Accounting for Lost Time: Examining Corporate Accountability to Stakeholders for Occupational Health and Safety A thesis submitted in fulfillment of the requirements for the degree of Doctor of Philosophy Sharron M.Com, MCom(Hons), CPA School of Accounting College of Business RMIT University March 2010 Declaration I certify that except where due acknowledgement has been made, the work is that of the author alone; the work has not been submitted previously, in whole or in part, to qualify for any other academic award; the content of the thesis is the result of work which has been carried out since the official commencement date of the approved research program; any editorial work, paid or unpaid, carried out by a third party is acknowledged; and, ethics procedures and guidelines have been followed. O’Neill 3rd March, 2010 ii Dedication This thesis is dedicated to the memory of my great-great-grandfather, William Montgomery, who was killed in a mining accident in the Stanford Merthyr Colliery in June 1907, and his son Robert who suffered respiratory damage from long-term coal dust inhalation; to my great-grandfather Fred Carter who passed away from surgical complications after a mining accident in 1932, and his brother John (Jack) who lost his arm in a mining incident and was subsequently known for the hook worn where his hand should have been. It is dedicated to these and to the many other men and women who have suffered, and continue to suffer, work-related injury or illness. This thesis is also dedicated to those men and women charged with the responsibility of managing hazardous workplaces and in particular to those who are actively cognisant of the health and safety impacts of their managerial decisions.
To those mine managers and mine accountants, my great-grandfather Robert Johnson, my uncle Ray and all those who strive to manage industrial operations in a socially responsible way, this thesis is also dedicated to you. Finally, this thesis is dedicated to those advocates committed to protecting miners and other workers. To the vocal campaigners for workplace health and safety: regulators, trade union officials, safety officers, academics, mine rescue and emergency response teams. In particular I thank those who have inspired me in this journey by sharing their experiences and research: Yossi Berger, Robert O’Neill, Bill Shorten and John Webb; Darren Flanagan, Geoff McDonald, Roger Kahler and Philip Byard; Ron MacCallum, and Michael Quinlan.
To all those men and women dedicated to ensuring workers go home safely at the end of each day, this thesis is dedicated to you. iii Acknowledgements I would like to take this opportunity to acknowledge and thank those people who have, in one way or another, provided invaluable guidance, assistance and support as I researched and wrote this thesis. First, thank you to my supervisor, Professor Craig Deegan, for his continued support and good humour, for guiding me through the process, for encouraging me to be critical and thorough, and for inspiring me to explore the broader issues within my field. I am indebted to my husband Robert who travelled with me throughout this journey and whose endless love, support, patience and encouragement was invaluable.
Robert’s willingness to be a sounding board and thoughtful critic for my ideas was always appreciated and his practical insights helped frame my research questions and shape the thesis. I also offer heartfelt thanks to my parents, Errol and Jill, my extended family and my close friends for their encouragement, for providing me space to work and (hopefully) forgiving my absence from recent social gatherings. In particular, I thank Dr Cornelia Beck for her generous words of wisdom and support. Finally, I also wish to acknowledge and thank the University of Sydney and the Discipline of Accounting for providing the semester of teaching relief which permitted me to substantially progress this thesis.
