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SEC Worker Safety Disclosure Rule Yielding Scattershot Results

March 3, 2022, 9:52 AM

Large employers are taking tentative steps to disclose their safety and health programs in response to a 2020 federal rule encouraging them to reveal the information in annual reports to the Securities and Exchange Commission.

The inclusion comes as occupational safety and health advocates continue to press for workers’ wellbeing to be given equal importance to such corporate concerns as environmental programs and workforce diversity.

Among the SEC rule revisions was a requirement to include a discussion of the firm’s “human capital” efforts in annual 10-K reports. Broadly, human capital includes such factors as workers’ skills, training, demographics, safety, and how a company supports its employees.

“Yes, it is very important. It is a start,” said Charles Redinger, chair of the American Industrial Hygiene Association’s Human Capital/ESG Task Force.

But returns from the first full year of the new reporting demand have been less than uniform as companies grapple with what to disclose and how best to do so.

Securities Rule

The SEC in August 2020 enacted new rules for what information publicly traded companies were expected to include in their annual 10-K corporate reports filed with the commission. Most companies whose financial year 2021 ended Dec. 31 are now filing their 10-K reports for that year.

The SEC change was partially in response to investors’ growing interest in companies’ environmental, social, and governance efforts—ESG for short.

The reporting mandate does have opponents who believe federal government shouldn’t promote corporate environmental and social programs.

“The purpose of businesses is to deploy investors’ capital and employees’ labor in the service of consumer needs and wants with the aim of making a profit,” the Heritage Foundation told the SEC in a 2020 letter opposing the 10-K requirement. The foundation didn’t immediately reply to a request for comment on how the regulation is playing out in practice.

Employers Decide

The SEC rule didn’t specify what data or programs needed to be included in the 10-K reports, leaving it to employers to decide what to tell their investors.

A Bloomberg Law review of more than 50 10-Ks filed for 2021 by firms, predominately those among the Standards & Poor 500 industrial members, found a wide variance in their safety program disclosures. Inc. included this brief mention of safety under human capital: “As we strive to be Earth’s best employer, we focus on investment and innovation, inclusion and diversity, safety, and engagement to hire and develop the best talent.”

Angie Quennell, an Amazon spokesperson, said the company’s filing complied with the SEC requirement. She added that Amazon in other company publications does share its U.S. and worldwide safety rate data.

The company also meets regularly with shareholders to discuss the company’s performance, including ESG issues, Quennell said.

Union Pacific Corp. took a broader approach, acknowledging the railroad fell short of its 2021 goals.

“Safety is foundational to everything we do at Union Pacific. 2021 safety results did not meet our expectations. In 2022, we are continuing to engage external experts to help us get back on track to world class industrial safety performance,’ Union Pacific said. Later in the 10-K, the railroad operator explained the personnel injury rate increased 9% in 2021 and outlined improvement efforts.

The 10-K information is part of the railroad’s effort to be transparent in its reporting, said Kristen South, Union Pacific’s senior director for corporate communications.

“It’s important for us to report our metrics, explain what we’re going to do moving forward and do what we say,” South said in a written statement.

Across Industries

Only about 20% of the reports review by Bloomberg Law included the company’s injury and illness numbers they are required to measure by the Occupational Safety and Health Administration or the Federal Railroad Administration.

Defense contractor and shipbuilder Huntington Ingalls Industries provided the greatest detail, breaking out rates for its Virginia and Mississippi shipyards.

Kathy Seabrook, a safety consultant and president of Global Solutions Inc. in Mendham, N.J., said the different responses are partially due to companies following consensus standard recommendations allowing employers in some industries to not include occupational safety and health information or give it less emphasis because the business isn’t considered to be in a hazardous industry.

The Sustainability Accounting Standards Board published a detailed guide, Seabrook said. The guide included which industries occupational safety and health is a “material” concern for investors that should be covered in company filings.

For example, the board’s matrix said that for commercial banks, occupational safety and health isn’t considered a relevant issue while it should be considered by electric utilities.

John Dony, senior director of thought leadership at the National Safety Council, said that while the human capital requirement is an important milestone in integrating safety and health reporting into company disclosures “the level of detail and types of metrics requested are generally rather basic.”

Covid Disclosure

How employers handled Covid-19 was also discussed either as part of human capital or as what the SEC considers an “operational risk factor.”

Huntington Ingalls said that before Covid-19, fewer than 400 employees regularly worked remotely. During the pandemic, more than 11,300 employees were working away from their offices.

Defense contractor Lockheed Martin Corp. noted that by Dec. 31, 96% of its workers were either vaccinated or had approved exemptions.

Arron Uddin, a partner with the consulting firm ERM Worldwide Group Limited and the SustainAbility Institute in Atlanta, said a trend he expects to see in future reports is more information on leading indicators such as safety management programs, the company’s culture, and how companies address workers’ mental health.

Investors have seen that there could be disastrous consequences for companies where workers don’t feel free to raise safety concerns.

“When people bring their full selves, there is less likely to be human error,” Uddin said.

Dony also believes companies will enact safety management systems and discuss them in corporate reports to “differentiate those who are merely compliant from those who truly excel.”

“For the investment community, in particular, looking more closely at these drivers of success proves that leaders in safety also lead in shareholder returns,” he said. “Organizations cannot be sustainable without being sustained by their people.”

To contact the reporter on this story: Bruce Rolfsen in Washington at

To contact the editor responsible for this story: Andrew Harris at