IOSH is driving efforts to put people at the centre of business, highlighting the place of human capital and safety and health in corporate sustainability, and OSH professionals’ role in promoting this.
Sustainable business management is often described as balancing benefits to people and the environment with the traditional corporate imperative of generating financial profit and shareholder value.
But if you were to judge the weight of each priority according to the space it is given in most organisations’ annual sustainability reports – there are commonly dozens of pages on environmental management for every one on human resources, health, safety and wellbeing – you would conclude that the balance had been upset somewhere.
‘Originally, sustainability included environment, health and safety and social responsibility,’ says Malcolm Staves, global health and safety director at cosmetics group L’Oréal. ‘It has gone off at a tangent, and when most people think about sustainability these days, they only think about environment, or biodiversity or the circular economy. A lot of people who drive sustainability and corporate social responsibility (CSR) are environmentalists; they don’t often understand occupational health and safety or it’s not on their agenda.’
Malcolm has a long-standing interest in the place of OSH in sustainability measurement and reporting and thinks that the primacy of the human element needs restating, citing the commonly accepted definition of sustainable development – coined in the 1987 Brundtland report for the United Nations – as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’.
‘Everything we do is about us staying on the planet – it’s all about people,’ Malcolm argues.
‘If people are the focus of sustainability, then their safety and health day to day has to be a fundamental part of that. It’s time to put people back into sustainability.’
Recentre on staff
‘It is the baseline. It is the most basic thing that people should be safe and well within the workplace,’ says Natalie Nicholles, development director of the Capitals Coalition, umbrella body for the Social and Human Capitals Coalition, an organisation that encourages business and government to place more value on the people business depends on for its success, its so-called human capital (see What is human capital? below).
IOSH has long advocated to business leaders the advantages of running people-centred organisations. Its report, The healthy profit, examined the many benefits accruing to organisations who invested in their workforces’ safety, wellbeing and development. This goes beyond CSR, linking people, purpose and sustainability.
The Center for Safety and Health Sustainability (CSHS), co-founded and funded by IOSH and the American Society of Safety Professionals, has lobbied investment organisations and organisations ranking companies on sustainability to include OSH metrics in their evaluations. ‘Sustainability is market-driven,’ CSHS chair Kathy Seabrook told IOSH magazine in 2018. ‘Ninety-five per cent of publicly-traded organisations report on sustainability performance, but not all report on their OSH performance in a meaningful way.’
The CSHS and IOSH also influenced the revision of GRI 403, the Global Reporting Initiative’s standard for safety and health measurement and reporting. The latest version requires reporting on broad aspects of employee protection such as health promotion and access to healthcare. Malcolm says that though they are voluntary, signing up to such standards will become the norm for all larger employers and that future revisions will demand even more detail on wellbeing promotion and human capital management.
In parallel, there are growing signs of interest from the investment community. Fund manager BlackRock, which has US $7.4trn (£5.7trn) worth of assets under management (larger than any national economy except the US and China), has warned companies that it will be examining their human capital management measures when deciding whether to hold their shares.
In August 2019, Business Roundtable, the group of 181 CEOs at the largest corporations in the US, issued a new statement of the ‘purpose of a corporation’ that committed their businesses to serving all stakeholders, including employees and communities as well as the interests of shareholders who have had primacy in previous statements.
Business Roundtable chair Jamie Dimon, CEO of JPMorgan Chase, said: ‘Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term.’
People, planet, profit: What is human capital?
Human capital is fundamental to the people element of the ‘people, planet, profit’ triad in sustainability management. It prioritises realising the potential of people at work and includes the safety and health needs and rights of workers and how this relates to organisational performance and social licence to operate.
The concept of human capital arguably dates from the 1700s but the term began to appear in business literature in the 1960s. It describes the asset and resource that an organisation’s workforce represents, as distinct from financial capital or physical assets, which were once seen as the main measures of value represented on a business’s balance sheet. Human capital comprises a workforce’s health, wellbeing, skills, knowledge, commitment, loyalty and other attributes that are the critical factors in the success of organisations, especially those in service-based economies.
