DASH - Director Action on Safety and Health
Measuring and Reporting on Corporate Health and Safety Performance
Reporting on Corporate Performance
Accounting for performance internally
Periodic reporting on health and safety performance within organisations is fundamental to the HSG65/BS 8800 approach. If they are to manage health and safety effectively, it is essential that, periodically, organisations should set out a clear and concise account of their performance against strategy for the whole workforce, but especially for managers, safety representatives and health and safety professionals. This is to enable all employees to understand progress in achieving corporate health and safety objectives and for those with management responsibilities to communicate such information to key internal and external audiences.
Many large companies produce internal health and safety performance reports, often in conjunction with reports on environmental performance. Smaller organisations too can provide simple periodic reports on progress in tackling health and safety matters using their internal communications procedures.
Reporting externally
The requirements of the workforce for information on OS&H performance overlap with those of a number of other external stakeholder audiences such as shareholders as well as regulators, insurers, clients, local and national political bodies and the media. Through its consultancy and awards work RoSPA has become aware of a number of cases in which companies have developed an ‘open’ approach to OS&H performance reporting, although the level of detail and approach may be varied on occasions to take account of varying audience needs and characteristics.
More recently, the wider issue of companies reporting on their management of risk (particularly financial risk but not excluding risks from work activity) has been explored in the Turnbull report and in BS PD 6668.
An analysis of coverage in their annual reports of OS&H by companies in the FTSE 100 was carried out by the charity ‘Disaster Action’ three years ago (DA 1997). This showed that roughly half covered health and safety in some way. Coverage varied from the superficial (perhaps even the cosmetic) to the relatively informative. Among those companies that did not mention health and safety informatively were many which are acknowledged to be ‘market leaders’ in health and safety.
Costs and benefits of reporting
Enhanced OS&H reporting by companies imposes certain costs but there are also many potential benefits.
Costs include both those associated with editing and publishing the required information as well as those arising from the maintenance of record systems, monitoring and the analysis and verification of the resulting data. It could be argued that many of the data are (or should be) gathered for operational purposes anyway and thus the main additional costs will be those associated with aggregation, analysis and dissemination. There could be disproportionately greater costs for smaller organisations, particularly if the information needed was extensive.
Besides direct financial costs there may be other indirect costs incurred in reporting, particularly if the information gives a negative impression of a company’s approach to health and safety and if quoted inappropriately in the media or used as evidence in civil proceedings.
So far as benefits are concerned, in RoSPA’s view the advantages to annual OS&H performance reporting are:
It provides essential information to shareholders on the organisation’s approach to risk management and its effectiveness, explaining the organisation’s approach to OS&H as a key business performance objective.
- It provides essential information to other key stakeholders/partners such as the workforce; contractors/suppliers/customers; regulators, insurers, political representatives and campaigning organisations and can therefore complement the existing requirement to report on environmental performance. In addition, it can provide a basis for providing information to the media and wider public.
- It can enable companies to report on progress towards the achievement of improvement targets.
- It can help to create a greater understanding of the ‘management system’ approach to OS&H.
- It can provide a basis for ‘benchmarking’, for example, within a sector or a group of companies.
- It can help to demonstrate openness and transparency, both internally and externally.
- It can provide a basis for celebration of achievement, helping to demonstrate and reinforce the organisation’s H&S values and culture.
- It provide a useful way of collating summary information on OS&H in support of other business processes such as tendering, entry to awards schemes and so on.
- For those companies already achieving high standards, publicising a positive OS&H profile can help to help secure competitive advantage in the marketplace.
Looking at the balance of costs and benefits, it might be hard to show a direct causal link between corporate performance reporting and any subsequent reduction in levels of risk, harm and loss. However, creating a climate in which corporate OS&H reporting became an established norm, with an accounting requirement affecting the company at its highest level, would create a powerful incentive in companies with deficient senior OS&H management to improve. The main net benefit therefore would be in enhancing the influence of other OS&H performance ‘drivers’ (particularly those associated with fear of loss of reputation, business opportunities and competitive advantage).
In RoSPA’s opinion it seems likely that, for the economy as a whole, the additional costs to companies of reporting will be significantly outweighed by the benefits of improved OS&H performance as well as the other incidental commercial benefits of the kind referred to here (although detailed CBA studies would be required to confirm this). The more organisations are able to communicate their OS&H performance data in a variety of ways (for example, in tender documentation, in seeking awards, in communicating with customers, insurers, regulators, the media and so on) the greater the resulting benefits are likely to be.
Law and/or guidance?
The case for mandatory coverage of health and safety performance by companies in their annual reports was originally developed by the Robens Committee whose report informed the enactment of the Health and Safety at Work Act of 1974. Section 79 of the Act made provision for making regulations (linked to company law) to require companies to include details of their health and safety performance in their annual reports. This was never implemented and, in the mid nineties, when company law to which it related changed, the section was repealed.
The idea of encouraging (or requiring) coverage of OS&H performance in annual reports was raised again in the HSC/DETR ‘Revitalising’ consultation document published in July 1999. Paragraph 45 stated "Publishing details of health and safety performance in companies’ Annual Reports can be another powerful tool. There is already a requirement to report environmental performance. Whether on a compulsory or voluntary basis, a higher profile for health and safety in annual reporting could help improve performance."
