ESG Makes a Stronger Business Case for EHS Concerns
By: Dan McLean, Contributor
As businesses show more interest in aligning with the principles of environment, social and governance (ESG), there’s an obvious overlap in concerns between EHS and ESG, and the one will most definitely help the other.
“With ESG, there’s a triple bottom line—profit, people and the planet—that will be demanded not only by the internal stakeholder, but the consumer and those looking to invest as shareholders,” said Intelex Vice President of Health and Safety, Scott Gaddis.
“The ability to position EHS as a business partner with an increased value for the ethical and moral view of EHS—and in support of ESG efforts—is a good thing.”
The Intersection of ESG and EHS
No doubt most EHS professionals would rightly declare the work they’ve been doing has aligned with many ESG principles all along. However, Gaddis noted that some in senior business leadership were too often not interested in EHS concerns, unless there was a significant miss in compliance and targets, and they typically only looked at a few metrics to measure success. The outline of ESG gives EHS practitioners a platform to be a business partner that’s not simply judged from a cost-avoidance function, but as a real partner in the business.
“Their work affects the non-financial impacts investors and shareholders are beginning to demand and an ethical approach to managing businesses,” Gaddis stated.
There’s clear common ground and intersection between ESG criteria and EHS. In his LinkedIn article, KPMG India Manager Phani Prasad M. noted, “In its essence, EHS is more a subset of ESG, as ‘E’ is a common aspect, while occupational health and employee safety together with CSR (corporate social responsibility) comprise the ‘S’ aspect of ESG.”
“There are all these topics that are the same for EHS and ESG,” said Jillian Stacy, Head of Global Expert Services at Enhesa. “By looking at what you’re already doing well…you have a nice starting point. There’s already knowledge that can be gleaned just by looking at EHS compliance (data and activities) to help drive what makes sense for ESG initiatives and what makes sense for ESG milestones.
“As ESG reporting becomes more regulated—which is already happening around the world—you’re going to need verifiable data in your ESG reports,” Stacy added. “EHS compliance data can feed into that. It’s data you’re already collecting and compiling.”
Within the three ESG broad pillars, much of “environmental” is also already well-reported to shareholders through EHS efforts. These generally have included greenhouse gas, energy and water conservation, wastewater, waste and water management, pollution and compliance.
Other areas, possibly new to some in EHS, will have an increased focus. In “social,” expect to see emphasis placed on chemical, biological and radiological impacts on people who work in communities with established businesses.
Gaddis stated there’s a solid intersection within “governance” in procuring materials and managing risk. He noted that, for EHS professionals, their deep expertise in risk management will be a skill relied upon by organizations for ESG programs.
Chris Ward, a former Regulator and Principal Health And Safety Inspector in the UK, and a former member of the British Standards Institute committee, says EHS processes provide data for disclosure in ESG operations reporting.
“Through the implementation of and adherence to international standards in relation to these areas (of environment, social and governance)—for example, ISO 14001 Environmental, ISO 45001 Occupational Health and Safety and ISO 45003:2021 Psychosocial Risks —EHS practitioners can demonstrate on- going processes of continual improvement in these areas,” he said. “Also, by ensuring their procurement and supply chains are in conformity with these standards, investors will be reassured of the sustainability, conformity and continuity of these policies throughout an organization’s areas of operation.”
The ESG Opportunity for EHS Practitioners
Many of today’s investors are making bets on companies that are “good for the planet” and doing their part to protect people and the environment. Likewise, more and more consumers want to put their money and loyalty behind such brands.
Research shows nearly two-thirds (64%) of Americans say they would pay more for sustainable products, and 78% of people are more likely to purchase a product that is clearly labeled as environmentally friendly. What’s more, 77% of Americans say they are concerned about the environmental impact of the products they buy.
The Social Science Research Network (SSRN) observed that, “while corporate sustainability and ESG investing are increasingly front and center for U.S. companies,” there is a severe lack of relevant expertise among board members of large U.S. companies as only 29% of more than 1,100 Fortune 100 board directors examined have relevant ESG credentials. Help is needed, and it’s a significant opportunity for EHS professionals to step in.
“Those responsible for talking about ESG at the highest level don’t understand ESG enough to know that it is EHS in many cases,” said Trevor Bronson, a Corporate Strategy Associate and Senior Product Marketing Manager at Intelex. “A lot of the things they talk about (regarding ESG) are ultimately managed on a day-to-day basis by the EHS department. ESG in many cases is EHS.”
The ESG metrics that investors and businesses often seek already exist in EHS dashboards, reports and collected data. It’s simply a matter of ensuring its availability, comprehensiveness and accuracy for the various stakeholders, Bronson advised.
“To contribute to ESG performance is absolutely bringing something to the organization, because it improves your standing as a company for everyone that’s interested in it,” he added. “Pursuing opportunities in ESG and seeking to improve a business’s ESG metrics gives EHS professionals an opportunity to assume strategic thinking within their organizations.”
Bronson expects ESG concerns will provide a clear business case for increasing EHS budgets because of new mandates and requirements. He added that there are five key things EHS practitioners can do to support ESG efforts for their organizations:
- Get educated on the ESG world. It’s full of new acronyms with which EHS professionals need to become familiar. It’s important to be knowledgeable about general ESG rules and to understand who the key ESG stakeholders for your company are and the material issues for your organization and stakeholders.
- Understand the company’s ESG posture. What are your organization’s stated ESG goals? Are there annual and other reports published by the company that may contain relevant ESG information? Who is receiving these? Is your company a leader or laggard?
- Understand what industry peers are doing. What are the ESG issues within your industry, and are you aware of your company’s ESG posture relative to competitors?
- Assess the capabilities and limits of current technology. Can your EHS technology help achieve your organization’s stated ESG goals? Can you track progress to those goals, and are you doing appropriate follow-up and preventative actions? Are your solutions tied to other ESG systems? How can technology help you? What are the gaps you need to fill? Do you have the right tools?
- Be vocal about the role EHS can and should play. Remember that leadership in most companies lacks ESG expertise. EHS professionals are much more visible today in what they do. The metrics they collect will be much more impactful to a business. You should look to leverage existing EHS datasets for ESG reporting—it exists on the EHS devices and software that are already in use.
About the Author
Dan McLean is a Senior Content Marketing Manager at Intelex Technologies. [Get the full story on how EHS supports ESG reporting and advances the careers of safety professionals by downloading the Intelex Insight Report, What Every EHS Practitioner Should Know About ESG.
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