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The Park Ridge, Illinois-based Center for Safety & Health Sustainability recently released a report that looks at how sustainable companies report occupational injuries, illnesses and fatalities. Kathy Seabrook, chairwoman of the CSHS board of directors, spoke to Business Insurance Reporter Joyce Famakinwa about the importance of having a core set of occupational safety and health metrics and working with the Global Reporting Initiative, an independent international standards organization. Edited excerpts follow.
Q: Why is it important to look at how organizations that are considered sustainable publicly disclose their information on occupational health and safety?
A: What’s interesting is different perspectives on this. I would look at this from a business perspective and…part of the stakeholders are workers. There is a compelling case for occupational health and safety in the context of human capital, which will be a nonfinancial disclosure for a company versus direct financial that organizations in the United States are required to file to the SEC. So we at the center are trying to help organizations understand this compelling case that — not only from a worker perspective, which has been sort of the traditional way of looking at things — but really looking at the stakeholders in the business, and that would be your own value chain which includes your suppliers and the investment community, which is really driving a lot of the voluntary disclosure. It’s the investment community that is really looking, at the end of the day, to find higher-value use to lower the cost of capital for well-managed companies. Part of what the investment community… are looking to really identify are what organizations are out there that really are a value to invest in. One of the areas is these nonfinancials in disclosure of nonfinancial from an organization.
Q: According to the study, the numbers of reporters complying with GRI guidelines have increased since the 2013 analysis but the numbers are still in general low?
A: Yes, it has increased, but not to the level that it really needs to be, so there needs to be more emphasis on actual reporting. In our case, voluntary reporting is what’s out there now, but there needs to be more emphasis for organizations on reporting their financials, which include occupational health and safety. We’re also focusing on what, actually, are those metrics? What is it that organizations need to be reporting on? And that kind of ties back to my other point of more proactive metrics like occupational health and safety management systems that demonstrate proactively that an organization is identifying their higher risk areas.
Q: What key findings from the report stood out, and why were they important to pay attention to?
A: One is organizations identifying occupational health and safety as material to their organization. The positive finding is that, yes, there are organizations that actually have been doing that. There was a significant number of organizations that have identified the concept of materiality. Of the total 100, 74 of those 100 companies reported that materiality was material to the organization. Forty-five of those organizations actually reported on occupational health and safety and actually identified it as a material issue for their organization. That, to me, is such a key finding that we did not see last time. Materiality in the grand scheme of sustainability reporting has really come to the surface with organizations such as SASB, which is the Sustainability Accounting Standards Board, and the Global Reporting Initiative, or GRI, as well as the International Integrated Reporting Council. They’re all looking at focusing companies on what is material. In other words, what is it that would have a significant risk to the organization that would impact their financials and impact an investor. That materiality — to me, from the center perspective — that’s a key finding, as well as the concept of reporting and that there needs to be greater education awareness by regulators, by the investment community, by all the stakeholders around occupational health and safety.
Q: Talk about CSHS’ recommendations.
A: Our actual recommendations are that organizations should report and begin to start understanding the correlation between the performance around human capital and occupational health and safety as part of human capital, human capital basically being your workforce at any level in the organization. If you look at the performance around assuring they’re safe, that they are healthy, part of that performance ties into many other aspects of productivity, of efficiencies, of operational excellence, of commercial excellence, and part of what we’re trying to do from the center. Part of why our recommendations are, for example, a management system to identify risks associated with health and safety for workers is that because by identifying them and managing those risks that, in turn, support the business, it reduces or mitigates that actual risk to the business both from the human capital as well as the operational and commercial perspective.
Q: Have any organizations begun to implement any of CSHS’ recommendations?
A: We have been asked to participate in the Global Reporting Initiative. They have a project working group, and we’ve been working on this for them since the spring. We have been working with GRI on their project working group around occupational health and safety, and they are developing a standard for sustainability reports on what organizations should be reporting on. We have really pushed to make sure that there’s occupational health and safety management systems and that there is some sort of third-party validation. In addition … to really do a trending. So are you having over a three- to five-year period, is this something that you can demonstrate the trend lines are going up, i.e. that you’re having more incidents of injuries or fatalities? Is it staying the same or is it going down? And if it’s going down, that kind of keeps you a level because these are about outcomes. These are measurement we call lagging or reactive. These are measurement of what kind of incidents you’ve had and how severe. Are they fatal or are they serious or are they paper cuts?