Louis Wustemann looks at the growing emphasis on safety and health in ESG measurement and reporting and explores how OSH managers could help set the agenda.

In the early 19^th century, successful companies run by families who were members of the Religious Society of Friends - more commonly known as the Quakers - were notable for their commitment to honest dealing, prompt payment, fair treatment of workers and generally doing no harm while turning a profit.

Fast-forward 200 years and many businesses are again laying emphasis on their probity and how they can avoid damage to people or the environment. Their actions have again been influenced, at least in part, by the religious beliefs of a set of owners.

One of the wellsprings for what we now call ESG (environment, social, governance) management and reporting was the requests in previous decades by church pension funds, which have hundreds of millions of pounds under investment, that their fund managers did not put their money into companies that were not just weapons or tobacco manufacturers but whose activities led to pollution, conflict or worker exploitation.

Other investors have followed suit, whether from moral conviction or because they believe that companies that perform well on ESG metrics are more likely to remain profitable longer. Reporting performance against these standards is also expected by many of the world’s stock exchanges. In 2015, less than 10 per cent of exchanges provided ESG reporting guidance for companies they listed; now that figure is close to 60 per cent.

Beyond the market

In the past few years, ESG has also gained a wider meaning beyond just the interests of shareholders. It has become a shorthand for sustainability management more generally in an age when the public does not want to support brands it believes are environmentally or socially irresponsible and when people gravitate towards companies which declare a “purpose” beyond just remaining profitable.

Until recently, the social component in ESG was a poorer relation to the environment. But the stewardship departments set up by the fund managers to assess the ESG efforts of companies whose shares they buy and sell for their clients now question those companies more closely about their social impacts.

Even when companies did focus on the social side, coverage of health and safety and health management has been limited. Many businesses have highlighted measures to improve diversity and inclusion in their workforces but not reported as much on the ways they protect them from physical or mental harm.

Another priority for sustainability reporting has been community initiatives, supporting local groups to improve public health or safety. But there is a strong argument that since the average travel to work distance for UK employees is 11.7km, the part of the local community organisations can have the biggest impact on is the part that it employs.

Growing rules

Increased interest in ESG has led to the spread of voluntary frameworks designed to help standardise how businesses manage and report on their impacts on people and the environment (covered in a previous RoSPA article www.rospa.com/news-and-views/esg-in-the-frame).

Now, regulations are coming that build on those frameworks. The latest is the Corporate Sustainability Reporting Directive (which RoSPA has looked at here) which will cover most business trading in the European Union. It relies on the concept of “double materiality”, requiring businesses to report both on the effects on them of environmental and social changes and on their efforts to reduce their own impacts.

Though OSH is not a mandatory reporting issue under the Directive, it is likely that most businesses’ evaluation of their important sustainability impacts will flag up the safety and health of their own employees and those in their supply chain as an important factor, so they will be obliged to report accident and illness rates and measures to improve them.

If strong safety and health management is a vital building block of the social component of ESG, it also underpins the G for governance. Governance describes the structures for ensuring an organisation conforms to regulatory requirements, manages risk adequately and is generally well run. Good safety and health management includes regulatory compliance as a subset, necessary but not sufficient. It promotes business efficiency by protecting financial and human resources, saving money on sick leave for example, generates more value for shareholders and promotes the success of the organisation, which is one of the primary duties of directors written into the UK Companies Act.

A leading role?

If safety and health is increasingly going to be framed as an ESG component rather than just a compliance or internal management issue, what implications does that have for the OSH managers who are tasked with managing it day to day? In most organisations, safety and health practitioners will already be doing their best to reduce risk and protect workers and contractors from accidents and illness. Applying an ESG lens shifts how they describe the work, not simply focusing on the traditional metrics in terms of accidents and ill health cases that have been demanded by executive boards, but framing them in a way that demonstrates their value to the business and wider society.

“It's about using ESG to see this as a step forward for your organisation to recognise that being compliant and moving beyond compliance all brings business benefit,” explains RoSPA’s Occupational Health and Safety Policy Adviser, Dr Karen McDonnell. “The business benefit might be reduced absenteeism or maybe keeping your people for longer.”

She says framing safety and health as a business and social benefit fits well with RoSPA’s priorities to encourage organisations to take a whole-person approach to caring for employees. “It all ties into our person-centred approach,” she says. “I think our work helps businesses and members put the S into ESG. It helps them understand why they should be focusing on good work and things like work engagement.

“These are the things that businesses should already understand, it's just that sometimes in the OSH world things get so busy that you lose sight of the fact that being a responsible employer, recognising your people, and then keeping them safe from harm, is about organisational sustainability, in what are really quite difficult trading conditions.”

Safety and health managers will most often be expected to help measure the progress in employee protection required by supply chain partners and investors and increasingly regulators, but that is largely a reactive role.

Speaking at the People Sustainability Summit in London in December 2023, Kathy Seabrook, Co-Chair of the Capitals Coalition’s Valuing Human Capital in OHS Project, asked an audience of senior safety and health professionals: “The challenge for us is to get involved, because at the minimum you are going to have to be able to provide the information, the data that’s going to be reported. But wouldn’t it be nice to be one of the leaders?”

Karen McDonnell agrees that this positive engagement in guiding ESG performance would be a valuable step forward for the safety and health profession, but adds that it will be more impactful if OSH specialists work in collaboration with other business disciplines.

“It’s important that OSH is no longer seen in isolation; that it’s recognised that OSH is part of tackling absenteeism. Working with HR and fleet managers, for example, we need a multidisciplinary approach to articulate the business benefit and to engage with others in the workplace that can provide that broader perspective”, she says.

The impetus to measure and report on ESG impacts has spread to affect more and more businesses in the past few years. As the social side, including safety and health, gains greater importance within that agenda, now may be the time of OSH practitioners to help shape its future.
 

Louis Wustemann is a writer and editor on sustainability and health and safety. He was previously Head of Regulatory Magazines at LexisNexis UK, publishing IOSH Magazine, Health and Safety at Work magazine and The Environmentalist among other titles. He is a trustee of the One Percent Safer Foundation.