Integrating safety leadership into best practice safety disclosures in annual reports

There has been much discussion in recent years about the need for improved quality of workplace health and safety information disclosed by organisations in their annual reports and corporate social responsibility (CSR) reports. As outlined by Dr Sharron O’Neill in Safe Work Australia’s Virtual Seminar Series, companies need to articulate what they are trying to achieve in safety, identify their critical risks and how they are being managed, and acknowledge the consequences of such risks in order to learn from their occurrence. These views have been supported by recent research, which identified four criteria of safety leadership analysed against ten years of ASX200 annual reports to understand the extent to which large Australian companies are making best practice safety disclosures. 

Vision

An essential element of any successful safety culture is having the ability to publicly articulate shared safety goals that resonate across all levels of an organisation. In ASX200 companies, by 2011 76% of all companies made a disclosure about a safety vision, an increase from 49% ten years earlier. The research identified that disclosures of a company’s safety vision are made against six categories. In 2011, the most common vision related disclosure was a direct statement of safety as a company value (72%). This was followed by disclosures linking the safety vision with business excellence (43%), the importance of leadership and culture in achieving the safety vision (34%), the specific goal of Zero Harm (34%), the role of employees in achieving the safety vision (33%) and disclosures making a link between the reputation of the company and safety performance (5%).

Personal commitment

The personal commitment of senior executives and board members to safety leadership is essential in the development of a strong safety culture. In annual reports, such a personal commitment can be reflected in the Chairman and/or CEO letters to shareholders. In 2001, only 22% of Chairman and/or CEO letters made mention of safety. By 2011, this had increased to 46% of companies but remained the least disclosed criterion providing a significant opportunity for Chairman and CEO’s to demonstrate safety leadership through their letters in the future. Where disclosures about safety activities were made, by 2011 the most common could be classified under the category of transparency (39%) which included references to fatalities that may have occurred, statistical performance outcomes, or general safety successes or challenges. This was followed by linking good safety performance with business excellence (37%), directly referencing safety as a company value (33%), making the link between leadership and safety culture (20%), highlighting the role of the board in safety (14%) or discussing the important role of employees in safety outcomes (14%).

Decision-making

Where decision-making around safety is disclosed in annual reports it reflects the fundamental role of senior executives and board members in the safety governance of an organisation. Of the four safety leadership criteria, disclosures relating to safety decision-making were the most disclosed criterion with 58% of companies making such a disclosure in 2001 and 89% doing so by 2011. Within the criterion of decision-making, six categories of disclosures were identified. The most common by 2011 was a disclosure regarding the existence of safety documents and systems (76%). This was followed by information on the role of the board in safety (55%), the role of employees in safety decisions (49%), the existence of a board committee focused on safety (46%), the role of senior executives in safety decision-making (45%) and the existence of employee safety committees (29%).

Transparency

The final criterion of safety leadership focuses on the need for senior executives and board members to ensure open, transparent communications regarding safety performance to encourage a culture of continuous improvement. In 2001, only 33% of companies were making a disclosure that could be classified under this criterion. However this rate increased significantly over the ten-year period with 72% of companies doing so in 2011. The most common category of such disclosures by 2011 was to include references to statistical safety performance (67%). Other categories of transparency disclosures included providing details of the link between safety outcomes and remuneration (53%), information on safety recognition through internal or external awards (18%), disclosures about any fatalities that may have occurred (16%), information on safety initiatives that may have reduced workers compensation premiums (11%) and information on legal action that may have been commenced against the company relating to a safety incident (5%).

 


 

Dr Kirstin FergusonAbout the author – Dr Kirstin Ferguson

Dr Kirstin Ferguson is a professional company director sitting on ASX publicly listed, private company and government boards. Kirstin was previously the global CEO of a safety consulting organisation operating in the mining and resources industry. In 2014, the Australian Financial Review named Kirstin as one of Australia’s 100 Women of Influence. Kirstin has a PhD in Business focused on safety leadership and safety governance for board members and senior executives, and was awarded the QUT Colin Brain Corporate Governance Fellowship for her research contributions. Kirstin is an Adjunct Professor at the QUT Business School.

You can connect with Kirstin via Twitter, Linked In or send an email to info@orbitasgroup.com