Investor group urges better workplace safety reporting at top firms
A group representing the interests of some of the country’s biggest institutional investors is pushing for mandatory reporting of workplace death and safety incidents at S&P/ASX 200 companies, after a joint investigation with accounting firm EY found major disclosure gaps.
There is currently no obligation for public companies to report workplace fatalities or details about injuries sustained by employees on the job.
The joint Australian Council for Superannuation Investors (ACSI)-EY report found that more than one-third (34 per cent) of ASX 200 companies did not disclose any information about workplace injuries and those that did were either limited in scope – opting for a tick-the-box style of reporting – or difficult for investors to track down.
“A loss of life is incredibly significant. It’s the worst possible thing that can happen and has a huge impact on the person, their community, their family and their workmates,” ACSI chief executive Louise Davidson said.
“It’s an issue investors want to know about.”
Contractors were over-represented in workplace deaths, the report found, making up 16 of the 23 deaths for the year. But deaths were also under-reported as there was a lack of guidance as to where the reporting responsibility lies, said Ms Davidson.
It’s well understood, particularly in the industrial sector, that safety is a leading indicator of wider performance.Oz Minerals chair Rebecca McGrath
“It comes down to a lack of clarity about whether the contractor death ought to be reported by the company contracting them or the contractor themselves,” she said. “In our view, any fatality that happens on a company’s watch, we think should be reported by the company.”
The research calls for greater attention to be paid to the severity of injuries, with only 14 of the top 200 companies currently providing this information.
For the most part, a sprained ankle is statistically the same as a spinal injury or the loss of a limb, Ms Davidson noted.
“That lack of granularity provides a problem for investors in terms of identifying where there are systemic risks and an escalation of safety issues within a company,” she said.
Only 17 of the 200 biggest companies reported on occupational health, including details about what the company spends on mental health and wellbeing programs.
A company’s management of health and safety is considered a non-financial risk, despite workplace injuries, illnesses and fatalities resulting in direct costs to businesses such as workers’ compensation claims, attracting and retaining staff and reputational damage.
Chair of Adelaide-based mining company Oz Minerals, Rebecca McGrath, said non-financial risk was increasingly a topic of discussion on boards around the country.
“It’s well understood, particularly in the industrial sector, that safety is a leading indicator of wider performance,” she said.
Ms McGrath noted companies could lose out on contracts based on their past safety performance, “even if they’re quoting a lower price”.
Tying executive bonuses to a company’s safety performance has mixed results. While it can encourage a culture that promotes safe workplaces, critics say it can also discourage accurate incident reporting.
Whether or not companies chose to use short-term or long-term incentives to boost safety performance, ACSI’s chief said it should be mandatory for these details to be outlined in the company’s remuneration report.
“What we’re keen for is some transparency about what link there is, if any, between safety performance and executive pay,” she said. “Currently, that is not clear.”
The report proposed a framework companies could use to improve reporting on health and safety performance, including assigning accountability to executives for monitoring risks, as well as identifying ways to boost transparency on health and safety-related expenses.
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Source: Thanks smh.com