Telling it how it is: health and safety reporting
Summary
The number of companies publishing information on health and safety performance as part of annual reporting is set to increase over the next year as a result of a challenge issued to Britain's top 350 companies by the HSC.
The HSC is supporting this call for greater health and safety reporting with new guidance.
Of the top 350 companies, around 90 produce "environmental reports" (which often encompass health and safety issues) and only around 10 produce social/sustainability reports (which can also cover health and safety performance).
The most transparent examples of health and safety performance reporting by companies are found in safety-sensitive sectors such as chemicals and construction.
Following the new HSC guidance is likely to mean more work for personnel and HR departments, as the suggested reporting includes detailed sickness absence data (for example, separating out absence caused or made worse by work).
The Government has called on Britain's top companies to start publishing annual information on health and safety performance this year, including details of fatalities, major injuries and "near misses".
The Health and Safety Commission (HSC) has produced new guidance1 to help them do so, and HSC chair Bill Callaghan has hinted that a mandatory requirement to report might be considered if companies fail to rise to the challenge. The guidance forms part of the Government's Revitalising health and safety strategy, which recognises that a higher profile for health and safety in annual reporting "could help improve performance".
This new call for greater corporate accountability over health and safety performance fits in with a wider sustainability agenda faced by global corporations. Employee health and wellbeing - particularly for those companies operating in the developing world - is part of the social strand of a sustainable development agenda. Companies already signed up to this way of working and reporting are often those most likely to report openly on health and safety performance.
More work for managers
The HSC argues that much of the information it is calling on companies to report is already gathered by large organisations, but for most, following the new guidance on reporting will mean more work for human resources, facilities and safety departments. For example, survey research suggests that only two-thirds of employers are able to state the major causes of absence in their organisation and relatively few separate work-related from non-work-related absence - both of which measures the HSC wishes to see reported externally.
Those companies that already produce annual reports on health and safety for their "stakeholders" will face revamping and expanding them, as some are little more than cosmetic exercises in corporate social responsibility, designed as public relations material. For example, an analysis by charity Disaster Action four years ago found that, although around half of the FTSE 100 companies cover health and safety in external reports, some of this "coverage" is little more than a mention in a much broader section of the annual report.
In this article, we review the new HSC guidance on the external reporting of health and safety performance and take a look at a number of companies that already publish health and safety information, often as part of larger documents on their "responsible care", "environment" or "corporate social responsibility" activities.
New HSC guidance
The Government and the HSC believe that wider reporting on health and safety performance in line with a common standard will help achieve the national health and safety targets set out in the Revitalising health and safety strategy.
The guidance explains how companies should address health and safety issues in published annual reports on business activities and performance. It does not specify that such information should be included in the annual reports and accounts of a company, and recognises that, for many companies, including health and safety in an allied report makes more sense. The guidance is aimed at Britain's top 350 companies initially - of which only 10 are estimated to produce social/sustainability reports - but will be extended to all organisations with more than 250 employees by 2004.
The HSC is of the opinion that external reporting demonstrates to stakeholders the company's commitment to effective health and safety risk management, and shows its readiness to improve on performance revealed in previous public statements. Although there is no legal obligation to include health and safety information in published reports, the HSC considers it "good practice to do so".
In addition to the hard data suggested (see box), the guidance also recommends that reports include the following information, or give details of how the organisation intends to include it in future reports:
the broad context of the health and safety policy;
details of any significant risks faced by employees and others and the systems in place to control them;
health and safety goals, as related to the health and safety policy and the national targets set out in the Revitalising health and safety strategy;
progress made towards meeting goals and plans for the next year for example, the introduction of new working practices or training; and
arrangements for consulting employees on health and safety matters.
Effective monitoring of health and safety performance should be the basis for reporting, according to the HSC. Monitoring should be based on a model developed by the Commission, the guidance suggests, which contains both active and reactive elements. For example, the active element includes measuring the effectiveness of risk management arrangements, while the reactive part looks at data on injuries, ill health and absence (so-called "failure" data).
