updated MODERN SLAVERY AND its CPD guide, outlining the different ETHICAL SUPPLY CHAINS / ways you can gain CPD points and giving Putting the spotlight FROM OUR PARTNERS guidance on how to allocate points. We on business practices. speak to some IoD members about the 25 Results from Marsh’s way they approach CPD, and hope it Global Risk Survey / might inspire you in your professional Marsh development journey. 35 Reading company ethics 19 from the boardroom / Kate Geenty BoardRoom editor KPMG 37 The importance of insurance for statutory liability / NZI BoardRoom is the magazine ETHICAL LEADERSHIP / of the Institute of Directors Cultivating organisational in New Zealand iod.org.nz ethical behaviour. BOARDROOM DETAILS boardroom SENIOR LEADERSHIP TEAM BOARDROOM IS PLEASED Chief Executive Officer TO ACKNOWLEDGE THE SUPPORT OF Kirsten Patterson BoardRoom is published six times NATIONAL PARTNERS a year by the Institute of Directors General Manager, Members in New Zealand (IoD) and is free Nikki Franklin to all members. Subscription for General Manager, Governance asb.co.nz Leadership Centre 0800 803 804 non-members is $155 per year. Felicity Caird BoardRoom is designed to inform General Manager, Corporate Services marsh.co.nz and stimulate discussion in the Chris Fox 0800 627 744 director community, but opinions expressed do not reflect IoD General Manager, Brand, Marketing and Communications NATIONAL CYBERSECURITY policy unless explicitly stated. Sophi Rose PARTNER Delivery Manager Robbie McDougall aurainfosec.com EDITOR Manager, Professional 04 894 3755 Kate Geenty Development +64 4 470 2647 Paul Gardner [email protected] NATIONAL SPONSORS Please contact the editor for any advertising queries. COUNCIL 2017/18 Liz Coutts – President Alan Isaac – Vice President INSTITUTE OF DIRECTORS IN NEW ZEALAND (INC) Dr Helen Anderson – Wellington kpmg.co.nz Mezzanine Floor, 50 Customhouse Quay Des Hammond – Bay of Plenty 09 367 5800 PO Box 25253, Wellington 6146 Julia Hoare – Auckland New Zealand Jackie Lloyd – Wellington Tel: 04 499 0076 Simon Lockwood – Waikato Fax: 04 499 9488 Vincent Pooch – Canterbury [email protected] Geoff Thomas – Otago Southland iod.org.nz Clayton Wakefield – Auckland Sarah-Jane Weir – Nelson The Institute of Directors has staff based at the Marlborough National Office in Wellington, an office in Auckland PRODUCTION NOTES and eight branches. For National Office, phone Every effort has been made 04 499 0076. COMMERCIAL BOARD to guarantee the pages of this magazine are sustainably Kirsten Patterson, Chair; sourced and produced using Liz Coutts, Alan Isaac, paper that meets the environmental BOARDROOM IS PROUDLY DESIGNED BY Dr Alison Harrison standards shown below. BRANCH MANAGERS eightyone.co.nz For a full list of branch managers, 04 894 1856 see page 40. When you have finished with this magazine, please recycle. BOARDROOM June/July 2018 BOARDROOM 1 CEO LETTER KIRSTEN PATTERSON CEO, INSTITUTE OF DIRECTORS practice, human rights in How will autonomous vehicles business, and transparency change that conversation, How ethical in the supply chain has more and test our ethics when we and more boards conducting have to sign waivers and user site visits and factory tours agreements that hand over is our conduct? of offshore production sites. authority for life and death It’s not just ‘fast fashion’ decision making? How do industries under the spotlight we as directors govern in Tēnā koutou katoa, around data and privacy. as contracting processes and an environment where our Technology is developing power imbalances are under programmers and products A lawyer writing about at such a rapid rate that greater scrutiny. will be making these types ethics (even a now reformed legislators and regulators are Directors also need to of higher level decisions? inactive one) is often seen having difficulty keeping up prepare their organisations How do we respond to as the opening line of a and preserving privacy as for the debates around individual customer pressure joke or cartoon. No longer a human right. automation and machine wanting exemptions from is the test of whether it is But it is clear from the learning. The ethical dilemmas inbuilt community protections? ‘legal’ or ‘allowed’ sufficient recent examples of Facebook and pending decision points To whom do we owe a duty to determine whether our and Cambridge Analytica around autonomous vehicles of care? business models are ethical. being summoned to appear are a good example of the As McKinsey’s Marvin We are, and we should be, before an EU Parliamentary power of the decisions Bower, whom Harvard referred being held to a higher standard Committee and the US Senate machines will make in future. as the father of modern from consumers, shareholders that ethical debates are not At a superficial level we all management consultancy, and stakeholders than just something we can afford to understand that should the said: “There is no such thing what the statutory minimum ignore in the boardroom. car have to choose between as business ethics. There floors prohibit or protect. Closer to home, in Australia, hitting and likely killing one is only one kind – you have Social media is also driving the banking enquiry has the person versus a dog, or one to adhere to the highest and demanding transparency role of the board in ethics and person versus a group of standards.” and accountability in our culture front page. There is school children, it will choose Thank you for choosing ethical conduct in ways not much to be learnt and there the smaller collateral damage to commit yourself to high seen before. Industries once are likely to be salient lessons in pursuit of the greater good. standards and the IoD Code seen as ‘blue chip’ no longer for other industries as the But how comfortable are of Practice for Directors. pass the ethical investment enquiry continues to play out we with ethical decisions being New Zealand has never test, and many are seen as over the coming months. hard-wired into the algorithms needed IoD members more. sunset. Directorships of Here in New Zealand, to which we are handing Haere taka mua, taka muri; tobacco giants are no longer potential legislation and social over our car keys? Are we kaua e whai. Be a leader, not celebrated on LinkedIn. changes, such as legalising discussing the issue of what a follower. Corporations such as Walmart cannabis and euthanasia, happens when our car decides Ngā mihi, are redefining their sales could create new challenges that we and our families are boundaries following calls for the directors of tomorrow. the acceptable collateral Kirsten (KP) for gun reform in the US. Where before we might damage in the car’s accident Digital disruption is also only see directors out of the assessment? increasing the speed in boardroom for health and Currently we get to exercise which boards are facing and safety site visits, the growing our ethics as drivers against navigating ethical issues emphasis on good ethical a backdrop of ‘self-defence’. BOARDROOM June/July 2018 BOARDROOM 2 UPFRONT UpFront The Queen’s Birthday Honours List 2018 The Institute of Directors congratulates the following members who were all honoured in the Queen’s Birthday Honours List. DNZM ONZM QSO DAME COMPANION OF THE NZ ORDER OFFICER OF THE NZ ORDER OF MERIT THE QUEEN’S SERVICE ORDER OF MERIT Mr Richard James Jeffery Dr Paul Hugh Stewart Reynolds The Honourable Luamanuvao Takapau Gisborne Winifred Alexandra Laban, QSO For services to governance For services to the State.