There’s a growing global interest in ESG reporting, but, what’s the connection between EHS and ESG? Our Chief Scientific Officer, Richard Tipper explains all.
There’s a growing global interest in ESG reporting? But, what’s the connection between EHS and ESG, but what are the advantages of disclosing your carbon accounting? All these questions and more were answered by none other than EcoOnline’s SVP of ESG and Sustainability, David Picton, and Chief Scientific Officer, Richard Tipper in our webinar: Synergy Between EHS and ESG Reporting.
With a combined experience of over 30 years in safety and sustainability, Picton and Tipper are well versed in all aspects of ESG. From driving initiatives focused on sustainability, to being part of the team that secured the Nobel Peace Prize for their work on climate change (that’s right, we said Nobel Peace Prize!), Picton and Tipper shared their insights to those on the journey of ESG reporting.
EHS involves complying with a variety of regulations and initiatives aimed at safeguarding employees, the public, and the environment.
With a combined experience of over 30 years in safety and sustainability, Picton and Tipper are well versed in all aspects of ESG. From driving initiatives focused on sustainability, to being part of the team that secured the Nobel Peace Prize for their work on climate change (that’s right, we said Nobel Peace Prize!), Picton and Tipper shared their insights to those on the journey of ESG reporting.
ESG in context
To get a proper understanding of ESG, we must first define what this means. ESG stands for Environmental, Social, and Governance. These three pillars each represent a different aspect of your organization.
Environmental: Environmental refers to all things that have to do with the environment, such as the energy sources you are using, waste and water management, as well as your greenhouse gas emissions.
Social: Social entails how an organization treats both internal and external members. Aspects that are evaluated are diversity and inclusion, human rights, and community impact to name a few.
Governance: Governance represents how an organization is run where elements like anti-corruption, ethical practices, and supply chain management are all highlighted.
Defining EHS and ESG
EHS (Environment, Health, and Safety) and ESG (Environmental, Social, and Governance) are two interconnected concepts that play a crucial role in an organization’s sustainability and responsible business practices. EHS focuses on minimizing negative impacts on the environment, protecting the health and safety of employees, and complying with applicable regulations. This involves identifying workplace hazards, implementing health and safety measures, and ensuring adherence to environmental regulations related to waste management and carbon emissions.
On the other hand, ESG represents a broader set of criteria that investors and stakeholders use to assess a company’s sustainability performance. ESG encompasses environmental stewardship, social impact, and corporate governance practices. While EHS focuses on the operational aspects of environmental and safety compliance, ESG provides a comprehensive view of an organization’s ethical business practices, including how it manages its environmental impacts, treats its employees, and governs its operations. Together, EHS and ESG form the foundation of a robust sustainability strategy, promoting both compliance and long-term value creation.
The ESG reporting boom
Over the last decade, ESG regulations have increased by 150%. Why? This is to keep track of all the different aspects and frameworks required in different locations around the world. It helps give professionals, like you, an idea of all the requirements you need to fulfill to be compliant.
Providing evidence that your business is responsible and sustainable through ESG reporting helps demonstrate the impact your organization is having on the planet. Understanding and locating ESG data within your organization is crucial for effective ESG reporting programs. With this one true view, you can start to truly understand all aspects of your business and highlight areas of priority.
Adherence to the UN’s Sustainable Development Goals is also something organizations are working towards to achieve universal goals such as positive climate action, responsible consumption and production, and sustainable cities and communities. With 193 countries committing to realizing the 17 Sustainable Development Goals by the year 2030, your business has an important part to play in making this a reality.
Integrating ESG factors into organizational strategies is crucial, particularly focusing on the role of ESG frameworks and standards in guiding the creation of sustainability reports.
In an EcoOnline survey, 124 organizations were asked several questions relating to ESG reporting. The following question stood out, as many feel the pressure to report their findings will only increase in the next two years.
This is no surprise, not only due to the increasing amount of standards and frameworks that have arisen, but also due to investor interest in this information. With this data, key stakeholders can see whether your business has a long-term sustainability plan and whether or not your organization is stable enough to partner with.
So, why should ESG reporting matter to your business? Not only does it give you an accurate view of all aspects of your organization from your supply chain to your greenhouse gas emissions, but it also helps you stay one step ahead of any unfortunate events.
For example, several climate disasters have negatively impacted businesses with damages to suppliers or disruptions in the supply chain. It’s been estimated that climate change might amount to £762 billion in losses by 2026. Having the steps in place to avoid such disruptions, such as secondary suppliers in less turbulent locations, can give you a competitive advantage as it helps your organization mitigate risk and achieve a sense of resilience and stability.
“What CEOs are expecting to see in the next 10 years is a much greater predominance of environmental-related impacts on business,” shared Tipper. “This shows that people are paying serious attention and seeing that as climate change progresses, things are getting incrementally more severe. It’s starting to be more about business resilience and how we adapt the business to be more fit for the future.”
The connection between EHS and ESG
So, what’s the connection between EHS and ESG and why is it important when reporting? Most notably, both these areas share the aspect of the environment, with ESG reporting allowing you to get a more in-depth view of specific elements such as your carbon accounting, waste and water management, as well as supply chain management. Integrating ESG practices into organizational strategy is essential for enhancing long-term performance.