Paragraphs 42 to 46 of the ‘Revitalising’ strategy statement published in June 2000 stated that the HSC would promote publication of guidance by March 2001 to allow large businesses to report publicly to a common standard. It stated that the Government and the HSC would challenge the top 350 businesses to report to these standards by the end of 2002 and would work to extend this to all businesses with more than 250 employees by 2004.
While it was clear that in the first instance a voluntary approach was to be pursued paragraph 43 stated, ‘..ministers are minded to move to a compulsory approach if good progress is not made against this action point.’ The statement drew attention to RoSPA’s initiative on performance measurement and reporting and stated ‘Ministers attach particular importance to details of prosecutions, fines and statutory notices being made public’. Action point 13 stated ‘All public bodies will summarise their health and safety performance and plans in their annual reports, starting no later than the report for 2000/1’.
What RoSPA has sought explore in its consultation document has been not only views about the advantages of reporting but whether a voluntary or mandatory approach should be adopted and, if a mandatory approach was considered desirable, whether it should be a goal setting duty informed by authoritative guidance or a prescriptive one - limited, for example, to requiring the reporting of certain specified information (eg numbers of reportable injuries, dangerous occurrences and diseases, any enforcement action taken against companies and associated costs with some specific detail perhaps on fatal injuries and serious incidents).
Response to the RoSPA consultation exercise has shown that there is a variety of approaches that could be adopted. However it seems that most companies are anxious to find the way of reporting that is most meaningful for them and do not wish be constrained by a prescriptive requirement.
Essentially any report in a business context (even the humblest departmental memo) needs to include key a range of key indicators of performance status and progress (‘where we said we wanted to be’, ‘where we are now’, ‘where we plan to be next’ and ‘how we plan to get there’). Many consultees, including some health and safety professionals and trades unionists, have expressed the view that OS&H performance reports to stakeholders produced by larger organisations in particular, should, at the very least, include information on their H&S failure record (such as that referred to above).
On the other hand, the majority of consultees agreed that it is of equal if not greater importance for organisations to also explain progress achieved in strengthening their OS&H policy, organisation and arrangements. How that can best be achieved in a meaningful way and within the constraints of an annual report format, is however a considerable challenge. Several consultees pointed to the growing volume of many annual reports; the perceived tendency of companies to ‘embroider’ reports on OS&H and environment (as opposed to including hard data) in order to promote their public image; and the advantages of including a fuller account of OS&H performance and plans in separate reports.
RoSPA agrees that, in the first instance a voluntary approach should be adopted with close monitoring of how organisations tackle the challenges involved. Some criteria need to be established by the HSC and others against which to assess progress.
Were it agreed in due course that a mandatory approach was necessary, RoSPA’s preference would be for a new goal setting duty, supported by an ACoP, requiring ‘adequate and suitable’ information on performance to be made available to a number of stakeholder audiences. Were a more limited prescriptive duty (relating, for example, only to notifiable accidents, dangerous occurrences, cases of ill health and enforcement action) to be introduced, then there would a need to consider whether such reporting should apply to some or all companies or be applied through a graded approach according to size, level of risk or possibly in the light of enforcement action. In RoSPA’s view, a goal setting duty would allow for reporting against a more holistic model of performance while allowing for flexibility. Indicative standards for compliance with the standards set out in the ACoP and ‘good guidance’ would be necessary in this case.
Encouraging best practice
Whether or not mandatory requirements are eventually introduced in this area, RoSPA believes there is a need to institute systems which will help to identify, encourage and facilitate best practice. These include not only the development of consensus about the overall approach but publicity and awareness raising, dissemination of information, briefing and training, and facilitation of benchmarking.
RoSPA’s recommendations Organisations within scope of Action Points 2 and 13 in ‘Revitalising’ should include concise information in their annual reports on their overall approach to health and safety management, together with an appropriate package of key, quantitative indicators which, when assessed together, will enable the informed reader to obtain a clear overview of that organisation’s OS&H status, progress and targets. While there will continue to be a variety of approaches to OS&H performance reporting, RoSPA recommends strongly that an organisation’s OS&H performance ‘evidence package’ should reflect broadly the holistic approach to performance discussed in Measuring OS&H Performance. |
Options for the package include: CULTURE: MANAGEMENT SYSTEMS: RISK CONTROL: OUTPUTS: Because of social concern that surrounds serious events, companies should consider including additional summary details on all fatal and major injuries, cases of notifiable industrial diseases and prosecutions. RoSPA strongly recommends that performance reporting should encompass, where appropriate, the OS&H performance of contractors, subcontractors and other relevant business partners. Reports should also refer as appropriate to occupational health, hygiene and welfare programmes; success in OS&H award schemes - both external and internal; involvement in ‘good neighbour’ activities; development of OS&H communications; and so on. Some attestation as to the appropriateness and integrity of the information is clearly important. RoSPA recommends that OS&H performance reports should be verified by a ‘competent person’ to assess their completeness, relevance and the overall accuracy of the ‘evidence package’. They should also be ‘signed off’ by the most appropriate senior officer of the organisation, for example, a board level director with oversight of OS&H, as well possibly as by the company safety committee and/or the company’s external auditors. |
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RoSPA is a registered charity: Registered Charity No: 207823 Patron: Her Majesty the Queen RoSPA Head Office: Edgbaston Park, 353 Bristol Road, Edgbaston, Birmingham B5 7ST, UK |
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