A Safer Conversation

A Safer Conversation: business sustainability – Part II

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A group of experts discuss business sustainability in the second of a two-part article.

How can health and safety get incorporated into Corporate Social Responsibilities (CSR) reports

Lowellyne: There is a strategic fit between health and safety and the social dimension of sustainability.The ISO 26000:2010 Standard provides guidance on social responsibility advocating the incorporation of health and safety into the social responsibility agenda. In practice the use of safety indicators such as Loss Time Incidents (LTI) and employee wellbeing can demonstrate management commitment to both CSR and safety.

Keith: I think it already is for many companies that follow the social reporting indicators set out in the Global Reporting Initiative. This voluntary reporting provides globally-accepted best practice in sustainability Reporting Principles and Standard Disclosures and is used by many British Safety Council members either directly in externally verified CSR reports or indirectly where the model is used for developing reporting indicators around health and safety.

Louise: HSG65 is the standard organisations should be applying in respect of their overall management of health and safety. There should be a high level plan in place and CSR reports should make a comment regarding this and performance against set targets. There should also be information in the report on accident and incident data. The health part of health and safety is often overlooked. CSR reports should therefore contain ‘wellness’ reports and tracking of sick leave.

The global movement for fossil fuel divestment is asking institutions to move their money out of oil, coal and gas companies for both moral and financial reasons. What is its impact and your forecast for UK companies following it

Lowellyne: Fossil fuel divestment albeit a grassroots movement has been instrumental in raising awareness of the climate change impacts of continued fossil fuel consumption. However humanity’s obsession with the internal combustion engine has created a global economic superstructure of government subsidies supporting oil and gas exploration, which seems to persist despite increased lobbying for subsidy cessation in an era of low oil prices. The main challenge to the disinvestment movement is the proportion of pension portfolios that are underpinned by oil and gas shares which traditionally have yielded high dividends. Herein lies the sustainability dilemma – the planet or profits for business leaders and politicians –, a deadly game of chicken or egg.

Keith:  I think industry is one step removed from this because of their reliance on fossil fuels and corporate financial practices becoming divorced from their day to day environmental and sustainability practices. I remember the apartheid movement and the impact that divestment had following public pressure from UK firms with South Africa operations, subsidiaries and produce. For many businesses this has serious effects on their bottom line. I would like to think that the same could be true now for the hydrocarbons industry but I think we are dealing with a different ball game given that the world is essentially a petro-centric society currently driven and ruled by hydrocarbon use.

How can a global company guarantee sustainable procurement and enforce good practice across the supply chain

Lowellyne: Global organisations should not pursue policies of enforcement but must engage supply chains regarding safety and sustainable best practice. Multinationals should seek opportunities to control and engage with internal supply chain partners through procedures, processes and training while extending influence through safety and sustainability best practice dissemination with external supply chain partners through policy, training and technical support.

Keith: Again I think the fact that the new ISO 14001 standard requires life cycle thinking in the procurement of goods and outsourced services is a new push towards greening the supply chain from a health and safety and environmental management viewpoint. I also thing the recent building collapses in developing countries  where clothes are made for western markets [Rana Plaza building collapse, Bangladesh, April 2013] has initiated a new surge in ethical audits. Most major retailers now undertake a thorough formal examination of the labour and safety practices of a particular supplier workplace or company to understand, measure, report on, and help improve their supply chain performance.

Louise: These organisations have to apply resources to actively check and be involved with their supply chain so they really do know and understand how it is operating. There must be strong policies in place driven by the business leaders. Buyers and procurement departments must be well trained and sustainably managed with KPIs which are not solely centred on financial achievements. Procurement teams can find it difficult to understand how the decisions they make can have a significant impact, which they do.

Just over 20,000 companies are using the Global Reporting Initiative framework to report their management systems (although 93% of the largest 250 global corporations do so). Why do you think the use of the guidelines is still low

Lowellyne: Critics of sustainability reporting insist that by nature it records historical impact, does not incorporate the views of future generations and are a luxury for most firms except those achieving near monopolistic profits. Sustainability indices such as the Global Reporting Initiative fail to demonstrate utility in providing clear indications to an organisation’s sustainability or unsustainable position. Researchers suggest that indices such the GRI do not measure sustainability outcomes but look at management practices. However, the proliferation of various reporting schemes and lack of external verification of GHG data has stifled the adoption of carbon footprints and sustainability reporting.

Keith: I think the number and breadth of Reporting Principles and Standard Disclosures may put some smaller companies off. Historically it was not very sector-specific although the introduction of recent sector reporting indicators means GRI becomes more applicable to a range of businesses and more mainstream as a reporting tool. There is also still some resistance from top management about being transparent about their HSE performance due to perceptions that it will give competitors an insight into their operations. In fact, in some cultures I work in, highlighting areas of weak HSE performance is just not understood and publicly reporting numbers of fatalities, injuries and pollution incidences just would not happen any time soon.

Some small business and individuals argue that their footprint on the environment is modest and they would take further actions only when governments and big businesses set sustainable energy policies. How modest or big is the real effect of an individual or a small company

Lowellyne: Small and medium enterprises (SME) are critical to economic development despite their perceived “pollution intensity” contributing 60%-70% of all pollution. Individually, SMEs may not have a significant impact, despite making up 98% of businesses, but collectively their unsustainable practices can be identified in the following four areas:

- Entrepreneurial orientation and opportunity seeking
- Limited focus on environmentally friendly solutions
- Indifference to environmental impacts
- “Self-serving perceptions” of sustainability initiatives based upon contribution to the bottom-line.
- SME business leaders that I interviewed for my recent book Sustainability Footprints in SMEs suggest policymaking institutions can contribute to the uptake of  sustainability initiatives such as carbon footprint measurement through ensuring fair competition, access to grants, mandatory guidelines for SMEs, tax incentives, fines, legislation, emissions league table and pre-qualification criteria for government contracts.

Keith: Actually quite a lot. This question again reveals how businesses think they are the only ones on the planet who put out a little bit of waste or emissions; they can’t see the bigger picture of millions of small amounts of waste equalling one big problem. They can’t see the wood because they are just one tree. I think it’s generally accepted that with life cycle thinking over 80% of the eco footprint of a business is outside of its physical boundaries and embedded in the supply chain through procurement decisions and outsourcing.

Louise: The UK and the world are a nation of small businesses. Small changes made by many can have a significant impact. We like working with SMEs as they can make a very real difference and put the larger organisations to shame in many cases.


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