The HSC recognises that the content of its suggested health and safety reporting focuses on failures in risk management - fatalities and accidents. However, it believes that most large organisations already collect this data during monitoring, so they should be able to follow the guidance without the need to establish new procedures or databases.
RoSPA favours "holistic" reporting
The HSC's guidance draws heavily on research conducted by the Royal Society for the Prevention of Accidents (RoSPA), published as a report on measuring and reporting corporate health and safety performance earlier this year2. The report takes account of comments received during a consultation exercise by RoSPA, which itself was part of a wider initiative by the charity to bolster the profile of health and safety on company boards - Director Action on Safety and Health (DASH).
RoSPA's view is that the traditional measures of performance highlighted for reporting in the HSC guidance, such as injury rates and other "failures" to control risk, are limited and that a more holistic approach should be adopted. It believes that companies should publish information on the effectiveness of the health and safety management systems and processes in addition to the raw data on "failures" to control risks (injuries or harm to health, for example).
According to Roger Bibbings, RoSPA's occupational safety adviser, companies should be encouraged to report the good news in addition to health and safety failures. He believes that external reporting is usually the job of the company public relations (PR) function, and that there is, not surprisingly, resistance in this quarter to publishing bad news on safety. Balancing the "failure" data with some good news on occupational health, for example, should help gain acceptance for reporting in areas of business such as PR.
The RoSPA consultation exercise leads Roger Bibbings to conclude that much of the current external reporting on health and safety by companies is "unsophisticated". Most of the reporting that takes place, according to the RoSPA consultation, is primarily concerned with safety failures and other "outputs" of health and safety (mis)management. "There is very little on occupational health performance, or on the management systems used," Roger Bibbings adds. RoSPA's response to the results of its research has been to produce a model "evidence package" for companies to use in putting together information on past health and safety performance and future targets (see box).
Costs and benefits of reporting
The value of external reporting, according to the RoSPA research, is primarily to enable employees and an external audience to understand the progress made towards health and safety objectives. External reporting places health and safety high up the agenda and fosters a better understanding of the management approach to health and safety among stakeholders, according to RoSPA.
Regular reporting will enable companies within a sector to benchmark performance and demonstrate their openness and transparency. Those achieving high health-and-safety standards can use external reports to advertise their performance and even use it to help secure competitive advantage, the RoSPA report suggests.
However, RoSPA recognises that the costs of publishing health and safety information may be relatively high for smaller companies, because they may not already collect much of the data needed for external reporting. Other companies may be worried that the information published will be quoted out of context by the media or used in civil proceedings. For these reasons, most companies consulted by RoSPA as part of its research are anxious to find ways of reporting that are most meaningful to them and do not want to be constrained by a prescriptive or mandatory requirement. RoSPA favours a voluntary approach to reporting in the first instance, but accompanied by close monitoring of how companies tackle the challenges involved.
Presenting the data
Many companies are concerned at the growing weight and volume of annual reports and accounts and believe that separate, fuller accounts of health and safety performance are preferable, perhaps linked to those already produced on the environment. This is the approach adopted by most of the companies examined by Employee Health Bulletin.
RoSPA believes that, because of the social concern surrounding serious incidents, companies should consider including additional details on fatal and major injuries, and cases of notifiable industrial diseases and prosecutions (see ICI case study below). Reports should examine the performance of contractors and subcontractors, and contain details of occupational health and welfare, health awards and good neighbour activities (see ICI case study for details of in-house health-and-safety awards).
Chemicals industry leads the way
Some of the most open examples of health-and-safety reporting are found in the chemicals industry, due primarily to the Chemical Industries Association (CIA) "Responsible Care" programme. This is the industry's commitment to continual improvement in all aspects of health, safety and environmental performance and, crucially, to openness in communicating member companies' activities and achievements in these areas. Led by the CIA since it was adopted in the UK in 1989, the Responsible Care programme has already produced improvements in performance, as measured by a consistent set of indicators, according to the Association.
