Environmental, social, and governance (ESG) is considered by some to be synonymous with the term sustainability, in other circles, it is linked to the investment community. No matter which term of reference you associate with, ESG is becoming a must-have for disclosure purposes and has started to come under regulator purview, including the U.S. Securities and Exchange Commission (SEC), the Canadian Securities Administrators, European Commission, where mandatory ESG reporting requirements are currently being developed or have already started to be enforced.
During the VelocityEHS Accelerate User Conference, three of VelocityEHS’ partners, STP ComplianceEHS, Fit For Work, and J.S. Held shared their insights with conference attendees on key components an organization should consider building into their internal programs that support each of the three key pillars of Environment, Social, and Governance.
Environment: Reactive Compliance vs Proactive Compliance
Gail Ankiewiez (STP), kicked off the session with a discussion of two basic approaches to compliance – reactive versus proactive – adopted by companies around the world. Gail shared that while reactive compliance may have a lower initial investment and be easier to act on with existing data, it is sometimes harder for the company to see the deeper issues that could lead to more fatal injuries and accidents until they have occurred. Proactive compliance on the other hand, typically requires more planning and for the company to develop the process(es) to monitor and thus, is considered a more costly alternative to managing compliance.
With the changes in regulations on public disclosure, there are growing expectations placed on companies, whether by investors, regulators, customers, and even employees, to ensure that they conduct their business to not only manage but ensure compliance. Against this backdrop, it is without a doubt that while proactive compliance may have a steeper upfront cost, having clear insights into potential risks BEFORE they become an issue, the company not only prevents injuries or damage, whether to humans or to the environment, from occurring but clearly shows their due diligence process.
Social: Valuing Employees
One of the key points Matt Weber (Fit For Work) shared in his session, is that a company should “hire to retire”. In other words, the company should hire their employees through a sound employee testing, onboarding, and training process to ensure that employees always remain safe when working in and for the company, ideally being even better than when they started.
To do this, Matt recommends companies start from the position of preventing employees from ever becoming a patient, no matter if it is due to a physical or mental issue. This entails:
- Having proactive interaction with employees, throughout the organization
- Providing intervention at the place of work where and when it is needed to address problems at the outset
- Have “boots on the ground” to understand the issues facing employees in their workplace
- Conduct regular employee testing, not just medical testing where required by law. This could include employee feedback or satisfaction surveys, amongst others.
Governance: Understanding Your Supply Chain
Over the last few years, the pandemic highlighted the risks in the global supply chain, when manufacturing sites were shut down literally overnight and companies were suddenly finding themselves with unknown production timelines and shipment windows. It brought to the forefront the importance of companies not only understanding supply chain risks, but also the need to build a sustainable supply chain, that is bearable, viable, and equitable. To do this, Andrea Korney (J.S. Held) suggests the following:
- Get real about your supply chain sustainability: do you really know your supply chain? Are they operating in high-risk locations?
- Evaluate your stakeholder expectations: what reporting requirements do you have? What investor expectations need to be fulfilled?
- Evaluate your competitor landscape: what are others in your industry doing?
- Establish sustainability goals: align across the organization and your supply chain
- Communicate and set a strategy to track engagement and compliance through the supply chain
Through this process, companies will begin to better understand and mitigate against the potential risks posed in their supply chain and take the necessary actions to address them before they become an actual issue and ultimately, they can increase competitiveness while lowering costs.
In addition to the key points from each speaker, one of the common threads throughout all three speakers’ presentations was that it is important for companies to be proactive, have clear and regular communications with their employees, and establish operational resilience.
Want more information about how VelocityEHS and its partnerships with STP, Fit For Work and J.S. Held can help you achieve your EHS and ESG goals? Visit the links below for details and to contact us.