I was recently asked to provide my thoughts on the future of occupational safety and health. I have been considering this topic for some time and came up with 5 major themes that I think will be of significant impact to our field in the future. Those will be published in an upcoming addition of a popular safety periodical. More to follow on that…
One trend I identified is that of the coming increase in organizational transparency enabled by the internet and the use of artificial intelligence to crunch big data into never before seen levels of useful information for all. Since writing that article a few days ago, I received the latest addition of Fortune Magazine with the theme of: how to profit while fixing the planet. One article really caught my eye. It is titled: Good Behavior, Heavenly Returns and it closely describes the dramatic increase in the transparency of organizations and it enables investors and other stakeholders to significantly increase their focus on environmental, social and governance factors (ESG). From the article:
“Today there’s a growing body of evidence showing that companies that put social responsibility first can also finish first in the market. The question is no longer whether you can do well while doing good, but how best to distinguish the do-gooders from the also-rans.”
What started as a movement of sustainable investing has already matured into a global investing force. The addition of ESG as a data analysis tool for sustainability adds fuel to the fire. According to a recent Morgan Stanley Institute for Sustainable Investing white paper titled Sustainable Signals: Asset Owners Embrace Sustainability, 1 in 4 dollars ($22.8 trillion!) invested globally under professional management are now in sustainable funds and organizations. They go on to identify that: “…among institutional asset owners, sustainable investing is increasingly pursued for its potential to manage risk and drive returns”. Currently there are over 250 mutual funds focusing on ESG factors with more being added every quarter (Schwab, 2018).
“OSH Professionals can’t miss the boat here. Our profession is in a unique position to drive future value for our organizations, their investors and the world by being leaders in managing the performance of matters that create sustainable organizations!”
So, why am I hitting you with these econ geek factoids?
Because our profession is in a unique position to drive value for our organizations, their investors and the world by being leaders in managing the performance of matters that create sustainable organizations! We can’t miss this boat if we want our profession to be relevant in the 21st century and beyond. Our methods and tools can contribute greatly to all 3 of the major focus areas of ESG. We just have to understand how our methods impact the relevant ESG performance measures and then effectively communicate that to the c-suite.
But how are organizations measured on ESG performance?
From the Fortune article mentioned above, let’s focus on the ESG Asset Management startup Arabesque (Arabesque.com). Again from the article: “Arabesque manages a database that covers 7,000 companies, with information drawn from 50,000 news sources and 8,000 NGOs, among other resources.” Arabesque and other “ESG Quant” companies take big data from thousands of internet sources and use artificial intelligence along with other algorithmic methods to score organizations on their ESG performance. The purpose is to quantitatively identify high performing organizations for ESG and Sustainability minded investors. As the field grows, it continues to build the case that profitability in general is more connected to sustainability than many other previously utilized investment evaluation measures. ESG Quants aggregate and analyze data from such sources as:
I don’t have the space to delve deeply into these on this post. Take a look at the links to learn more and read below about where to start.
So what do we as the OSH profession do this this opportunity?
First we have to recognize that the society is changing and that is changing the environment our organizations are doing business in. We have to see this as an opportunity. OSH’s exiting tools, concepts and methods are a great fit for the transparent world of the future (it’s already here!). Those tools and methods firmly touch each piece of ESG activities in an organization. We need to apply them and build more to maximize our impact on ESG and Sustainability measures.
Doing the work to impact the activities of focus for ESG & Sustainability is only half the battle though. Next we have to learn how to ensure the success our firms have in these areas are picked up and included in the analysis and scoring of our companies in systems used by investors to make investing decisions. Take a look at Arabesque’s analysis rating tool S-Ray (Sustainability-Ray –cool name!) as an example. Below is distribution plot of thousands of companies. Those scoring to the upper left are most attractive to 1 in 4 investors globally. Those in the bottom left quadrant are going to starve for resources.
Homepage for Arabesque’s S-Ray ESG Reporting and Scoring Tool
A great place to start is with the Global Reporting Initiative mentioned above. Their reporting framework represents a comprehensive collection of measures used for ESG & Sustainability reporting. By Learning how to maximize your firm’s score in the GRI report, you are gaining important insight into how your firm’s activities and reporting are turned into high ESG scores. In the process, you and your firm are literally changing the world! The key is to get started today influencing your organization’s leaders, determining where you are on the scoring results and what you can have an impact on in the short and longterm to maximize your firm’s score.
Another useful resource to get started is the Center for Safety and Health Sustainability (www.centershs.org). The purpose of this organization is to provide occupational safety and health professionals around the world with a stronger voice in shaping sustainability policies. It offers many additional resources specifically for the implementation and execution of sustainability principles in organizations.
The time is here for occupational safety and health professionals to take our seat at the table of corporate governance and transparency is our path.
The evidence is clear that “Virtuous stocks win over time” (Fortune, 2018). Our OSH profession is in the driver’s seat to help our firm’s live up to the commitment of a sustainable future for our children and financial success today for their stakeholders. The time is here for us to take our seat at the table of corporate governance and this is our path.
Fortune (2018). Good Behavior, Heavenly Returns. Retrieved on 9/3/2018 at: http://fortune.com/2018/08/22/stocks-esg-arabesque-ti-cummins/
Schwab (2018). Socially Conscious Funds List. Retrieved on 9/3/2018 at: https://www.schwab.com/public/file/P-9561751/
Photo credit: Shutter Stock, used with permission.