The Role of Worker Safety and Health in Sustainability: Current Challenges and Opportunities

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1 The Role of Worker Safety and Health in Sustainability: Current Challenges and Opportunities Tom Cecich, CSP, CIH Chairman, Center for Safety and Health Sustainability October 7, 2013

2 WHY SUSTAINABILITY?

3 Sustainability The Brundtland Commission of the United Nations on March 20, 1987: sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Sustainability is generally considered to be the combination of: (1) Economic (2) Environmental (3) Social principles that when balanced lead to a productive future.

4 Sustainability May Also Be Viewed as the Four P s

5 Universe of ESG Issues and Opportunities Source: Hauser Center for Nonprofit Organizations at Harvard University Source: Hauser Center for Nonprofit Studies, Harvard University

6 Importance of Sustainability

7 Importance of Sustainability To corporations: 93% of global CEOs surveyed said that they felt sustainability issues are critical to their companies future success. 96% believe that sustainability must be fully integrated into a company s strategy and operations (up from 72% in 2007). Over 3,000 corporations participated in sustainability reporting or reporting for similar issues in 2008 (up from 26 corporations in 1992). Of the 250 largest global companies, 95 percent now report on their behavior on key societal issues a 14 percent increase since 2008

8 Importance of Sustainability To investors: Socially Responsible Investing, or SRI, now accounts for almost $4 trillion of the $25.1 trillion, or 16% of the total invested in the American marketplace. Nearly 50 socially responsible investing (SRI) indices exist. There is a movement to include corporate social responsibility reporting as part of integrated reporting requirements.

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10 TRENDS IN REPORTING

11 Existing Sustainability Indexes (from rating organizations) The Global Reporting Initiative Dow Jones Sustainability Index The Pacific Sustainability Index FTSE4Good Index Dozens of Socially Responsible Investment Funds Financial Analysis and Intelligence Firms Bloomberg Thomson-Reuters Sustainability Accounting Standards Board (SASB) Wal-Mart Supplier Sustainability Assessment

12 Why Safety and Health as Part of Sustainability?

13 2.3 million people killed by work accidents and disease 337 million work accidents 6,300 deaths per day (one every 15 seconds) 160 million people with occupational disease around 4% of world GDP = occupational accidents and diseases Source: ILO Why Safety and Health as Part of Sustainability?

14 NY Times 9/12/12

15 AP 4/25/2013

16 OHS Sustainability Has Important Business Drivers

17 High Profile Tragedies Have Highlighted the Importance of Safety and Health in Sustainability

18 The Big Unknown Occupational Illnesses -Raleigh News and Observer 4/5/2013

19 NIOSH Science Blog June 13, 2011 Safety Has Not Been Asked to Prom Environmental stewardship and occupational safety share considerable overlap. Both are key sustainability issues, yet the green movement has outstripped workplace safety. What can OSH learn from green?

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21 The Status of Safety and Health in Sustainability No agreement on the key performance indicators to measure sustainable safety and health performance Reporting on safety and health performance is not comprehensive Most corporations include safety as part of their annual corporate social responsibility or sustainability reports, but the focus tends to be on lagging indicators The scope of the questions on many of the widely recognized global indices is limited, terms are undefined, and the focus is on results rather than process There is no widely accepted definition of safety and health sustainability

22 The Way forward. The Center for Safety and Health Sustainability (CSHS) is a global collaborative effort among the American Society of Safety Engineers (ASSE), the American Industrial Hygiene Association (AIHA), and the Institution of Occupational Safety and Health (IOSH) A 501(c)3 not-for-profit organization launched in 2011 Represents 100,000 workplace safety and health professionals worldwide

23 CSHS Vision For all organizations to recognize their responsibility to ensure that the protection of human life and the safety, health, and well-being of workers, customers, and neighboring communities is among the primary considerations in any business practices, operations, or development.

24 CSHS Goals Goals To provide a strong voice and comprehensive leadership for safety and health in shaping sustainability policies To educate the business community on the importance of safety as part of good corporate governance and corporate social responsibility/sustainability To provide new insights into the measurement, management, and impact of safety and health sustainability To be a recognized thought leader for sustainability and corporate social responsibility

25 CSHS Webpage

26 New Research February 2013 Examines the occupational health and safety practices of the world s 100 top rated sustainable companies (as reported by the Corporate Knight s 2011 Global 100 Most Sustainable Corporations in the World)

27 Research Methodology Selected a recognized rating organization that publishes an annual ranking of the top 100 sustainable organizations Corporate Knights (CK) Examined publicly facing reports of all one hundred organizations for statements about OHS performance Specifically evaluated reporting on GRI 3.1 OHS indicators Evaluated reporting on proposed CSHS GRI 4.0 OHS indicators Assembled conclusions from reporting data Not intended to criticize individual companies or CK

28 Research Findings High variability in degree of reporting and terms making comparison across organizations difficult Very low (<10%) reporting to GRI indicators Reporting for I&I rates relatively high (75%) but formulas widely varying Reporting very low for contract/temporary workers No organization reported on fatal occupational diseases High number of fatalities (>10) reported by 5 organizations. One reported 49 fatalities in past year