For example, the CIA web site contains a report on performance in the 10 years to 1999, showing that the general trend in fatalities is down, but that setbacks do occur from year to year. For example, the number of major injuries resulting from chemicals increased in 1999, but the total figure was below that recorded in 1997. The web site also reports on prosecutions of member companies, showing that 14 were upheld in 1999, compared with seven in 1998. Improvements in occupational health provision are charted, particularly in the areas of "health surveillance" and "emergency response". The CIA has started to collect data on occupational illness frequency by cause, and will report on this later in the year.
The level and presentation of health and safety information by individual companies differs according to sector, system of financial reporting and the perceived needs of the external audience (for example, shareholders, regulators, insurers, clients and political bodies). The case studies presented below are examples of more open reports, and tend to come from companies in sectors where safety at work has a higher than average profile - construction, offshore exploration, pharmaceuticals and chemicals. Other examples discovered by Employee Health Bulletin were more cosmetic in content, often little more than one or two paragraphs to the effect that "safety performance has improved over the past year".
Typically, companies in the safety-sensitive sectors will mention health and safety in the full annual report and accounts, usually within a section on "environment" or "social" issues. Reference is made in the annual report to a separate, but associated, document, and it is this separate document that contains the full performance information on health and safety.
The internet has added a new dimension to all company reporting, and many large organisations with a longer history of reporting on health and safety performance have developed sophisticated, menu-driven health and safety web sites, linked to the relevant year's annual report and accounts. For example, BP Amoco produced its first web-only financial, environmental and social report in 1999 and is issuing a 24-page environmental and social report this year to summarise the web version for 2000. Sixty-percent of BP's 1,000-page web site is devoted to non-financial information, including health, safety and environment reporting.
The health and safety report contains a table of performance for various standard indicators, including reportable lost-time accidents and rates (see table below). The latest figures show that accidents fell to a record low for the group in 1999; the company's rate is 10% below the CIA average. Special milestones and achievements are also mentioned: for example, two sites completed one million hours without a reportable lost-time accident, and another was "highly commended" in a national occupational health awards scheme.
|
Measure |
1999 |
1998 |
1997 |
|
Reportable lost-time accidents |
7 |
17 |
19 |
|
Rate per 100,000 hours |
0.29 |
0.62 |
0.68 |
|
Source: "Health, safety and environment report 1999", Hickson International. |
|||
Ken Patterson, the process safety manager for Hickson & Welch, traces the history of the company's health and safety reporting. Unusually, the company started reporting on health and safety matters before environmental performance as a result of a serious accident at one of its UK sites in 1992. Following this incident, a decision was taken at a senior level to raise the profile of health and safety in the business and to publish annual data starting in 1994. A decision was also taken to establish a Responsible Care supervisory board, chaired by an external expert who was a former president of the CIA. According to Patterson: "All these activities were about improving performance in line with the industry's responsible care guidelines, which emphasise the need to share information." Health and safety performance is ranked alongside business performance in the company directors' priorities - monthly board meetings involve around an hour's discussion on health and safety before any financial matters are raised.
Hickson & Welch publishes its health and safety information in a separate report, but Ken Patterson understands why some argue that health and safety data should be contained in the main annual report and accounts, as this is the important point of reference for all stakeholders. However, annual reports get larger every year and there is a danger that the health and safety information gets lost, he adds. "We have always published a separate document, but if people request an annual report, they automatically get sent the health, safety and environment one as well." This association is reflected in a link between the financial and health and safety reporting pages on the company's web site.
Ken Patterson would not have a problem if reporting on health and safety performance became mandatory: "We should, and would, publish whether we are required to or not," he adds.
The ICI health and safety web site describes the company's health and safety policy, which includes ensuring that all activities are conducted in a manner consistent with the group's standards in this area, setting demanding targets and measuring health and safety performance. The policy also commits ICI to "communicate openly on the nature of our activities, encourage dialogue and report progress on our safety, health and environmental performance."
