We’re thrilled to see how much snow is dumping on the mountains of California lately. Not just for its drought-easing implications — keep it comin’! — but because we love to get out and play in the stuff. And since ESG is always on our minds, of course our thoughts went straight to the reporting standards for ski resorts.

SASB classifies snowsport resorts under Leisure Facilities, a category which also includes amusement parks, sport venues, theaters, and other destinations designed for relaxation and entertainment. Snowsport includes skiing, snowboarding, and other similar pursuits carried out in a similar way; I’m going to use the blanket terms “skiing” and “skier” going forward here to mean all the above — but we still love you, snowboarders!

The SASB provisional standard for these facilities recommends one Environment metric in Energy Management — simply put, how much energy is consumed and where it comes from, a materiality that needs no explanation — and our focus today, three Social metrics in Customer & Worker Safety.

The latter is a timely topic, given the recent tragic death of a skier at Colorado’s Granby Ranch, attributed by investigators to ski lift mechanical failure. According to the National Ski Areas Association (NSAA), this is the first U.S. death of its kind since 1993, and though lift-caused injuries are more common (and injuries caused by the lift rider themself more common still), they’re rare.

That’s not to say that injuries from the act of skiing itself are rare. The NSAA’s statistics suggest it’s still an incredibly safe pursuit. According to their 2016 reports, “In short, a passenger is five times more likely to suffer a fatality riding an elevator than a ski lift, and more than eight times more likely to suffer a fatality riding in a car than on a ski lift,” and “Skiing and snowboarding enjoy an excellent safety record, and are less dangerous than other high-energy participation sports—less so than some common activities, in fact.” But according to others, the NSAA’s figures may wildly underreport the reality of snow sport injuries. According to the SnowSport Safety Foundation (SSF) — a nonprofit whose goal is to improve safety across the snowsport industry — NSAA reported a national “annual average of 40 catastrophic and 50 fatal injuries per year.” But, “Analysis of statewide California hospital payment information (EpiCenter Injury Data) documents a five year annual average of over 11500 emergency department and 630 hospital admissions in California due to snowsport injuries.”

That’s quite a discrepancy.

Skiing is traditionally undertaken at the risk of the consumer, who by buying a lift ticket essentially signs a waiver that absolves the resort of responsibility. The resort is assumed to be responsible for maintaining safe facilities — safety disclosures for which are part of the SASB standards — but once on the slope, a skier is assumed to take responsibility for their safety.

This presents a conundrum. On the one hand, ski resorts may have an interest in downplaying the risk of the sport to prevent dinging ticket sales; on the other, it’s not inconceivable that hiding the actual casualty figures leads skiers and snowboarders to feel more confident in taking chances, which in turn may increase the number of actual injuries.

The online legal resource Nolo explains, “Because there are inherent risks in participating in these sports, the defendant (such as the ski resort owner or operator or even another skier or snowboarder who ran into you) may raise the ‘assumption of risk’ defense. By raising this defense, the defendant is arguing that you are not entitled to compensation because you chose to take part in an activity that was likely to cause you harm.”

That doesn’t stop injured skiers from trying to sue the resort or even other skiers and/or their responsible parties.

But unless public perception of the situation changes, such defensive legal fees will probably remain immaterial, particularly compared to issues arising from instances where the resort itself is clearly and directly responsible for safety conditions (e.g., a poorly maintained lift tower). Therefore on-slope customer injury has little bearing in this disclosure … for now.

Meanwhile, it still lies to the resorts to take utmost care of the conditions they can control.Worker climbing ski lift pillar

The SASB industry brief lists a number of agencies whose oversight covers various aspects of running leisure facilities, mostly related to services complementary to the resort’s primary draw, then concludes that “industry safety practices are self-regulated, which leads to inconsistent safety procedures and performance. In turn, that can lead to legal liabilities for negligence.” On the topic of accident exposure, the brief continues: “Failure to implement and effectively manage a culture of safety can lead to consumer and employee injuries that generate reputational risks that materially harm industry participants.”

The brief cites instances where large amusement parks lost significant revenue due to reduced attendance or legal fees, and a major suit against Vail Resorts for an employee-involved collision. In the recent Colorado case, the resort closed the lift for about ten days while under inspection; though it offered a 40% discount on lift tickets during that time, response to their social media showed that the lift closure prompted some would-be skiers to stay away.

SASB recommends leisure facilities report on three metrics: customer fatality rate and injury rate; employee total recordable injury rate and near-miss frequency rate; and percentage of facilities inspected for safety/percentage failed. There’s clear value in measuring the second and third category: the facilities and employees are the direct responsibility of the resort. It’s important to perform proper maintenance and successful equipment testing to forestall trouble that could lead to reputational risk, and important to document it to reduce legal risk. It’s just as important to keep employees safe.

But what about those visitors who willingly assume the risk of the sport? Why document and disclose figures about casualties that, presumably, are out of the resort’s control? Ignoring this metric may be the result of a dangerous assumption based on current laws and public sentiment. Just because ski resorts are not currently held responsible for the majority of on-slope incidents does not mean that such will always be the case.

If SSF’s founder Dan Gregorie has his way, ski resorts will begin to disclose this information even outside of sustainability reports, as a simple matter of public safety. He and others claim that individual ski resorts and the NSAA have closed ranks in their refusal to make public their safety information.

According to a Summit Daily article, “Gregorie’s bigger gripe is that no numbers are made public for the injuries, nor evidence of each resort’s particular safety management plan. If no proof is ever given of such a strategy, consumers are simply left to believe they exist and are being followed.” In other words, by resorts’ very silence, skiers are led to believe the sport is safer than it is, and have no basis for comparing relative safety among resorts.

If this is so, then lack of disclosure itself may qualify as a “failure to implement and effectively manage a culture of safety,” and become a long-term liability.

Gregorie hopes “there’s a local legislator in Colorado who would love to make a reputation with the public that they’re looking out for public safety. And at some point, one of these resorts is going to break rank, and they’ll see safety as a potential competitive advantage. A good executive who’s thinking will go that direction, because we aren’t going away.”


Know Before You Snow is part of our series, ESG Key Issue of the Week. Tune in weekly for new installments.

You’ve heard a lot of buzz about how ESG can help make good investments, but many investors still misunderstand the how and the why.

Environmental, social, and governance data has material value. Simply put, ESG helps reveal how well a particular company is run, how it relates to its stakeholder base, how it manages its risks for the long term, and so on.

The key issues, as outlined by the standards boards, include some obvious ones — for instance, energy management clearly tracks quantifiable costs — and some that at first glance may not seem to promise immediate benefit to the company’s bottom line.

Find out why each of those ESG issues has been recommended for a particular industry based on materiality. Every week we’ll translate another one into plain language. Stay tuned!

 

The information contained herein (the “Information”) is for illustration and discussion purposes only. It is not, and may not be relied on as, investment advice or as an offer to sell or a solicitation of an offer to buy any security. The Information is not sufficient to form a basis for deciding to make any investment. There can be no assurance and no representation, express or implied, that the Information is accurate. The Information is provided as of the date indicated, is not complete, is subject to change, and no obligation is undertaken to revise or update it.