[This article from 2015 was previously password-protected and is now available to all]
Recently a couple of media outlets referred to a report produced by Citi into workplace safety issues related to the top 100 companies on the Australian stock exchange. The report, “Safety Spotlight: ASX100 Companies & More” (not available online), provides a useful insight to the ASX100 companies’ safety performance but Citi also undertook several thematic analyses which are curious but not always as helpful as expected. (A blog article on a previous Citi report is HERE)
In support of some of the statements at a recent seminar after the Australasian Reporting Awards, Citi found that shareholders and investors now expect to read about occupational health and safety performance in company reports and that the omission of OHS mentions seems suspicious. Safety can be an indication of the quality of a company’s management and these findings could be a major boost for the issue of OHS accountability and transparency.
The Spotlight report records fatalities for the ASX100 companies since the 2005 financial year and over that time the annual fatality rate has declined however the report acknowledges that recent issues may indicate past statistical deficiencies when one considers the increased attention on work-related suicides and work-related vehicle incidents.
The benefit of having fatality figures, brief descriptions and trend data for each company in this report shows the amount of attention to detail Citi has applied for this report. This data is likely to be useful in deciding about investments but the use for safety professionals is limited, however OHS professionals are not the target audience.
It is useful to note that 94 of the 127 companies (Yes, it’s still called the ASX 100) reported LTIFR and/or TRIFR as indicators of safety performance. Citi acknowledges that TRIFR “may be a better measure of harm.”
The need for a consistent metric is shown in the report’s footnotes by the plethora of frequency rates. A sample includes
- All Injury Frequency Rate
- Recordable Case Rate
- Recordable Injury Frequency Rate
- Recordable Case Injury Frequency Rate
- Lost Workday Case Frequency Rate
Some of the titles may be exactly the same metric but even when looking at Annual Reports it is difficult to tell. Frequency rates are, largely, a lag indicator but even consistency in these measures would greatly help the comparison of OHS performance.
The thematic research report areas for this year included
- Developing vs Developed Country Injury Statistics,
- Process Safety and Major Hazard Risk,
- Safety and Executive Remuneration,
- Workplace Impacts of Obesity, and
- Western Australian Inquiry into FIFO (Fly-In, Fly-Out) Mental Health.
Some companies operate globally and safety data varies from country to country. Citi suggests that this may be due to differences in risk perception, the presence of workers compensation schemes, reporting consistency and different workforce demographics and fitness, amongst other factors. This variability affects the interpretation of global OHS performance statistics.
On the issue of major hazards, Citi found that major companies are increasing their focus on process safety and major hazard risk but wondered whether investors could ask why these companies are acting now rather than years earlier when the risk levels were similar. This type of reaction after major incidents is common and is one of the major frustrations of the OHS profession. Tragedy motivates change much quicker than leadership.
Recently a colleague mentioned their own frustration with safety professionals and academics who continue to use disasters such as Piper Alpha, Challenger and Three Mile Island, as illustrations of systemic failure. The theoretical relevance is obvious but to most of the OHS students and graduates such events are of historical interest mainly as these occurred before many were even born. It is useful to remember that even those children now in their teenage may be unaware of the events of 9/11 even though they may be aware of the consequences of that event.
Citi also makes the point that the measurement of personal safety in this industry sector can provide a false sense of security as it misses the major process disaster risk, a perspective borne out by others in the oil and gas sector.
Someone in Citi has been reading some of the recent work of Andrew Hopkins and others when it writes:
“Executive remuneration schemes may act against management of major hazard risk.”
One section of this report that has generated a lot of attention concerns executive remunerations and how these are linked to safety. Most companies continue to rely on personal safety figures but Citi noted that at least four companies are incorporating safety leadership in this area.
The criteria used with safety as a remuneration factor, as with the safety performance metrics mentioned above, are messy and contradictory. Some of the criteria used by Australian companies include:
- injury rates,
- reportable spills,
- risk reduction actions on time,
- personal initiatives and leadership, and
- occupational health exposures.
Four companies made no mention of safety influencing CEO remuneration!
One of the more curious analytical themes was Workplace Impacts of Obesity. The Citi report highlights this through references to solid data from the Australian Institute of Health and Welfare, Australian Bureau of Statistics and others but suggest no OHS solutions other than noting the increase in wellness and healthy lifestyle programs.
This section is an odd inclusion as it is difficult to see how these statistics could affect the decision making on investments. The issue is more a quality of life issue that has curiosity value rather than any corporate indicator.
Mental Health FIFO
This topic is a more logical fit to the Citi report as many of the resource companies that use FIFO labour are also part of the ASX100. More specific OHS information is available from the recent Western Australian inquiry report and through watching the current Queensland inquiry but, as Citi notes, the crucial factor in this sector will be the governments’ responses to the inquiries. One of these is due in mid-September 2015 and will be a good gauge of the Federal Government’s attitude to the prevention of harm from a psychosocial matter.
In Citi’s advice to investors it mentions potential changes in the following areas:
- Rosters, Construction and Contractors,
- Reporting of Suicides, and Inclusion of Mental Health in WHS Requirements, and
- Accommodation Facilities.
The OHS challenge of this labour practice in this industry sector is to apply a core OHS principle – to eliminate harm, at the source – companies may need to restructure their operations, and change fundamental perspectives on the use of labour. Given that many suggest that the recent mining boom in Australia has ended, the issue of FIFO mental health has diminished except that as the mining labour force has entered other industry sectors, the consequences of FIFO may manifest in the new occupations or, at least, affect a worker’s productivity.
The latest Safety Spotlight is a fascinating document, particularly as the data covers a decade from 2005 and is not limited to Australian safety events but includes global incidents under the “control” of Australian companies.
It is hoped that Citi avoids the temptation of rolling this decade across the next Spotlights (if there are any) as anchoring the data in 2005 allows for trend data across a range of economic fluctuations such as booms and the Global Financial Crisis. This will be doubly important as, as Citi mentions several times during the report, safety may be directly affected by the varying fortunes of the ASX100 companies.