Sixteen global management standards are explained, including those affecting the safety and security of ICI employees and contractors. Each business is responsible for implementing the standards through management systems. A database on the global standards has been developed, which includes guidelines on implementation and examples of good practice. The web site also describes the auditing procedures for measuring performance against these standards.
The web site tracks health and safety performance over the past five years under the company's previous target-setting exercise - Challenge 2000. The circumstances of three fatalities over the period (all of which occurred in ICI businesses in developing countries) are described. The performance section of the site reports how the reportable injury rate target set in Challenge 2000 was beaten, and how the broader "classified" injury rate fell to 0.23 per 100,000 hours worked in 2000, below the 0.3 target set in 1995.
Health performance is also reported, showing that ICI just missed hitting its target to put all staff through health assessment and occupational hygiene programmes by 2000. The site gives examples of how the company presents data on two work-related illnesses: allergies and noise-induced hearing loss. For example, the number of allergy cases fell significantly during the latter years of the 1990s (see chart on p.9), but did not meet the 2000 target of zero. There were no new cases of noise-induced hearing loss last year as all the 21 cases reported were due to historical exposure, ICI reports.
The section of the reporting web site on Challenge 2005 - ICI's health and safety targets for the next five years - describes how the business has changed fundamentally since the last targets were set. By 2005, ICI plans to cut the classified injury rate and work-related illnesses by 50%, and will "expect and help our on-site contractors to achieve the same improvement in their classified injury rate".
An overview in Unilever's Social Review describes how accidents in the workplace were cut by two-thirds over the period 1996-99. Fatal accidents among employees and contractors almost halved over the same period, from 21 to 11. A section on "a safe and secure workplace" includes a case study on safe driving, which is a big issue for the company, particularly in its operations in developing countries (see box). This section also reports on the safety management systems in place; how an action committee is responsible for overseeing the implementation of a set of global standards; and how the occupational health service works with the human resources department and line managers to ensure safe and healthy working. In 1999, information was collected on a number of key health problems to monitor work-related health worldwide, including musculoskeletal conditions, asthma and noise-induced hearing loss.
A Unilever spokesperson explains why the company reports on health and safety performance: "As a responsible company we feel the reporting of occupational health and safety performance on a corporate basis (in addition to our environmental performance) is an important key performance indicator. It is indicative of the commitment of all employees to health and safety and reflects the quality of the business."
The benefits to the stakeholders are obvious, Unilever believes: "Reporting provides transparency on non-financial performance indicators, which are also indicators of how well a company is doing. Health and safety reporting allows our stakeholders to judge whether the growth of business performance is at the expense of the welfare of all our employees or not." However, Unilever does not believe that reporting should be mandatory: "Peer-group pressure is a better way to encourage this type of reporting," the spokesperson adds.
In the latest report for 1999/2000, sustainability issues at BAA, including health and safety, have been moved back into the main annual report, although hard performance data on health and safety remain on the web site, with a link from the main annual report. "All annual reports and data are released on the same day, so are essentially part of a single package," Kathryn Barker adds. She does not feel that the sustainability information will be lost by moving it back into the main annual report, "so long as there is proper signposting".
Making health and safety reporting mandatory would not pose a problem for BAA as "we do it anyway", according to Barker, who feels that the practice should be encouraged as part of a movement towards more general openness on issues of corporate social responsibility.
An "impact and performance" section of the Shell online annual report contains a section on health, safety and environmental performance, in which the company expresses its "deep regret" that 60 people - primarily contractors - died during work activity in 2000, an increase on the 47 deaths recorded by the company in 1999. The report is very open and transparent, describing it as "frustrating" that enormous amounts of time and energy devoted to preventing such incidents is "not yet showing returns". Like Unilever, most fatal accidents at Shell are the result of road accidents in developing and emerging economies. Owning up to shortcomings in this fashion does much to establish the report's credibility and makes the reader feel confident that other health and safety information published by the company is genuine and not purely a public relations exercise.
