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Company Annual Reports

What the Government said in its June 2000 Strategy Statement
The consultation Process
Excerpt from HSC Minutes of meeting of 28 Feb 2002

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Final HSC document
HSC Paper on Company Reporting
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What the Government said in June 2000

Action Point 2 of the Revitalising Health and Safety Strategy Statement – published by the government in June 2000 - stated that:

"The Health and Safety Commission will promote publication of guidance, by March 2001, to allow large businesses to report publicly to a common standard on health and safety issues. The Government and the Health and Safety Commission challenge the top 350 businesses to report to these standards by the end of 2002, and will then work to extend this to all businesses with more than 250 employees by 2004."
42 An analysis of health an safety coverage in the annual reports of companies in the FTSE 100 was carried out by the charity 'Disaster Action' in 1996. This showed that roughly half of these reports covered health and safety in some way, with wide variation in the quality of reporting
43 In line with the approach adopted on environmental reporting, were there are some excellent examples, Ministers wish to seek to encourage more widespread reporting on a voluntary basis in the first instance. However, Ministers are minded to move to a compulsory regime if good progress is not made against this action point.
44 It is anticipated that the new guidance on annual reporting will encourage companies to include details of their health and safety policies, numbers of reported incidents and details of any enforcement action. Ministers attach particular importance to details of prosecutions , fines and statutory notices being made public. Many of the unions responding to our consultation argued for auditable standards for reporting the costs of health and safety failures and the benefits of health and safety failures and the benefits of health and safety interventions. The feasibility of this proposal will be considered in working up guidance.
45 The Royal society for the Prevention of Accident is taking forward a new initiative called Director Action on Safety and Health (DASH). One aspect of this work is to be a consultation on encouraging best practice in measurement and reporting (both internally and externally) of health and safety performance and plans.
46 The Company Law Review, which includes within its remit an examination of the legal framework for company accounting, reporting and disclosure, may also make proposals relevent to company reporting on health and safety. The Review, which was launched by the Department of Trade and Industry in 1998, is overseen by a steering group of independent experts. It is due to make its final report in Spring 2001

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Consultation Process

In December 2000, the HSE drafted a document setting out voluntary guidance to companies. This was not open to a general consultatoin process - and the CCA only obtained it only by accident.

To see the original HSE draft, Click here

To see the CCA response, Click here

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Excerpt from HSC Minutes of meeting of 28 Feb 2002

Draft HSC Guidance: Health and Safety in Annual Reports: HSC/01/50

8.1 David Morris introduced the paper. Since the paper, there had been some additional input from interested parties. This included the view of the Centre of Corporate Accountability (CCA) that the requirement to provide health and safety information in a company's report should be put on a statutory basis. The Institute of Directors (IOD) had identified difficulties in providing data on occupational ill health. To take account of this concern, it was proposed that reports should include, as a minimum, an account of what the company was doing to collect this information.
8.2

The following points were made in discussion:

i the guidance was originally intended for the top 350 companies as set out in "Revitalising" and the public sector but might usefully be extended to smaller companies later;
ii the guidance represented a minimum requirement for inclusion in annual reports. It did not preclude the inclusion of more extensive information about positive indicators of health and safety such as benefits the company derived from investment in health and safety training. More examples on this type of information could be included in the guidance;
iii the extent to which including health and safety in annual reports improved performance was open to debate but there was anecdotal evidence that it focused the minds of directors. Stakeholder impact might be greater by including data on the financial costs of health and safety and measuring this against the business performance and targeting the corporate risk agenda;
iv reference to ROSPA might be better be placed as a footnote;
v the guidance should also be directed at the public sector
vi the revitalising context and the reasons for issuing the guidance, including the importance of reporting to common standards, - should be better emphasised in the letter and the guidance; and
vii some of the ‘top 350’ companies may already be including this type of information in their reports. The letter to the top 350 companies should be redrafted to reflect this.
8.3 The Commission agreed that the letter and guidance should be amended in the light of discussions and put out as a challenge to the ‘top 350’ companies before the end of March. The letter should go from the Chair and either the Minister or the DG.

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Final HSC Document
To see the final HSC Document Click Here

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Paper to HSC meeting on Company Annual Reports
In April 2002, the HSC received a paper on "Corporate respsonsibility and accountability for health and safety - progress report on key initiatives" which contained the following information:

Challenge’ to top companies on annual reporting

7 The Commission received a report at its 20 November 2001 meeting (see HSC/01/155) on the progress of the health and safety reporting ‘challenge’ by Government and the HSC to top UK companies - Action point 20 of “Revitalising Health and Safety” (RHS). Since then arrangements have been put in place to take forward actions agreed at that meeting including the submission of a progress report to Ministers, the publication of the results of the ‘challenge’ and associated research
to coincide with the publicity launch for the RHS stakeholders conference and planned meetings on reporting with some 80 Chairmen and Chief Executives of top companies in 2002. The Minister has indicated his keenness to attend some of the planned meetings.
8 To date the Chair, Director General and Deputy Director General have met with Chairmen, Chief Executives and other senior managers of 20 of the top companies challenged. The purpose of the meetings are to secure the commitment of top companies to reporting on health and safety in line with the HSC guidance and to promote greater board and director responsibility for health and safety. Although most of the companies have given that commitment and have boards that provide direction and leadership on health and safety some remain to be persuaded that public reporting will bring business and social benefits.
9 The programme of visits planned for 2002 are in the main with companies which have not formerly responded to the ‘challenge’ and in many cases do not report publicly on health and safety. Further research is planned for 2002 to establish to7 what extent reporting practice has changed in the light of the ‘challenge’.

To download the whole paper - which also deals with (a) director duties and (b) safety and institutional investment - click here (PDF)



Research
The HSE commissioned consultants to undertake "A study of the Provision of health and safety information in the annual reports of the top UK companies"

The Executive Summary is set out below.
To download the whole report, Click Here (PDF)

"This report details the findings of a study of the provision of health and safety information in the annual reports of the UK’s top companies (in terms of turnover).

The study was undertaken to assist the Health and Safety Commission (HSC) with their current Strategy Statement to promote the reporting of health and safety information in company annual reports.

The main aims of the study were:

To determine the current level of reporting of health and safety issues in
annual reports of the top UK companies.
To determine the quality of health and safety information reported.
To compare current levels of reporting with those in 1995.

Of the top 350 UK companie s contacted, 282 were identified as producing an annual report; 227 of which were received and examined. Less than half (107 reports) contained health and safety related information.

The quality of reporting in these 107 reports varied greatly. Whilst many companies reported high quality information and dedicated an entire section of their annual report to the issue of health and safety (describing principles, performance and targets information), other companies only briefly mentioned health and safety, often in the form of a low quality statement indicating that the company met the requirements of the Health and Safety at Work Act 1974.

Based on our comparison there has been a slight increase since 1995 in the number of companies reporting health and safety information in their annual report. In 1995, 47% of (FTSE 100) companies reported on health and safety in their annual report (based on the findings of a study conducted by Disaster Action). This can be compared with the 60% of companies who currently report health and safety issues (based on year-2001 FTSE 100 companies who are also UK top 350 constituents).

To ensure the success of the HSC’s Strategy Statement, there are several issues that have arisen from our study which require further investigation. These are:

Determining why some companies report on health and safety information in their annual report and other companies do no
Establishing if there is a relationship between health and safety reporting and health and safety performance."

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