Organizing Your Firm’s EHS Function for Risk Management and Value Creation

Traditionally, environmental, health and safety (EHS) functions have been viewed by firms as a necessary cost, but also a non-contributor to brand value or the bottom line—in other words, ripe to be cut during an economic downturn. However, in BBJ Group’s experience, forward-looking firms are “flipping the script” and using their EHS functions to not only manage risk and brand value, but create value as well. Here’s how:

Facilities on the Front-Line

Day-to-day EHS risk management generally works best when handled at the facility level, and EHS personnel at the facility are on the front lines of protecting brand value and mitigating operational risk. Because of their intimate familiarity with facility operations, local personnel are often more capable of identifying problems and solutions to those problems in real time. Examples of EHS activities best handled at the facility level include implementing spill response plans, complying with permits, and recordkeeping. 

Establishing company-wide KPIs allows performance information from the facilities to flow up to corporate-level decision makers in a consistent, usable manner. 

Value Creation Is a Corporate Function

While good organizations use their EHS budget to effectively manage risk, great organizations also use EHS strategies to create value. Such value creation requires an overview of the whole organization, and therefore requires corporate vision and direction. With proper systems in place, which include both trailing and leading key-performance indicators (KPIs), corporate EHS management can lead process improvement.   

Value creation can come in the form of cost reduction, such as: 

• Taking best-in-organization practices from one facility, and then integrating them firm-wide;
• Identifying alternate suppliers whose suppliers allow waste reduction;
• Reducing organizational downtime or claims due to injury;
• Creating products that result in less downstream waste (and, therefore, cost) for customers.

But, at the corporate level, there are “softer” opportunities to create brand value that can open new markets or business lines. By touting strengths in EHS and sustainability management, firms can create strong value propositions to market new customers and improve customer satisfaction.

Organization-Wide Integration

Ideally, firms should look for opportunities to ingrain EHS objectives throughout the organization, and such opportunities likely abound. After all, efficiency, waste reduction and operational readiness align well not only with EHS and sustainability goals, but are obvious organizational goals as well. Facility operations, procurement and supply chain are typically good places to start looking for synergies between EHS-specific objectives and larger organizational goals. 

Outsourcing Creates Continuity and Consistency

Particularly at the facility level, there is extraordinary turnover in EHS roles. In BBJ Group’s experience, turnover rates for such positions in the range of 9 to 15 months is not uncommon. Chronic turnover results in (1) a loss of institutional knowledge, (2) a lack of continuity, and (3) backfilling the position with under-qualified or disinterested people. Outsourcing overcomes those obstacles and often at less total cost.  

Strategic outsourcing also creates value at the organizational level. Because outsourcing results in teams being integrated into operations who have experience working at both the facility and corporate level, a stronger communication between the corporate level and facility level is also formed.