Investors expect WHS reports, but limitations persist

Analysis

Investors expect WHS reports, but limitations persist

Companies are increasingly reporting safety data to meet investor expectations, but reporting methods continue to be inconsistent, and this means it is difficult to compare the performance of one company to another, according to a report by a major bank.

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Companies are increasingly reporting safety data to meet investor expectations, but reporting methods continue to be inconsistent, and this means it is difficult to compare the performance of one company to another, according to a report by a major bank.

Citi Bank has published a report on its analysis of safety reporting by 117 ASX-listed companies, (including ASX100 companies plus a few more) over a nine-year period between 2005 and 2013.

The report said that investors ‘increasingly expect companies to report safety data and demonstrate active programs to manage safety’, and that a failure to do so ‘raises doubts about whether safety is being actively managed’.

More companies are now reporting on safety, with one in four out of the sample reporting injury data by 2013. New reports were the ASX, Bank of Queensland, Beach Energy, Carsales.com, Cochlear, Federation Centres, Investa Office Fund, and Seek.

Inconsistent reporting methods

The authors said there are ‘no perfect metrics’ for assessing and comparing companies’ safety programs and performance, citing inconsistencies with data as well as reporting boundaries between companies, sometimes due to inherent differences between industries. They explained:
‘We suspect that reporting boundaries vary substantially between companies and industries, and over time. Reporting on traffic accidents may be a key example, including the extent to which contract drivers are included in company reporting.’
The authors’ views on the limitations of popular reporting metrics are consistent with a recent research paper from Safe Work Australia (SWA), which the agency said it will use to develop a standardised set of indicators that businesses can use in annual reports. SWA provided this concise summary of the problem:
‘Currently there is a lack of standardised and accepted indicators to measure the work health and safety performance of organisations and businesses at the organisational level. Work health and safety information can and is being reported on a voluntary basis, however reporting is often selective and inconsistent. This hinders comparisons of work health and safety performance and due diligence reporting over time and across organisations.’
Relevantly, the authors of the Citi Bank report questioned where companies should ‘draw the (reporting) line’, and suggested that more complexities and inconsistencies with reporting will be encountered if companies expand the scope of their data too far. They explained:
‘We suspect companies may often include contractors working on their sites. But do companies like supermarkets include any fatalities among all drivers involved in their supply chain logistics? Do resource companies include any fatalities among all companies they may contract for their exploration activities, such as early exploration drilling, or seismic operations? Do REITs include any fatalities associated with construction of buildings they own?’
Eleven companies with more than 10 deaths

The authors of the Citi report said that injury data was generally reported as either Lost Time injury Frequency Rate (LTIFR) or Total Recordable Injury Frequency Rate (TRIFR), with 78 companies in their sample using the former method, and 43 using the latter.

They said the general trend was for LTIFR and TRIFR to decrease over time. The LTIFR declined between the most recent year and the previous for 50 companies, but increased for 20 of them. Meanwhile, the TRIFR declined between the most recent year and the previous year for 31 companies, but increased for eight of them.

The authors said there were 427 fatalities in the sample between 2005 and 2009 or 523 if members of the public are included.
 
Fatalities were highest in mining, materials, construction, engineering and logistics, and there were 11 companies with ten or more fatalities among employees and contractors in this period; namely, Aquarius Platinum, BHP Billiton, Boral, Coca-Cola Amatil, Leighton Holdings, Lend Lease, Newcrest Mining, Orica, Rio Tinto, Toll Holdings and Transfield Services.
 
There were a handful of single incidents which resulted in five or more fatalities — these were three aviation accidents (BHP, NCM, RIO) and one underground mining fall of ground (AQP).

The authors observed that companies are now reporting more vehicle accidents (eg Toll, Coca- Cola) but they suspected that this was due to historical reporting of such accidents being less comprehensive.
 
Fatalities tended to result from:
    • cases where an employer failed to provide safe equipment or a safe workplace
    • deaths due to lightning, cyclone and landslip
    • electrical accidents
    • employees failing to follow procedures
    • falls from height, falling objects or crush injuries
    • helicopter accidents (5 BHP, 8 Newcrest, 3 Oil Search, 11 Rio Tinto)
    • underground rockfall in mining
    • vehicle/mobile plant accidents, on public roads, mine sites, etc.
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