World Safety Day 2021
…a Safety and Health Professional’s Road Map to
Your C-Suite, Board Room, Corporate Stakeholders &
'True North'
Kathy A. Seabrook
(5 min read)
Our world, the work world, and the essential role of safety and health (S&H) professionals have radically changed due to the global COVID-19 pandemic. For many of us, this shift has opened welcome opportunities to spotlight the importance of workplace safety and health. But the world, the wider business world, was shifting before the crisis hit, with significant implications for business, its people, stakeholders, and safety and health professionals.
With these winds of change come tremendous opportunities for S&H professionals to influence corporate decision-making impacting the safety and health of their people, increased executive engagement and visibility as well as raising the bar for worker safety, health, and well-being to new levels.
Simply put, today’s companies depend more and more on their workforce, an organization’s Human capital, to create value. Many of you have heard me say, “
People are at the core of every thriving business, and their ability to contribute is influenced by their health, safety and well-being.” This is especially true in the wake of COVID-19 and an economy that continues to shift to a business model more dependent on technology and providing a continually changing plethora of innovative products and services.
Let’s begin to 'connect the dots' on how a confluence of meta-trends presents Safety and Health professionals with an unprecedented opportunity to move the needle and make a difference. We will begin by mapping out the business environment in which you operate to ultimately reach "True North" - where the safety and healthy of people is valued and embedded in decision making.
Shining the Spotlight on the Safety and Health Professional’s Role
This is where you come in. People need to be safe and healthy to thrive; innovate; engage in their work; align with their company’s purpose and use their discretionary energy to the benefit of the company. Examples of discretionary energy include staying late to finish a project on schedule; working into the next shift; problem-solving to get production back online after unscheduled downtime; or collaborating long hours to bring a new product to market. People create value for companies.
Boardroom, C-Suite, and investment community decision-makers are more aware than ever of how people – human capital in the language of business – generate value and sustain an organization as much as financial capital. Still, we have a long way to go. Understanding the impact and value of non-financial intangibles such the people working in a company is a trend to watch, albeit early in the maturity curve of many businesses. S&H, operations, legal, procurement, R&D, and human resources professionals, the C-suite and board of directors are leaders and active participants in solidifying this understanding and realizing its positive potential to the company workforce and corporate performance. Forward thinking companies understand the value of these non-financial intangibles and engage their S&H professionals, providing them a seat at the C-Suite decision making table. Where is your company on this maturity curve?
Before you can educate others, you need to know the business environment in which you, your company’s C-suite and board of directors operate. In ISO 45001 management system speak, this is called “context,” seeing the big picture as it relates to S&H management. Let’s start with connecting the dots on your company’s internal and external influences and influencers related to the business and S&H.
The Business Environment in Which your C-Suite, Board and You Operate
To get started, do you know: How transparent is your organization with external stakeholders? Does it publicly report (disclose) financial – and non-financial performance in areas such as environmental, social and governance (ESG), including human capital/employees/workers? Does your senior leadership understand, as ESG and mainstream investors increasing do, that the “social” component of running a business includes people and their health, safety, and well-being? Are ESG metrics disclosed in your company’s annual financial report? Or segmented out in sustainability or corporate responsibility reports? Is your S&H management system performance disclosed as a leading performance indicator?
How well does your company proactively identify and assess potential threats or risks that it determines are material? (The U.S. Supreme Court's definition of materiality generally states that information is material if there is a substantial likelihood that the omitted or misstated item would have been viewed by a reasonable resource provider as having significantly altered the total mix of information.) In the US, the Securities and Exchange Commission now requires companies to disclose information on human capital in their Annual financial (10K) reports that it deems material. If deemed material, you company is required to disclose health and safety initiatives and metrics.
Is S&H considered material to your company and its stakeholders? How well does your organization recover from crises, such as COVID-19? How resilient is it to high consequence, low probability risk? These traditional internalities are fast becoming externalities and top of mind for investors, customers, your workforce, and other stakeholders such as your value chain.
Many of these questions come from your company stakeholders. Do you know your company and S&H internal and external stakeholders? Traditionally, companies focus on shareholders, and creating wealth for shareholders. That is changing. Business is beginning to move from shareholder primacy to stakeholder capitalism. From an emphasis solely on financial-related tangibles to inclusion of non-financial intangibles in the valuation of a company. This includes worker health and safety. In a public statement by Jamie Dimon, chairman and CEO of JPMorgan Chase & Co. and chair of the U.S. Business Roundtable, he puts it this way: “Employers know investing in their workers and communities is the only way to be successful over the long term.”
