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May 05, 2012
Shareowner Group Details Occupational Health and Safety Issues for Investors
    by Robert Kropp

The Shareholder Association for Research and Education issues investor guidance for assessing the health and safety policies and practices of Canadian corporations.

Occupational Health and Safety (OHS) tends to become a concern for investors in the aftermath of widely publicized workplace accidents. During the 2011 proxy season, for example—the first after the 2010 oil rig explosion in the Gulf of Mexico that killed 11 workers—the AFL-CIO filed resolutions with three oil and gas companies, requesting disclosure of accident prevention plans. The resolution won the support of a majority of shareowners at Tesoro's annual general meeting.

In Canada, the Shareholder Association for Research and Education (SHARE) reports, the workplace fatality rate was higher than in several other developed nations from 1998-2003. Canada was also the only nation among those studied in which the workplace fatality rate actually rose.

What challenges does OHS present to investors? In its recently published Investor Guidance, SHARE details billions of dollars lost through premature mortality and absenteeism. The Guidance states, "Canadian institutional investors have an objective interest in understanding how companies manage OHS risks and in ensuring sufficient corporate disclosure of OHS information."

The "objective interest" of institutional investors is satisfied only partially by the OHS metrics disclosed by companies, even thought those metrics are governed by regulatory requirements that mandate disclosure to a greater degree than is found in other environmental, social, and corporate governance (ESG) indicators.

In order to ensure that corporations are effectively addressing OHS issues in their operations, investors should determine if a company has in place a health and safety policy that applies to contractors in its supply chain. The Guidance also states, "A board level committee responsible for OHS better ensures a long-term and sustainable focus on improving workplace health and safety."

Other considerations for investors include the presence of an effective OHS management system, adequate training and documentation, and worker representation. Warning that provisions of the Criminal Code of Canada makes corporations and their executives liable "if they fail to implement an appropriate standard of OHS in workplace, resulting in the injury or death of an employee," the Guidance advises that investors ensure that companies engage in continual improvement in implementation of OHS policies.

By considering "corporate ability to ensure that health and safety research, policies and practices keep pace with technological advancements," SHARE concludes, "Investors can better identify and invest in companies that maximize competitive advantage through workforce loyalty, improved productivity, lower workers compensation premiums, and recognition of corporate reputation."


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