Ensuring that all work is safe, healthy and well designed is vital for human capital management and can help employers successfully attract, deploy and retain a diverse and inclusive workforce. Effective health and safety management helps organisations to protect, enable and increase their human capital, creating value and benefit for individuals, businesses
Blown off course?
If there were already signs of growing recognition of the centrality of people to sustainable business management, the COVID-19 pandemic has thrown it into sharp relief.
‘When there is a threat to the species, we come back to safety and security,’ says Jonathan Nobbs, head of product at IOSH, citing Abraham Maslow’s theory of the ‘hierarchy of needs’, which places safety at a fundamental level just above food and heat at the base of a scale.
As the pandemic was officially declared, the safety and health of employees and customers became an urgent priority for leaders of almost every business, whether they had to protect public-facing workers in essential services, or ensuring adequate hygiene and distancing measures as the majority of workplaces reopened. In most cases they deferred to their OSH professionals as resident experts.
‘This crisis will raise the profile of health,’ says Malcolm. ‘For most organisations it’s safety with a big S and this will allow it to be better balanced. Health and wellbeing will get more attention among senior management.’
Natalie adds that this has made businesses conscious their resilience in the face of major upheavals is dependent on the trust, goodwill and flexibility of their employees.
‘Some of them have only ever seen staff as a cost on the balance sheet, something to cut when time gets tough, as opposed to seeing them as an asset, something that can keep our businesses going.’
But many have now realised that looking after their workers has been key to their survival and continuity in recent months. ‘If they are on minimum wage or contingent contracts you are not going to get the extra mile out of your staff,’ Natalie says. ‘But if they feel valued and safe and well, a company has that resilience and agility to help it survive at a very difficult time.’
OSH professionals should be able to capitalise on this opportunity to make organisations future-fit, says Malcolm. ‘Now they have the attention of the board to put in place better health and hygiene programmes because of COVID-19 and to be ready for the next pandemic. Wellbeing, including mental health, nutrition and ergonomics, will also become a bigger part of the dialogue. They were becoming more and more part of the professional’s toolbox but now it will be taken to the next level.’
Many businesses are conscious that their resilience in the face of major upheavals is dependent on the trust, goodwill and flexibility of their employees
Revaluing human worth
Human capital advocates warn that making the best of this chance to help reshape business as the immediate crisis recedes will involve a shift in thinking for some OSH professionals, widening their focus beyond the risk management and legal compliance that have been their main responsibilities to date, to promoting organisational resilience and agility through happy and fit workforces.
‘Safety and health professionals are one of the key groups of professionals able to realise the requirements of those safe and healthy workplaces that contribute to high-performing, profitable and purposeful organisations,’ says Jonathan.
This broader outlook will mean more joined-up working with other functions such as human resources and establishing positive measures of employee health and wellbeing, alongside the accident and ill health rates that are the staples of OSH reporting. Such metrics may also provide useful data for corporate communications or staff tasked with compiling sustainability reports and web pages and increase the proportion of the material dedicated to safety, health and wellbeing. Consequently, health and wellbeing will become more and more a necessary part of the OSH professional’s expertise and is vital they understand the relationship of OSH within human capital and its value to the business at all levels,’ Malcolm says.
But there is also an argument that business needs new measures to give a clearer picture of the costs of its less positive impacts on workers and the wider world.
Malcolm notes that countries gather and publish figures for the cost of ill health to their economies, but that employers do not do the same. ‘If they could realise what the price of non-management of human capital was, it might focus their minds.’
IOSH has said: ‘Investing in safety and health strengthens corporate reputation, resilience and results. Worldwide, we need to tackle the human and financial toll from safety and health failures, estimated to cost around 4% of global GDP a year.’
The world now has a chance to transform and improve, encouraging organisations to go beyond compliance for safety and health and performance reporting as part of valuing human capital and sustainability.