A focus on the value of workers is especially highlighted during an infectious disease pandemic such as CoVID-19. According to Forbes, “acceptance of the workforce oversight duty has been steadily gaining traction in the boardroom.” Acceptance of the workforce oversite duty initially surfaced in response to #MeToo, and its impact on the workforce. This has resulted in diversity, equity and inclusion initiatives. Forbes suggests this oversite duty be extended to employee health and safety. Reopening of businesses have spotlighted this in the wake of CoVID-19. Boards oversite means asking about management’s specific plan to minimize safety and health risks to their employees, value chain workers and customers as the business crisis manages a pandemic and proactively identifies other high risks (potential material risks/issues) to day to day operations.
The Influencers: Internal and External Stakeholders
Companies have internal and external stakeholders. Internal stakeholders or influencers include the workforce, owners, the parent company, and internal shareholders. External stakeholders are typically customers / consumers, suppliers, the local community, creditors, regulators, policymakers, non-governmental organizations (NGOs) and investors.
181 U.S. CEOs of the US Business Roundtable have committed to leading their companies for the benefit of all stakeholders – customers, employees, suppliers, communities as well as shareholders -- as part of a U.S. Business Roundtable initiative.
Fuel for this expanded perspective comes from the investment community. More investors want to know how companies retain, reward, engage and manage their people, how their ‘human capital’ is managed. You may believe “human capital” or “talent” are too cold to describe your workforce. You will not get an argument here. But keep in mind understanding the concept of human capital, in the context of business, enhances your ability to influence this stakeholder group and help investors and other stakeholders understand the value of ‘people’ working in your company. The Capitals Coalition is spearheading groundbreaking work in the human capital (and S&H) valuation and decision making space. They are focused on the dependencies of the capitals (Nature, Human and Social) impacts on the value of a company. Their work will be a trend to watch.
The two most recognized sustainability/corporate responsibility reporting standards setting bodies are the Sustainability Accounting Standards Board (SASB) and the Global Reporting Initiative (GRI). SASB is a non-profit organization founded in 2011 to develop sustainability accounting standards for corporate and investor decision making. Founded in 1997, GRI established its first sustainability reporting framework in the same year. From a U.S. investor perspective, SASB Materiality Maps identify employee health and safety as material in many industry sectors. From a company perspective, GRI standards define materiality as “relevant topics that may reasonably be considered important for reflecting the organization’s economic, environmental and social impacts, or influencing the decisions of stakeholders.” Currently, SASB and GRI are voluntary standards whereby a company determines its materiality issues/impacts (including ESG and human capital) to report either integrated into their annual financial report or a standalone sustainability/corporate responsibility report. Use of these standards continue to grow. According to GreenBiz, of the world's 250 largest companies, 92 percent report on sustainability performance and 74 percent of these sustainability performance reporters use the GRI standards. There have been more than 23,000 GRI reports recorded in GRI’s database. Also notable is the use of GRI frameworks by 35 countries within their sustainability policies.
The Influencers: Investment Community
From an investor’s perspective, ESG funds are attracting record levels of investment. Sustainable funds in the United States attracted new assets at a record pace in 2019 and they outperformed their conventional fund peers. Estimated flows into sustainable funds totaled $21.4 billion. That's nearly four times the previous annual record for net flows set in 2018, according to Morningstar a leading provider of independent investment research. The flow data encompasses 303 mutual funds that integrate ESG factors into their investment processes, and/or pursue sustainability-related investment themes, and/or seek measurable sustainability impact alongside financial returns. This ESG investment trend continues.
Conclusion
What started as environmental sustainability has now expanded to include social responsibility (ESG), people (human capital, employees, workers, supply chain workers and communities) and governance impacts. It is primarily investors, customers, employees/workers, and their transparency and disclosure expectations for a company’s impacts (risks) in these areas. This is what is driving this business trend in the US and globally. The safety, health and well-being of people working in companies is fundamental to the long-term viability of a company. With these winds of change come tremendous opportunities for safety and health professionals to influence corporate decision-making and raise the bar for worker safety, health, and well-being to new levels. This is directionally correct to get us to "True North."
I leave you with three questions:
Does Your Company Pass the
'True North Test'?
Are You and Your Company
'Future Fit'?
What are Your
' Next Steps',
Today?
Curious, Want to Learn More? (Click on the links below.)
ISO 45001: 2018 Occupational Health and Safety Management Systems, Requirements and Guidance for Use
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