I also thank Sara Haddad for proof-reading my final draft and helping me ensure the content was consistently presented and the reference list was complete. iv Contents Declaration .iv Research Summary .1 Justification for the research .3 Issues for research .4 Contribution to knowledge .5 Structure of the thesis .1 Corporate accountability for OHS .2 Ethical duty of care – OHS as a human right .3 Legislated duty of care – OHS as a legal obligation.1 Robens: Reshaping OHS regulation .2 WorkChoices: Reshaping industrial relations .4 Consequences of OHS failure .1 Economic consequences of OHS.2 Non-financial consequences of OHS.2 Constructing corporate accounts of OHS.1 Accounting for corporate OHS performance .1 Financial measures of OHS performance.2 Non-financial indicators of OHS outcomes .3 Non-financial indicators of OHS inputs and processes.2 Philosophical foundations of OHS strategy .3 OHS strategy, programs and performance.1 Risk identification and assessment .2 Behaviour-based programs .3 Safety incentive programs .4 OHS management systems (OHSMS) .4 Revisiting indicators of OHS.3 Empirical evidence of OHS disclosure.1 Exploring OHS disclosures.1 Human resource disclosures .2 The Global Reporting Initiative (GRI) .1 The GRI’s sustainability reporting guidelines.2 Advocates of the GRI .3 The GRI and OHS disclosure .1 Theorising ‘why’ firms provide OHS disclosures.2 Theorising ‘what’ OHS disclosures firms provide .1 The evolution of ‘institutional theory’ .2 Contextualising institutional change .1 The organisational field .2 Institutionalised patterns of behaviour (templates) .3 Institutional pressure and the evolution of templates .4 Institutionalised templates of OHS disclosure. RESEARCH METHODOLOGY AND METHODS .1 Ontological and epistemological foundations .2 Inductive versus deductive reasoning .3 Classifying accounting research.4 Mixing quantitative and qualitative methods.2 Research methods and model.4 Conduct of the research .1 Stage 1 – Stakeholder survey .2 Stage 2 – Content analysis.5 Data coding and analysis .3 Stage 3 – Reconciling evidence of supply and demand.2 Describing the sample .2 Stakeholder perceptions of OHS impact and accountability .1 Attitudes toward OHS .2 Perceptions of OHS impact .3 Demand for OHS accountability .3 Stakeholder demand: information relevance.1 Demand for information on OHS expenditure .2 Demand for information on OHS outcomes.3 Demand for information on OHS processes.4 Stakeholder demand: information comparability, reliability .1 Comparability – measurement standards.2 Comparability – data presentation.3 Comparability – disclosure media.4 Reliability – external verification. RESULTS: Content Analysis .1 Describing the sample .3 Overview of OHS content .2 Patterns of OHS disclosure .1 Corporate commitment to OHS .2 Corporate board oversight.1 Patterns of reporting on OHS activities.2 Trend 1: Behaviour-based safety for OHS risk management .3 Trend 2: Occupational health as corporate philanthropy .4 Trend 3: Process KPIs as evidence of OHS effectiveness .1 Work-related fatality disclosures.2 ‘Serious’ injury and illness disclosures .3 Total injury and illness .3 The GRI and OHS disclosure.
DISCUSSION: Perceptions of Disclosure Quality.1 Evaluating quality using PSI scores.1 Lack of historical data.2 Inconsistent performance metrics.3 Inconsistent units of measurement.1 Evidence of bias .2 Evidence of errors .3 Use of external verification .5 Evaluating quality using OSHAI Scores.1 Summary of research project.2 Implications of research findings .1 Implications for research .1 Contributions to theory .2 Implications for research method .2 Implications for practice.1 Recommendations for policy-makers and the professions .2 Recommendations for rating agencies .3 Recommendations for preparers of corporate reports.4 Recommendations for the GRI technical committee .262 vi Summary of Appendices Appendix 1: Economic Cost Burden to Employer, Worker and Community. 262 Appendix 2: Potential Sources of OHS Hazards. 263 Appendix 3: Survey Instrument. 264 Appendix 4: Disclosure Classification Rules.
272 Appendix 5: Disclosure Index (Matrix). 273 Appendix 6: Example of Excel ‘Comment’ Function for Coding Rules. 274 Appendix 7: Overview of Pacific Sustainability Index. 275 Appendix 8: Examples of Data Coding.
284 Appendix 9: Descriptive Information – Survey Respondents. 285 Appendix 10: Attitudes to OHS Process KPI Disclosure (by stakeholder type). 286 Appendix 11: Summary of CSR Reports Examined (by year and firm type). 287 Appendix 12: Reconciling Outcome Disclosure to Expectations.
288 Appendix 13: Reconciling OHS Expenditure Disclosure to Expectations. 289 Appendix 14: Format of Injury Data Presented by Year. 290 Appendix 15: Adapted PSI Scores (by category, firm and year). 291 Appendix 16: OSHAI Scores (by category, firm and year).
293 Appendix 17: Comparing Trends in PSI and OSHAI Scores (by firm and year). 296 Appendix 18: Injury and Illness Classifications. 297 vii Summary of Figures Figure 2-1: The economic cost of OHS in Australia. 25 Figure 2-2: OHS control measures.
40 Figure 4-1: Continuum of ontological assumptions. 88 Figure 4-2: The process of inductive reasoning. 89 Figure 4-3: The process of (hypothetico-) deductive reasoning. 89 Figure 4-4: Research design – objectives and methods.
