Reporting on workplace safety falling short

(via Investment Magazine)

Workplace health and safety impacts every Australian worker. An incident or fatality at a workplace has a huge impact on the individual, their family and their colleagues, and it’s an issue that investors should be made aware of.

It is a sobering fact that there were 23 workers killed in ASX200 companies in 2018. According to Safe Work Australia, across the broader economy in the same year 144 Australian workers were killed at work.

As long-term investors, superannuation funds have a strong interest in supporting the health and safety of workers in Australian companies. In addition to the tragic human consequences of unsafe working environments, investors see a clear link between health and safety and the quality of management of a company, its operational performance and its culture.

Workers, unions, and many employers around the country work hard to ensure health and safety issues are eradicated. Despite these efforts and many years of focus from boards of Australian companies, serious health and safety risks remain a feature of many Australian workplaces.

ACSI recently worked with EY to produce research into reporting on health and safety.  The report highlighted significant deficiencies in health and safety reporting which leave investors without critical investment information.

Concerningly, the research found that 34 per cent of ASX200 companies did not disclose any health and safety information. It also found:

  • Information on fatalities was often difficult for investors to find, with no requirement to report fatalities publicly or in a consistent way
  • Contractors made up 16 of the 23 reported workplace fatalities in 2018, however, contractors are not always included in public reporting
  • Reporting on severity of incidents was limited, with only 14 companies reporting a severity indicator
  • Company remuneration reports often failed to adequately explain the link between safety performance and executive pay

How a company manages health and safety is often seen as a so called “non-financial risk”. This is despite workplace injuries, illnesses and fatalities resulting in direct costs to businesses such as workers’ compensation claims, the ability to attract and retain staff and reputational damage.

Lack of transparency about workplace deaths and inconsistency in reporting on other safety metrics may mask the extent of tragedy and slow the identification of systemic risks. Health and safety performance is a leading indicator of broader performance issues. Increasingly company boards are discussing issues like safety and the impact that past safety performance can have on future commercial opportunities.

Stronger focus on the quality of health and safety reporting will enable investors to make more informed decisions about companies.

To address the current gaps our research proposed a framework for better public reporting on health and safety. In our view, better disclosure includes:

  • Providing information on the company’s overall approach to health and safety management
  • Reporting of any fatal incidents involving employees, contractors or members of the public
  • Providing reporting relating to the severity of incidents, illnesses and injuries (both actual and potential)

We will use this framework in our ongoing engagement with companies, encouraging companies to provide more meaningful and targeted health and safety disclosure.

Working together investors, companies and workers can contribute to healthier, safer Australian workplaces.

You can read the full report here:

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