Sustainability and OSHA: Sustaining Safety

As US manufacturers increasingly prioritize environment, social, and governance (ESG) initiatives for environmental factors and the governance of internal management practices, how do the social factors of ESG affect front-line workers? 

While ESG was popularized as a legal framework for investment decisions, as outlined by Tech Target, it predominantly focused on how companies outwardly affect the environment, by reducing their carbon footprint or sourcing sustainable materials. However, the Occupational Safety and Health Administration (OSHA) is now defining what ESG means for the employee.

In this article, we’ll explore the potential intersections of ESG regulations and OSHA standards.

Following the Metrics

Manufacturers have been responsible for reporting lagging indicators, such as the amount of hazardous waste generated in accordance with the EPA’s Resource Conservation and Recovery Act (RCRA) or any recordable injuries sustained on the job site via OSHA’s Incident Tracking Application.

In this new era of sustainable compliance, companies are being challenged to track leading indicators and more “dynamic” metrics, including occupational health and safety (OHS) employee staffing levels, their specific role and responsibilities within the company, and safety training for frontline employees.

As described in the Harvard SHINE Well-Being Index, production rate, absenteeism, and turnover are key factors for a sustainable business. Metrics like these are increasingly being scrutinized by consumers, stakeholders, and even investors as a measure of a company’s long-term viability and ethical standing.    

OSHA’s objectives are paralleled by ESG principles

As ESG laws and regulations develop, US manufacturers must consider the importance of integrating these principles into their core operations. OSHA, as part of the US Department of Labor, has released a new whitepaper called Sustainability in the Workplace: A new Approach for Advancing Worker Safety and Health which provides an in-depth look at new strategies for employee safety and advances therein.

The paper begins by stating that OSHA “recognizes that new strategies are needed to ensure that all workers return home safe, sound, and healthy from a day on the job.” It goes on to reference the UN’s Brundtland Commission Report from 1987 as the framework for how ESG can impact the workplace and supports this claim with the UN’s Sustainable Development Goals (SDG), which were adopted in 2015 at the United Nations Summit. The potential impacts on OSHA regulations include the alignment of goals.

Since ESG goals often overlap with OSHA’s objectives for ensuring a safe and healthy work environment, companies who strive to meet ESG criteria may find a mutually reinforcing framework for safety and sustainability. Enhanced reporting and transparency, as outlined by the Sustainability Accounting Standards Board (SASB), may include specific metrics related to a company’s safety protocols or even incident reporting. The SASB lists three General Issue Categories (GIC) that define relevant sustainability issues: 

• Employee health and safety 
• Labor practices 
• Employee diversity, inclusion, and engagement 

Recognizing the health and safety gap to be filled

In the whitepaper, OSHA acknowledges the disconnect between occupational safety and health (OSH) professionals and business leadership. By prioritizing leading indicators such as continuous improvement goals, OSH involvement in capital investments, worker involvement/training, and transparent risk mitigation processes, OSH professionals can become stronger advocates for the front-line employee’s safety. 

Aside from reportable criteria for injuries and illnesses, OSHA has not required companies to actively report their safety and health strategies. Currently, there isn’t a harmonized approach for such reporting in the US and there is no verification process. This lack of data hinders the adoption of sustainable OSH practices. 

While companies with stronger ESG performances may attract more clients and favorable investment (and therefore see a more tangible ROI for OSH investments), there isn’t a standardized approach to this. OSHA references the ESG framework established by the United Nations Principles for Responsible Investment (PRI), which urges companies to prioritize the health and safety of their workforce. 

Six key principles were created by the PRI community of over 5,000 organizations around the world who are described as “[having] publicly demonstrated their commitment to responsible investment.” The principles state that ESG issues must be incorporated into investment analyses and decision-making processes, ESG disclosures must be provided by entities into which the community invests, and ESG issues will be incorporated into ownership policies and practices. 

Incorporating ESG and OSH in businesses

As ESG practices evolve and take root in the United States, it will naturally influence corporate practices and affect occupational health and safety regulations. Proactively integrating ESG principles into operations will set companies up for success and foster the type of company culture employees and stakeholders alike wish to be a part of. Even in today’s work culture, there is unrealized monetary and social value in a quality occupational health and safety program. Corporate leaders must view their OSH program as an investment with a return, rather than an expense by prioritizing workforce culture and support.