Merging EHS and ESG will future proof your business

Merging EHS and ESG will future proof your business

Published March 1, 2022

4 minute read

As sustainability leaps forward in our business strategies, environmental, health, and safety (EHS) teams are left with yet another reporting factor. The good news is that this additional dimension doesn’t need to mean more to do.

In this article, we will guide you through the different areas of environmental, social, and governance (ESG) reporting and what you will soon discover, the many similarities between EHS and ESG. Having a proactive approach to EHS, you will probably find several ESG related topics that you already can tick off.

Riding the perfect wave

With over 500 formal and informal sustainability reporting standards and frameworks in the market we run the risk of missing the point and falling into a "reporting anarchy" trap.

Recently, the EU Taxonomy has been making headlines with its standard classification of economic activities that contribute to environmental objectives.

However, to an EHS professional, compliance and reporting standards have been a part of their day-to-day work for decades. Their experience of the practical application of best practice will be a valuable set of skills for companies to utilize when maneuvering in the myriad of standards.

Post-Covid, we see a shift in the EHS and the ESG landscape towards people and social issue management, increasing the stakeholder's interest in social performance. This trend is strongly backed by what the UK-based Institution of Occupational Safety and Health (IOSH) refers to as "the second wave of sustainability."

With these disruptions in the move, all companies now have the chance to establish a stronger connection between their existing EHS efforts and the increasing focus on ESG reporting.

EHS as a competitive advantage

The financial markets' need for sustainability information leaves many companies with undiscovered advantages. Simply communicating the company's focus on employees' health, safety, and wellbeing can automatically benefit the bottom line.

In other words, there lies a vast potential to create a competitive advantage from already established reporting traditions within the EHS department.

One of the critical drivers to defining useful sustainability information is that it needs to be measurable. And herein is the sweet spot from an EHS perspective. All the reporting activities from a company's EHS department can be measured. Like reporting on incidents, near misses, environmental and chemicals. And the good news is that digital tools that are likely already in place, or in the pipeline, will provide the data you need to show the good practice that’s been applied and improved upon for years now.

EHS and ESG are intertwined

In the following section, we will define each of the ESG dimensions and, through some examples, showcase how EHS professionals can report the most measurable metrics in ESG. Some might even be topics you have been tracking, reporting, and monitoring for years. 

Another important thing to keep in mind is that you do not have to track, monitor, and report on every metric on the ESG framework. Before you become overwhelmed by the volume of information desired, take one step back and determine what metrics and indicators are most relevant and vital to your organization. 

ENVIRONMENT – Environmental conditions

Environmental factors concern resource use, pollution, climate change, energy use, waste management, and other physical environmental challenges and opportunities. For many EHS professionals, collecting environmental information has routinely been done for years.

A significant component of environmental reporting is emissions data. The environmental dimension is divided into three different scopes covering all directly company-owned and controlled resources and indirect emissions from upstream and downstream value chains.

Examples of Environmental Topics that correlates with EHS:
Greenhouse gas (GHG) emissions: Greenhouse gas emissions are the levels of carbon dioxide, carbon monoxide, sulfur dioxide and other gaseous byproducts of the industrial processes of a company in its business operations.

Climate risk: Climate change has led to extreme weather and other disruptions to the ecosystem, causing damage to business assets, outages, and commodity shortages. In addition to managing physical climate risks, there’s also a so-called "transitional risk". This refers to changes in framework conditions because of stricter climate regulations, technological changes, and changes in market preferences. Due to the consequences climate change can have on companies' bottom line, climate risk reporting is essential to banks, insurers, investors, and governments.

Other environmental factors: This covers different topics that are relevant when focusing on improving the environmental performance of a company, such as resource efficiency, waste management, circular economy, water, and marine resources and biodiversity.

SOCIAL – Social conditions

The social pillar focuses on the business’ impact on its employees, customers, and the community. It measures how a company tackles issues like workplace health and safety, employee training, modern human slavery, local community impact, and even data and privacy.

When evaluating the “social” component for the company’s ESG score, you need to include factors such as employee safety policies, risk management, employee engagement, and training.

Examples of Social Topics that correlates with EHS:
Competence development: All enterprises must recruit and develop competent employees. Today, many EHS solutions come with the opportunity to integrate a learning management system (LMS) that helps with good statistics related to competence-raising measures, leadership development programs, and employee training.

Health and Safety: Within traditional EHS management, reports and statistics on health and safety issues are well established, partly because this is more regulated by legislation than many other ESG topics. Reporting on health and safety includes physical, chemical, and biological hazards and should systematically display how the company works for employees' health, safety, and wellbeing.

Privacy & Security:  Privacy and personal data protection are fundamental rights, and all companies should report on their data protection policy. Security is also the growing concern for cyberattacks as the nature of cyber-crime is continually evolving. 

GOVERNANCE – Governance issues

Governance addresses topics fundamental to ensuring reasonable control in a business, such as bribery corruption, procurement practices, equal treatment, composition and independence of the board, incentive structure and system for risk management, and internal control.

Examples of Governance Topics that correlates with EHS:
Risk management: ESG analyses are primarily risk-oriented, emphasizing the companies' potential for negative impact on people and the environment. Monitoring and mitigating risks across all three dimensions is an essential priority for any company serious about ESG.

Supplier code of conduct: Ensuring a healthy procurement practice to lower the risk of corruption, human rights, working conditions, and the environment—select suppliers based on relevant sustainability criteria, including high environmental standards and performance.

Data is key to making sustainable decisions

As the overview above indicates, no matter how closely your EHS tasks relate to the different ESG topics, you are 100% dependent on access to qualitative and quantitative data. To many companies, this typically means that you will be gathering information from many departments across your organization, often handled manually.

Helping you to harness the data needed, a place to start would be to invest in a digital tool and a unified platform. Using SaaS software to collect, monitor, and categorize, you can extract the data into intuitive and instant dashboards. Any data insight will help you provide an overview of your combined ESG and EHS performance and even make it easier to identify areas where you can make improvements and make sustainable decisions for the future of your business.

Is that it?

A health and safety management software can go a long way to helping you to prepare for your ESG reporting. EcoOnline's powerful and rich EHS software platform can help you to create safe, sustainable, compliant and efficient workplaces. If you are interested in finding out more, request a demo today.

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Author Helene Brodersen

Helene works as Head of ESG & Sustainability. She is passionate about connecting EcoOnline's solutions with the higher purpose of creating safer and more sustainable workplaces for people and the environment. As a former journalist, she dedicates her writing to translating complex topics into easy-to-read and engaging stories. Helene also holds a degree in Sustainability.

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