Another interesting connection is that EHS professionals will most likely be the ones who will drive these sustainability initiatives in organizations. In fact, 36% of senior EHS decision makers believe that EHS will be a key deciding factor when it comes to a company’s ESG strategy. This is because these individuals rely on the same techniques used when collecting and analyzing EHS data such as collaboration with other teams and the workforce, a breakdown of silos, and enhanced communication. A comprehensive ESG program demonstrates a company’s commitment to environmental responsibility and ethical practices, appealing to investors and stakeholders.
Think of EHS reporting strategies as the blueprint for a proper approach to your ESG reports. EHS software can play a significant role in managing EHS and shaping an organization’s ESG reporting strategy.
Leveraging EHS software for ESG reporting
EHS software can play a significant role in shaping an organization’s ESG reporting strategy. By utilizing EHS software, companies can collect and analyze data on environmental impacts, health and safety measures, and compliance with regulations. This data is crucial for ESG reporting, as it provides stakeholders with a comprehensive understanding of the organization’s sustainability performance.
EHS software helps organizations identify areas for improvement by providing detailed insights into their environmental and safety practices. For instance, it can track carbon emissions, waste management practices, and adherence to safety regulations. This information allows companies to prioritize ESG factors and develop strategies to mitigate risks and manage environmental impacts effectively. By integrating EHS data into ESG reporting, organizations can ensure that their sustainability efforts are data-driven and aligned with their overall ESG strategy.
Employee safety in ESG reporting
Employee safety is a critical aspect of ESG reporting, as it directly impacts an organization’s social responsibility and reputation. ESG metrics often include surveys that assess employees’ well-being and satisfaction in the workplace. Meanwhile, EHS compliance ensures that the workplace is safe for employees by providing proper training, personal protective equipment (PPE), and implementing accident prevention measures.
By prioritizing employee safety, organizations can demonstrate their commitment to responsible business practices. This not only enhances their reputation among stakeholders but also contributes to a positive work environment, which can lead to increased employee satisfaction and productivity. In essence, integrating employee safety into ESG reporting highlights an organization’s dedication to ethical business practices and its role in fostering a safe and supportive workplace.
Overcoming challenges in ESG reporting
Integrating ESG into an organization’s strategy can be challenging, but there are several steps that can be taken to overcome these challenges. Firstly, organizations should identify reporting requirements from relevant ESG frameworks and mandatory disclosures. This involves understanding the specific criteria and metrics that need to be reported, which can vary by industry and region.
Secondly, conducting an ESG materiality assessment is crucial to determine which ESG topics or factors are most relevant to the business and valued by stakeholders. This helps organizations focus their efforts on the areas that matter most, ensuring that their ESG strategy is aligned with stakeholder concerns and business priorities.
Finally, organizations should utilize the right frameworks and standards for their industry, such as CDP, TCFD, or SASB, to ensure that their sustainability program is comprehensive and aligned with corporate and sustainability goals. By taking these steps, organizations can develop a strong ESG program that meets reporting requirements, addresses material issues, and promotes sustainable and ethical business practices. This approach not only enhances transparency and accountability but also helps build trust with stakeholders and supports long-term business resilience.
Words of wisdom
Our experts shared several words of wisdom when it comes to embarking on this journey. Having helped several organizations in the past, Picton and Tipper drew on their past experiences to share these insights when it comes to ESG reporting:
- Get leadership buy-in. If senior management and leaders are committed to this cause, it will help drive initiatives and strengthen your sustainability strategy going forward. Picton said, “Think of it as a business case…Remember the 5 R’s: revenue impact, regulation, risk, responsibility and reputation. These 5 R’s are great ways of attracting senior buy in to build a business case around.”
- Have finance involved early-on. This will help enhance your data preparation and management so you can focus on taking action instead of administrative tasks. Tipper shared, “Once you get finance involved you usually get a better quality of data management. When you start sending spreadsheets around the company to collect data…you get bogged down in reporting rather than doing relevant actions.” Developing an ESG strategy aligned with both corporate and sustainability goals is crucial for initiating an effective ESG reporting program.
- Remember this is a continuous process. You’re always learning and gaining more experience and insight each time you complete your ESG reporting. This data helps shed light on the areas you need to prioritize and steps needed to take action. Picton shared, “This is an agenda of learning. The ink should never be dry, and we should be comfortable with that. I use a little acronym: LIFT – learn what matters, identify the priorities, focus on things we can act upon and try some initiatives, programs, and campaigns and then go back to top of the cycle again. Each time you get a little bit better with more experience and knowledge.”
What now?
Reporting your ESG metrics opens up a whole new world of company insight, giving you an accurate understanding of your business and the impact it’s having on the planet. This knowledge helps provide greater resilience and stability to your organization going forward.
Understanding and managing ESG data effectively can enhance an organization’s resilience and performance, making it essential for companies to adopt comprehensive approaches to sustainability in a rapidly changing business environment.
Curious to gain more tips from our experts? Check out our webinar, Synergy between EHS and ESG Reporting, to find out more about this topic and how you can strengthen your sustainability strategy.