The total number of reportable health and safety cases fell by 14% in 2000 to a "best-ever" rate of 3.2 cases per million hours worked. The health and safety section on the web site also includes information on targets set for the next three years; Shell aims to cut the total reportable case frequency to 2.2 cases by 2003 (see table below).
|
|
2003 |
|||
|
Measure1 |
1998 |
1999 |
2000 |
(target) |
|
Total reportable case frequency |
4.4 |
3.7 |
3.2 |
2.2 |
|
Lost-time injury frequency |
1.6 |
1.4 |
1.3 |
0.7 |
|
1 Cases per million exposure hours (contractors and staff). |
||||
|
Source: Shell Group of Companies, www.shell.com |
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In a brave move, the web site also has a section reporting on stakeholders' comments on the company's health and safety performance ("You told Shell"), containing the following single comment from an unknown contributor: "Safety seems to be one of your big stumbling blocks. Your managers seem more interested in their personal options in Shell shares than in your goal to prevent the loss of lives. The financial results have been made their number one goal."
A section on health in the Blue Circle annual report explains how the health risk profile of the workforce has changed significantly with the acquisition of new businesses, "particularly in emerging economies" - a common theme among the global operations we examined. As a result, Blue Circle started a programme of health audits in sub-Saharan Africa to assess risk, determine existing levels of control and improve control systems.
The lost-time incident rate at Blue Circle improved by 22% in 2000, exceeding the company's 20% target. As a result of this and improvements in the past few years, the company has met its Target 2000 objective, set in 1996, to cut by a half the accident frequency rate by the end of 2000. This was despite an expansion of the business into several newly industrialised countries - with greater health and safety challenges - and the closure of some UK sites with more developed health and safety cultures.
Health and safety in annual reports
The new HSC guidance on health and safety in annual reports suggests that companies include the following information on health and safety performance in external reports:
the number of injuries, illnesses and dangerous occurrences. The data should distinguish between fatalities, other injuries, illnesses and dangerous occurrences. More inclusive definitions, for example, lost-time injuries, may be used. The data should be expressed as the rate of injuries/occurrences per 100,000 employees to enable comparisons with the national targets to be made;
brief details of any fatalities and of the actions taken to prevent any recurrence;
numbers of cases of physical and mental illness, disability or other health problems caused or made worse by work that are first reported during the period under review;
the total number of employee days lost because of absence, separating out the number thought to be caused or made worse by work. The main causes of absence should also be detailed;
the number of health and safety enforcement notices served on the company and details of what action the notices required the company to take;
the number and nature of convictions for health and safety breaches sustained by the company, the outcome in terms of penalty and costs, and what actions have been taken to prevent a recurrence; and
the total cost to the company of the occupational injuries and illnesses suffered by employees during the reporting period.
Source: "Health and safety in annual reports", Health and Safety Commission guidance, April 2001.
"Evidence package" reporting: RoSPA recommendations
The Royal Society for the Prevention of Accidents (RoSPA) recommends that companies produce an "evidence package" of information on their occupational safety and health performance, covering both the health and safety management process in the organisation and traditional measures of performance such as injury and accident rates. Options for this "package" of information include:
occupational safety and health culture: for example the results of internal "climate" surveys;
management systems: rankings or scores produced by audits of the health and safety management system;
risk control: control data for selected principal risks; and
outputs: failure data such as "near misses", incidents, injuries, work-related ill health, sickness absence, claims and enforcement experience.
Source: "Director action on safety and health: measuring and reporting on corporate health and safety performance - towards best practice", RoSPA, January 2001.
Reporting on health and safety achievements at ICI
The following projects are two among many reported on the ICI safety, health and environment web site:
Contractor safety: A concentrated focus on improving contractors' safety at Uniqema's Thane plant in India has paid dividends. Although a range of engineering projects have been undertaken at the site in the past three years, there have been no classified injuries to ICI employees or contractors.
To maintain this record, the plant has concentrated on raising safety awareness among contract workers and has implemented a new contractor selection and management programme.
