There are some glaring gaps when it comes to safety reporting by Australian listed companies and action is required to improve the level of safety data collection and reporting, according to the Australian Council of Superannuation Investors (ACSI).
New ACSI research into ESG reporting of Australia’s top listed 200 companies found that 22 people died in workplace fatalities in 2018, yet there is no requirement to report this information to the market.
Instead it is collected by state-based agencies and may vary by sector, making it difficult to locate, according to ACSI, which represents 38 Australian and international asset owners and institutional investors, which own on average 10 per cent of every ASX200 company and manage more than $2.2 trillion in assets.
“Safety data is material to our members,” said ACSI CEO Louise Davidson.
“We are concerned that the lack of transparency about workplace deaths may mask the extent of this tragedy and slow the identification of systemic risks.”
ACSI’s ESG reporting by the ASX200 found that the number of companies that comprehensively report on ESG matters has improved 19 per cent over the past five years.
More than half of Australia’s largest listed companies now provide in-depth disclosure and assessment of their material ESG risks.
“Information about ESG practices is a critical piece of business intelligence,” said Davidson.
“Investors need to understand how companies are tackling ESG issues to make their investment decisions.”
More specifically, the research found that of 22 reported workplace fatalities were contractors, suggesting there is a disconnect between the safety practices of companies and the standards they require of contractors.
A further 67 companies disclosed no safety information, including eight companies that pay executive bonuses based on safety outcomes, and ACSI said “this lack of information is out of step with investor expectations.”
The research found safety reporting is commonplace, but disclosure is limited: more than half the ASX200 report some form of safety metric but few give any insight into the severity of injuries (except fatalities).
More mature reporters typically disclose forward-looking metrics alongside lagging safety metrics, and only nine companies reported their near misses.
Fewer than half the ASX200 reported their lost-time injury frequency rate (LTIFR); just one third reported their total-recordable injury frequency rate (TRIFR) and even fewer companies in both indicators included information on contractor safety.
While this appears to show reasonable levels of reporting, ACSI said it demonstrates significant disclosure gaps in reporting safety metrics.
Eighty-six companies did not report either LTIFR or TRIFR measures, and 67 of those companies provided no safety information at all.
Executive remuneration outcomes at 85 companies include a safety component, although eight of these companies did not report any safety metrics, and ACSI said this makes it difficult for investors to assess how this was applied to pay outcomes.
“Safety incidents come at significant personal and financial costs,” the research report said.
“Apart from the effects on the people involved, companies face compensation claims, loss of productivity and operational performance issues – both directly, in a financial sense, and indirectly in terms of community and other stakeholder impacts including reputation.
“Workplace health and safety is a focus area for ACSI and our members, many of whose own members work on the front line of high-risk industries.
“Safety reporting is not just important for investors, who see and feel the financial impacts of delays to projects and lost productivity.
“It is also a crucial piece of business intelligence that signals that management has robust and timely information to appropriately manage and mitigate its risks in these areas.”
ACSI said it faced various challenges collecting data on work-related fatalities, and for companies that provided no reporting of fatalities, it was unclear whether the company actually experienced zero fatalities or whether it simply did not report them.
Companies did not always report fatalities with other safety information, making it difficult to find.
For those that did provide information, ACSI found the disclosure was in various locations with some companies reporting fatalities only in an annual general meeting speech, in a separately prepared GRI report or ASX announcement.
Others reported zero fatalities in their annual report’s opening letter and statistics but recorded contractor fatalities further into the report.
“We are concerned that the lack of transparency about workplace fatalities in Australia may mask the extent of workplace tragedies and slow the identification of systemic risks,” said the research report.
“Best practice safety reporting would include reporting fatalities to the market.”
The cover feature for the next edition of OHS Professional magazine will focus on workplace health and safety reporting, and detail challenges facing Australian organisations as well as trends in this area.