94 Figure 5-1: Perceptions of OHS. 122 Figure 5-2: Perceived impact of OHS on stakeholders. 123 Figure 5-3: Stakeholder expectations for OHS reporting. 124 Figure 5-4: Perceived uses of OHS information.
125 Figure 5-5: Support for corporate discretion in OHS disclosure. 126 Figure 5-6: Support for OHS disclosure regulation agency. 127 Figure 5-7: Stakeholder demand for OHS disclosure content. 128 Figure 5-8: Stakeholder attitude to cost / benefit approach to OHS management.
130 Figure 5-9: Stakeholder perceptions of OHS cost importance (by category). 131 Figure 5-10: Stakeholder attitudes to the disclosure of workplace outcomes. 134 Figure 5-11: Stakeholder attitudes to OHS discussion topics for disclosure. 137 Figure 5-12: Stakeholder attitudes to disclosing OHS management KPIs.
140 Figure 5-13: Stakeholder attitudes to OHS indicator comparability. 142 Figure 5-14: Stakeholder attitudes to the presentation of OHS outcome KPIs. 144 Figure 5-15: Stakeholder attitudes to presenting OHS process KPIs. 144 Figure 5-16: Demand for the provision of prior year comparative OHS data.
145 Figure 5-17: Stakeholder preference for OHS disclosure media. 146 Figure 5-18: Stakeholder attitudes to external verification of data. 148 Figure 6-1: Annual and sustainability reports examined. 152 Figure 6-2: Data distribution across reporting media.
155 Figure 6-3: Total OHS disclosures by category. 157 Figure 6-4: Institutionalisation of OHS governance disclosures. 159 Figure 6-5: Disclosures presenting OHS within a risk framework. 161 Figure 6-6: Disclosures of board sub-committees with OHS oversight charter.
162 Figure 6-7: Disclosures relating to OHS policy. 164 Figure 6-8: Disclosure of OHS activity in annual reports. 166 Figure 6-9: Disclosure of OHS activity in sustainability reports. 166 Figure 6-10: Disclosure of OHS activities over time.
167 Figure 6-11: Activity detail presented (1997-99). 169 Figure 6-12: Activity detail presented (2005-07). 169 Figure 6-13: Focus of OHS risk management programs. 170 Figure 6-14: Level of detail provided about BBS activity.
170 Figure 6-15: Level of detail of occupational health disclosures. 175 Figure 6-16: Disclosure of lead and lag PPIs. 176 Figure 6-17: Disclosure of OHS outcomes. 181 Figure 6-18: Fatalities by employment type.
184 Figure 6-19: Disclosure of permanent disability. 187 Figure 6-20: Disclosure of injury by industry and reporting media. 190 Figure 6-21: Frequently disclosed injury and illness KPIs. 191 Figure 6-22: Disclosure of LTI and RI indicators.
192 Figure 6-23: Institutionalisation of RI rate reporting. 192 Figure 6-24: Disclosure of occupational illness data. 197 Figure 6-25: Disclosure of OHS expenditure by classification. 199 Figure 7-1: Disclosure of comparative (fatality) data.
213 Figure 7-2: PSI and OSHAI scores for MH. 225 Figure 7-3: PSI and OSHAI scores for EE. 225 Figure 8-1: Proposed severity classification scale. 232 Figure 8-2: OHS Scorecard.
234 viii Summary of Tables Table 2-1: Australian work-related fatalities by industry (2005-2008). 22 Table 2-2: Safety system failures. 46 Table 2-3: OHS risk management time orientation. 47 Table 2-4: Influence of ideology on risk identification, mitigation and measurement.
48 Table 2-5: GRI OHS indicators. 58 Table 2-6: Sustainability reporting research by the Australian accounting profession. 58 Table 4-1: Factors influencing methodological choice in accounting research. 90 Table 4-2: Justification for survey questions.
96 Table 4-3: Stakeholder survey sample. 98 Table 4-4: Characteristics of scientific enquiry. 100 Table 4-5: Companies targeted for disclosure analysis. 102 Table 4-6: Sources used in developing the disclosure index.
105 Table 4-7: PSI scoring criteria. 110 Table 4-8: OSHAI scoring criteria. 114 Table 5-1: Stakeholder survey sample.