How to Align EHS and ESG Goals

How to Align EHS And ESG Goals 

Focusing on environmental, health, and safety (EHS), no matter the industry, is a way for companies to protect their employees and the areas in which they operate and fulfil regulatory requirements. Depending on the industry, more stringent measures are necessary and comprehensive EHS programs must be developed. In recent years, there has been an increased commitment from companies to evaluate and improve their organization’s impact on people and the environment by developing ESG (environmental, social, governance) programs. Investors are making responsible investment decisions which drive companies to improve their performance.  

Naturally, there is an overlap between EHS and ESG as both strive to mitigate a company’s impact on employees, the environment, and communities. Companies have started to notice the opportunities that exist by aligning EHS and there are still challenges a company will face in developing effective EHS and ESG strategies, but by understanding your organization’s goals, resources, and timelines, you can develop a comprehensive and streamlined approach.  

Assess the Status Quo 

The first step towards aligning EHS and ESG approaches is to conduct a full assessment of each strategy.  You should understand the purpose of each strategy within your organization and how it fits into company operations. You should review the oversight of each topic and who has responsibilities for ensuring any policies and procedures are followed. It should include an assessment of any regulatory requirements associated with the topics. Additionally, a review of policies, procedures, metrics that are collected, and the effectiveness of the overall strategy should be conducted.  

Understanding where each strategy is on its own and who is responsible for its implementation is essential to figuring out where there is overlap to merge the two. Determining the baseline will establish the foundation for which your company can build upon to meet goals and regulatory requirements without it becoming burdensome to the business.  

Find the Crossover 

Once you’ve assed your current strategy and set goals for the future, you can find where there is overlap between your EHS and ESG strategies. Employee health and safety and protection of the environment are often themes seen in ESG assessments so it makes sense there would be some alignment. When doing this assessment, companies should be looking for metrics that need to be tracked as part of both strategies. Companies should also understand who within the organization has responsibility for implementing various aspects of the strategies so that similar processes and procedures can be assigned oversight by the same individual or group. Evaluating when reporting deadlines align is also useful so that you can gather information at the same time and use the same tools.  

There are also elements to EHS and ESG that don’t directly overlap but are codependent and can have positive effects on each other. An example would be the ESG topic of Management of the Legal & Regulatory Environment (refer to SASB). EHS regulations vary by jurisdiction and are constantly being updated. Having an established process of tracking and communicating regulatory requirements pertinent to the business, including laws related to the environment and health and safety, enables better management and outcomes for these topics.  

Meeting a multitude of company goals and regulatory requirements can be a daunting task, but understanding where strategies can be made more efficient can help reduce the burden. 

Set Goals 

Perhaps the most important part of the process is setting goals. You must know what your strategy or roadmap is trying to accomplish and the impact it will have. You have to understand if your goals are simply to meet regulatory requirements and investor demands, or, if you want to be more ambitious by setting targets and identifying keys areas where your company can have a positive impact.  

When looking at ESG ambitions, your company should assess whether there are specific frameworks or standards it wants to report on or if it wants to focus on the most material topics (e.g., energy management, human rights, data security) and develop a strategy to integrate them into business operations. EHS programs often have regulatory drivers, but companies can take the initiative to develop advanced policies and procedures that promote a culture centered around a safe working environment.  

Each company needs to determine their level of ambition, while still being realistic. For goals that are set, there must be a way to track progress so companies identify metrics to do so. Your company should also set timelines for goals as it will help guide the development of a roadmap for achieving them. By understanding the EHS and ESG objectives and targets for your organization, you will be able to develop a comprehensive strategy that works towards improvement with sufficient oversight and resource allocation.  

Create a Roadmap 

Once your company has established their baseline and identified goals and overlaps, the next step towards meaningful progress is creating a roadmap. A roadmap will provide a detailed overview of the actions needed to be taken to achieve your company’s objectives. The roadmap should identify each action item needed with as much detail as possible, including deadline for completion, responsible person or group, and any additional resources that may be needed. The roadmap should include progress checks so that company management can assess how well actions are being implemented and adjust as necessary. A roadmap is a key aspect of any EHS or ESG strategy as it breaks down something complex with multiple components into something digestible with simplified action items. 

Monitor Key Metrics 

As mentioned earlier, metrics are an important part of measuring progress towards your company’s goals. For each goal, your company must choose metrics that accurately reflect what you are trying to achieve. These metrics can be quantitative or qualitative. As part of your roadmap, you should establish how metrics will be collected, such as surveys, audits, monitoring devices, data input from employees, or company records. You should also establish the frequency in which each metric should be collected and reported on and who is responsible for collecting the data. Software can be a great tool to simplify this process, especially when collecting data from multiple locations or departments within an organization. While data collection can be a hassle, it is the only way to know and document whether your company is meeting their goals. 

Eliminate Silos 

Each company is organized differently and depending on the structure, barriers between locations and departments can develop. These barriers can prevent certain locations or departments from following standardized procedures or from getting important updates on business operations. In the case of workplace health and safety and risk management procedures, there needs to be established communication channels so that new prevention measures can be implemented elsewhere. It’s important that companies establish both effective communication procedures and appropriate supervision throughout the company so that information is not concentrated in one group. For a company’s EHS or ESG strategy to be effective, the whole company needs to actively participate. Regular progress check-ins will help identify if there are any silos so company management can make the necessary changes. The more cross-functional collaboration a company has, the more effective and easier it will be to implement their EHS and ESG strategies.    

Educate Employees 

Implementation of an ESG strategy and the creation of a health and safety focused workplace culture often comes from the top down. However, an important part of achieving company goals is making sure all employees are aware of the goals the company is trying to achieve. Educating employees on the various topics is a crucial part of implementing your strategies, especially if there will be changes to their job functions or duties. It is also important for employees to know how the strategy plays into the overall operations of the business and what the company’s goals are and why they are setting them. Education is a key tool to get buy-in from employees so that they know why certain actions are being taken and processes followed to meet company goals. 

Emphasize Strengths 

At all stages of the strategy implementation process, businesses need to know how to play to their strengths. Every business has certain strengths when it comes to workplace safety and ESG management. Identify why and how certain aspects have become strengths so you can apply those same actions, tools, and management styles to other aspects of your strategy. Because good EHS management is also good ESG management and vice versa, focus on the areas of overlap as those will often be where the most progress can be made. 

Leverage Technology 

Utilizing available tools and technology makes implementing your EHS and ESG strategies easier and more efficient. There are multiple software systems that allow companies to track metrics, set targets, complete required reporting, and manage responsibilities and actions within the company. Technology is also a way for companies to meet their goals as new technology brings in improved safety features, higher efficiencies, and better processes. Keeping up with new technologies allows companies to see different ways in which they can improve and what may work best for their business. 

Progress Isn’t Linear 

When implementing a strategy, there will often be challenges, especially as companies continue to face an ever changing regulatory and industry landscape. By staying focused on the most important goals, companies can continue to make progress. As noted before, tracking progress and regular check-ins will help company management understand whether they are on track or if adjustments need to be made. By making these commitments, companies are finding ways to create safer working environments while reducing the impact they have on people and the environment to foster a more sustainable future.