Health Day: All employees at Uniqema's Emmerich site in Germany have participated in a project looking at health, both inside and outside the workplace. Groups of 20 employees were asked to consider a number of questions over a 15-day period, including what can and must be done by the management, staff and the company doctor. One outcome of these discussions was the creation of an annual Health Day, encompassing all personnel and focusing on health and relevant issues within the workforce.
Case-study reporting: safe driving at Unilever
The first Social Review produced by Unilever, for 2000, contains a section on "a safe and secure workplace". The following case study on reducing road traffic accidents forms part of the group's reporting on health and safety.
Safe driving
Road traffic accidents, whilst on Unilever business, are a significant contributor to the overall fatal accident numbers. During 1996-99, driving-related fatalities accounted for 24 out of the total of 66 (36%). Consequently, SHEACO [Safety, Health and Environment Action Committee] issued a new mandatory standard in November 2000, the "Safe Travel in Vehicles" programme, to be applied everywhere in the world. It requires that:
all vehicles driven by employees on Unilever business must be in a safe and roadworthy condition with seat belts fitted for the driver and passengers;
all employees must wear the seat belt(s) provided whilst on Unilever business;
each Unilever organisation must implement a programme of defensive driving training for all employees required to drive on Unilever business; and
employee work schedules, remuneration and incentive schemes must be kept under review to ensure that they encourage safe driving patterns and practices.
Health and safety reporting web sites
The following web sites contain information on the health and safety performance of UK companies:
BAA at www.baa.co.uk/main/corporate/sustainable_development
Chemical Industries Association at www.cia.org.uk/newsite
HSE guidance on health and safety in annual reports at www.hse.gov.uk/revital/annual.htm
Hickson & Welch at www.hickson.co.uk/hse99/responsible.pdf
ICI at ici.com (Health, safety and environment report 2000)
RoSPA at www.rospa.co.uk/ohs/dash/exec.htm
Shell Group of Companies at www.shell.com/home/Framework?siteID=home
Unilever at www.unilever.com
HICKSON & WELCH
This chemicals company - which was formerly part of Hickson International - has signed up to the CIA Responsible Care programme and has produced an annual report on its health, safety and environmental performance since 1993. The latest report, for 1999 (the report for 2000 is still being produced), sets out the company's policy in the broadest of terms and reports on performance. For example, the company completed an audit of its responsible care management system at each of its sites in 1999, and action plans were developed to further improve performance in 2000.
ICI
ICI uses the internet to its full potential in all external reporting, and has a dedicated safety, health and environment web site, containing reports and case studies on the company's health and safety performance. The web site has separate sections setting out the health and safety achievements over the past five years and plans for the future, together with a news page and case studies from different parts of ICI's worldwide operation. The group has just completed a major review of its safety, health and environmental activities, which resulted in the launch of five-year performance targets called Challenge 2005.
BAA
Health and safety reporting at airport operator BAA began many years ago, even before the company started producing separate sustainability reports on a range of social and employment issues around 10 years ago, according to Kathryn Barker, head of environment at the company.
SHELL GROUP OF COMPANIES
Shell has developed a web-based approach to annual reporting, so Shell.com contains more detailed information than the company's printed annual report. Information on the web site is updated throughout the year, so quickly becomes more current than most of that contained in the published annual report.
UNILEVER
This multinational company produced its first Social Review to accompany all its other annual reporting in 2000. The 2000 review is the result of an exercise in nine Unilever companies around the world to test a framework to evaluate and manage performance in all areas of corporate social responsibility, including health and safety. The social review is a companion document to the separate environmental performance report and covers a range of issues in addition to health and safety, including diversity in the workforce and sustainable development.
BLUE CIRCLE INDUSTRIES
This manufacturing company includes health and safety information in its published annual report and accounts for 2000. A section on the subject describes how a new Social and Environmental Responsibility Committee of the main board was established last year, in recognition of the importance of the issue to group operations.
1"Health and safety in annual reports", HSC guidance: www.hse.gov.uk/revital/annual.htm
2"Director action on safety and health: measuring and reporting on corporate health and safety performance - towards best practice", RoSPA, January 2001, tel: 0121 248 2095.
