New ESG regulations such as the Corporate Sustainability Reporting Directive (CSRD) in the EU or the SEC Climate Disclosure Rule in the US make it crucial for companies to kickstart their ESG strategy in 2023. What does this mean to EHS though? And why should EHS professionals strengthen EHS in the age of ESG?
Let’s have a look at:
- The differences between EHS and ESG
- Why EHS is the foundation for strong ESG
- Practical tips to strengthen your EHS
The Differences Between EHS and ESG
EHS and ESG are two related concepts, but they are not interchangeable and are distinct from each other. Let’s look at the differences and what each term stands for:
|What does it stand for||Environmental, Health & Safety||Environmental, Social, and Governance|
|In which context is it used||Legal requirement for companies to ensure that their workplaces are safe and healthy. Enforced through a set of policies and practices that aim to protect workers from hazards and promote their well-being.||Broader framework that evaluates the sustainability and ethical impact of a company.|
|What does the term “Environment” stand for||Refers to the systematic approach to complying with environmental regulations, such as managing spill incidents, tracking gas usage||Also refers to the approach a company is taking to comply with environmental regulations. Additionally, it includes the organization’s wider environmental impact and whether it approaches environmental opportunities proactively, such as renewable energy.|
EHS is the foundation for strong ESG
ESG became more important in recent years. Companies must address environmental and social issues and demonstrate good governance practices to be considered sustainable and responsible.
However, this doesn’t mean companies don’t need EHS anymore. In fact, they need good EHS before they can have strong ESG.
Although the two concepts are distinct from each other, Verdantix recently outlined the role of EHS in corporate ESG ratings (Verdantix, Market Insight: The Role Of EHS In Corporate ESG Ratings, 18 April 2023).
In the report, they illustrate the intersection between EHS and ESG by identifying EHS metrics within the MSCI ESG Rating Framework.
According to the MSCI framework, an organization’s ESG effectiveness depends on the following EHS metrics:
- Carbon emissions
- Product carbon footprint
- Water stress
- Biodiversity and land use
- Raw material sourcing
- Toxic emissions and waste
- Packaging material & waste
- Electronic waste
- Health & safety
- Supply chain labor standards
- Product safety and quality
- Chemical safety
Organizations that rate well on these metrics show commitment to their employees’ work environment. But ultimately, they also show commitment to the community in their area. This sets the foundation for the environmental impact of an organization and a strong ESG strategy.
Companies that have EHS resilience are better equipped to address the demands of ESG because they already have strong sustainability and risk management in place. On top of that, there is clear evidence between health and safety and productivity.
Prioritizing EHS resilience can mitigate risks, reduce costs, and enhance reputation, ultimately delivering value to both the business and society.
Strengthen Your EHS – Practical Tips and Strategies
1. Invest in efficient EHS software
Implementing EHS software can help a company to boost its EHS significantly.
For example, Tronox rolled out Pro-Sapien’s EHS software which improved their SHEQ Incident Reporting. Instead of manually collecting EHS data, their site in Hamilton, Mississippi, has now quicker incident processing with the help of Pro-Sapien’s automated notifications and workflows.
Tronox is a great example of how digitizing processes improves the Health & Safety of an organization which contributes to the social pillar of ESG.
Furthermore, enterprises can make use of existing platforms that their employees know and use every day. Pro-Sapien’s EHS software is built on Microsoft 365 which means that it integrates seamlessly into SharePoint and Microsoft Teams.
Learn more in our eBook about how enterprises can boost EHS engagement through Microsoft 365.
2. Provide regular EHS training and action tracking
Regular EHS training is crucial to ensure that employees are equipped with the knowledge to identify and mitigate potential risks. Not only does this help to safeguard the well-being of employees, but it also fosters a culture of safety within the organization.
This ultimately leads to better product safety and quality which is one of the key EHS metrics within the MSCI ESG Rating Framework.
By keeping your team up-to-date with the latest EHS practices and protocols, you can empower them to make informed decisions that promote a safe and healthy workplace.
You also want to develop a safety culture where employees are encouraged to report incidents and unsafe conditions. For that, it must be easy to report issues and manage any actions.
With Pro-Sapien’s EHS software, employees and EHS managers can easily manage EHS tasks on Microsoft 365.
Workers can simply sign into their usual Microsoft 365 account from their phone or desktop to access EHS tasks and actions. This makes it much more user-friendly than a separate system that requires another sign-on and looks different from the usual apps employees use.
LBC Tank Terminals increased Near Miss Reporting by 370% after they implemented Pro-Sapien’s EHS software. The single sign-on made it much easier for their employees to track incidents and Near Misses straight from the LBC Sharepoint.
3. Monitor EHS performance efficiently
In order to have strong EHS resilience, you need to keep a close eye on EHS metrics to identify areas for improvement. Verdantix’s research demonstrates that new ESG reporting requires robust EHS data management capabilities.
However, their report shows that a majority of large organizations operate their EHS software on as many as 200 different applications (Verdantix, Strategic Focus: ESG Reporting Will Force Firms To Consolidate Legacy EHS IT Systems, 15 May 2023).
This means that EHS data is located in different systems which makes monitoring difficult and time-consuming.
If you want to understand your EHS performance better and ultimately score better on ESG, it will help you significantly to have all data such as incident reports, audits, and compliance metrics in one place. This saves you time and will allow you to find areas of improvement and identify trends and patterns in EHS incidents.
Does your organization already use Microsoft 365? Then you can easily integrate Pro-Sapien’s EHS software. With that, you can leverage Power BI to track EHS performance enterprise-wide.
Power BI is Microsoft’s data visualization product that lets you create rich, interactive data visualizations and is likely already included in your Microsoft 365 Enterprise license.
Pro-Sapien will feed your EHS data into Power BI and then you can easily work together with other people in the business, collaborate on reports and share insights across popular applications such as Microsoft Teams.
ASCO is a great example of how companies can utilize Power BI for EHS data analytics. ASCO spends 80% less time on monthly reporting with Pro-Sapien’s EHS software.
Different database systems and paper forms made their EHS management time-consuming and it was challenging to track data sources. They required a software solution that would take all processes and reporting into one place.
Making the Case for Stronger EHS
Even though ESG is now at the forefront of all discussions, it doesn’t mean that EHS is less important. As we have seen, having a strong EHS foundation in your company provides a much better basis for achieving successful ESG.
If you want to take your EHS management to the next level, have a look at Pro-Sapien’s EHS software that lets you increase visibility and engagement on Microsoft 365. Learn now how you can integrate Pro-Sapien on Microsoft!