29 So, what s next?

30 So, what s next? (and who all is interested in this?)

31 So, what s next? (and who all is interested in this?) aka What are the external drivers?

32 So, what s next? Who are the external drivers? Global Reporting Initiative (GRI) Integrated Reporting SASB: Sustainability Accounting Standards Board IIRC: International Integrated Reporting Council GISR: Global Initiative for Sustainability Ratings Center for Safety and Health Sustainability

33 Global Reporting Initiative (GRI)

34 Global Reporting Initiative (GRI) A network-based organization, draws participants from global business, civil society, labor, academic and professional institutions with the core goal of mainstreaming the disclosure on environmental, social and governance performance. GRI s Sustainability Reporting Guidelines have gained widespread adoption as the de facto global standard for CSR reporting 80 percent of G250 are aligning to GRI standards 45% increase in reporting in North America in past year

35 The GRI Guidelines Environmental EN 3 - Direct energy consumption by primary energy source Labor LA 7 - Rates of injury, occupational diseases, lost days and absenteeism, and number of work related fatalities by region. Human Rights HR 4 - Total number of incidents of discrimination and actions taken Product Responsibility PR 6 - Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, ad sponsorship. Economic EC 4 Significant financial assistance received from government.

36 GRI Sector Leaders: American GRI reporters

37 GRI 3.1 Indicators

38 Integrated Reporting Combining Audited Financial Reports with Audited Sustainability Reports

39 Combine Financial and Sustainability Reporting

40 Integrated Reporting SASB: Sustainability Accounting Standards Board IIRC: International Integrated Reporting Council The Sarbanes-Oxley of Sustainability Reporting?

41 Global Initiative for Sustainability Ratings (GISR) Billions of dollars of capital flow are are based on what 100+ raters decide How sustainability ratings are determined is neither transparent or comparable

42 DJSI Occupational Safety and Health Ratings

43 Wide Variation in Sustainability Ratings Beverage Beverage Oil and Gas Utility Consumer Products CRO Selects Top 100 DJSI Selects Top 10% Newsweek rates 500 Companies

44 CENTER FOR SAFETY AND HEALTH SUSTAINABILITY

45 CSHS GRI INITIATIVE Influence the next generation of occupational health and safety indicators to be meaningful and more accurately reflect an organization s commitment to responsible OHS performance

46 CSHS Proposed Indicators 1. Lost-time injury and illness incidence rate, losttime injury and illness severity rate, and number of fatalities (all employees 5 year period) Current reporting practices* employees Lost time Injury Frequency Rate 57% Occupational Injury and Illness Frequency Rate 51% Fatalities 45% *sampling of 65 companies reporting sustainability performance from the Best in Social Responsibility, Global 100 most sustainable corporations, Super 50 from Forbes

47 CSHS Proposed Indicators 2. Lost-time injury and illness incidence rate, losttime injury and illness severity rate, and number of fatalities (all contractors 5 year period) Current reporting practices* contractors Lost time Injury Frequency Rate 28% Occupational Injury and Illness Frequency Rate 26% Fatalities 29% *sampling of 65 companies reporting sustainability performance from the Best in Social Responsibility, Global 100 most sustainable corporations, Super 50 from Forbes

48 CSHS Proposed Indicators 3. % of owned or leased work locations that have implemented an occupational safety health management system that meets recognized standards Current reporting practices* Organization has implemented an OSH program that meets recognized standards 48% OSH program covers all of the organization s business units, operations, facilities, subsidiaries, contractors, and suppliers 32% *sampling of 65 companies reporting sustainability performance from the Best in Social Responsibility, Global 100 most sustainable corporations, Super 50 from Forbes

49 CSHS Proposed Indicators 4. % of owned or leased work locations that have had their occupational safety health management systems audited by an independent third-party Current reporting practices* Processes are in place to verify compliance with the OSH program 45% *sampling of 65 companies reporting sustainability performance from the Best in Social Responsibility, Global 100 most sustainable corporations, Super 50 from Forbes

50 CSHS Proposed Indicators 5. % of direct or first tier suppliers facilities in developing countries that were audited for compliance with safety and health standards Current reporting practices* Policy/Code (or other relevant documentation)» 54% Communication of policy/code to suppliers or some monitoring of supply chain» 49% *sampling of 65 companies reporting sustainability performance from the Best in Social Responsibility, Global 100 most sustainable corporations, Super 50 from Forbes

51 MOVING FROM OHS INDICATORS TO AN OHS REPORTING FRAMEWORK (OR OHS SUSTAINABILITY PERFORMANCE STANDARDS)

52 Essential Elements of Safety and Health Sustainability Values and Beliefs Safety and Health Commitment Codes of Business Conduct Operational Excellence Integrated and Effective Safety and Health Management System Professional Safety and Health Competencies Worker Engagement in Safety and Health Oversight and Transparency Executive Leadership Oversight of Safety and Health Transparent Reporting of Key Safety and Health Performance Indicators

53 QUESTIONS? FOR INFORMATION CONTACT: TOM CECICH: